Liberalism
F. A. Hayek
Written in 1973 for the Italian Enciclopedia del Novicento where the
article appeared in an Italian translation.
Reprinted as Chapter Nine of Hayek, F. A., New Studies in Philosophy,
Politics, Economics and the History of
Ideas, Routledge & Keagan Paul, London and Henley, 1982 [1978], pp.
119-151 ORDER THIS BOOK
The basic principles from which the Old Whigs
fashioned their evolutionary liberalism have a long pre‑history. The
eighteenth‑century [121] thinkers who formulated them were
indeed greatly assisted by ideas drawn from classical antiquity and by certain
medieval traditions which in England had not been extinguished by absolutism.
The first people who had clearly formulated the
ideal of individual liberty were the ancient Greeks and particularly the
Athenians during the classical period of the fifth and fourth centuries BC. The
denial by some nineteenth‑century writers that the ancient knew
individual liberty in the modern sense is clearly disproved by such episodes as
when the Athenian general at the moment of supreme danger during the Sicilian
expedition reminded the soldiers that they were fighting for a country which
left them 'unfettered discretion to live as they pleased'. Their conception of
freedom was of freedom under the law, or of a state of affairs in which, as the
popular phrase ran, law was king. It found expression, during the early
classical periods, in the ideal of isonomia or equality before the law
which, without using the old name, is still clearly described by Aristotle.
This law included a protection of the private domain of the citizen against the
state which went so far that even under the 'Thirty Tyrants' an Athenian
citizen was wholly safe if he stayed at home. Of Crete it is even reported (by
Ephorus, quoted by Strabo) that, because liberty was regarded as the state's
highest good, the constitution secured 'property specifically to those who
acquire it, whereas in a condition of slavery everything belongs to the rulers
and not to the ruled'. In Athens the powers of the popular assembly of changing
the law were strictly limited, though we find already the first instances of
such an assembly refusing to be restrained by established law from arbitrary
action. These liberal ideals were further developed, particularly by the Stoic
philosophers who extended them beyond the limits of the city state by their
conception of a law of nature which limited the powers of all government, and
of the equality of all men before that law.
These Greek ideals of liberty were transmitted
to the modems chiefly through the writings of Roman authors. By far the most
important of them, and probably the single figure who more than any other
inspired the revival of those ideas at the beginning of the modern era was
Marcus Tullius Cicero. But at least the historian Titus Livius and the emperor
Marcus Aurelius must be included among the sources on which the sixteenth‑
and seventeenth‑century thinkers chiefly drew at the beginning of the
modern development of [122] liberalism.
Rome, in addition, gave at least. to the European continent a highly
individualist private law, centring on a very strict conception of private
property, a law, moreover, with which, until the codification under Justinian,
legislation had very little interfered and which was in consequence regarded
more as a restriction on, rather than as an exercise of, the powers of
government.
The early moderns could draw also on a
tradition of liberty under the law which had been preserved through the Middle
Ages and was extinguished on the Continent only at the beginning of the modern
era by the rise of absolute monarchy. As a modern historian (R. W. Southern)
describes it, the hatred of that which was governed, not by rule, but by will,
went very deep in the Middle Ages, and at no time was this hatred as powerful
and practical a force as in the latter half of the period.... Law was not the
enemy of freedom: on the contrary, the outline of liberty was traced by the
bewildering variety of law which was evolved during the period.... High and low
alike sought liberty by insisting on enlarging the number of rules under which
they lived.
This conception received a strong support from
the belief in a law which existed apart from and above government, a conception
which on the Continent was conceived as a law of nature but in England existed
as the Common Law which was not the product of a legislator but had emerged
from a persistent search for impersonal justice. The formal elaboration of
these ideas was on the Continent carried on chiefly by the Schoolmen after it
had received its first great systematization, on foundations deriving from
Aristotle, at the hands of Thomas Aquinas; by the end of the sixteenth century
it had been developed by some of the Spanish Jesuit philosophers into a system
of essentially liberal policy,
especially in the economic
field, where they anticipated much that was revived only by the Scottish
philosophers of the eighteenth century.
Mention should finally also be made of some of the early
developments in the city states of the Italian Renaissance, especially
Florence, and in Holland, on which the English development in the seventeenth
and eighteenth centuries could largely draw. [123]
It was in the course of the debates during the
English Civil War and the Commonwealth period that the ideas of the rule or
supremacy of law became finally articulated which after the 'Glorious
Revolution' of 1688 became the leading principles of the Whig Party that it
brought to power. The classical formulations were supplied by John Locke's Second Treatise on Civil Government (1689)
which, however, in some respects provides a still more rationalist
interpretation of institutions than came to be characteristic of eighteenth
century British thinkers. (A fuller account would also have to consider the
writings of Algernon Sidney and Gilbert Burnet as early expositors of the Whig
doctrine.) It was also during this period that that close association of the
British liberal movement and the predominantly non‑conformist and
Calvinist commercial and industrial classes arose which remained characteristic
of British liberalism until recent times. Whether this merely meant that the
same classes which developed a spirit of commercial enterprise were also more
receptive to Calvinist Protestantism, or whether these religious views led more
directly to liberal principles of politics, is a much discussed issue which
cannot be further considered here. But the fact that the struggle between
initially very intolerant religious sects produced in the end principles of
tolerance, and that the British liberal movement remained closely connected
with Calvinist Protestantism, is beyond doubt.
In the course of the eighteenth century the
Whig doctrine of government limited by general rules of law and of severe
restrictions on the powers of the executive became characteristic British
doctrine. It was made known to the world at large chiefly through Montesquieu's
Esprit des lois (1748) and the
writings of other French authors, notably Voltaire. In Britain the intellectual
foundations were further developed chiefly by the Scottish moral philosophers,
above all David Hume and Adam Smith, as well as by some of their English
contemporaries and immediate successors. Hume not only laid in his
philosophical work the foundation of the liberal theory of law, but in his History of England (1754‑62) also
provided an interpretation of' English history as the gradual emergence of the
Rule of Law which made the conception known far beyond the limits of Britain.
Adam Smith's decisive contribution was the account of a selfgenerating order
which formed itself spontaneously if the individuals [124] were
restrained by appropriate rules of law. His Inquiry
into the Nature and Causes of the Wealth of Nations marks perhaps more than
any other single work the beginning of the development of modern liberalism. It
made people understand that those restrictions on the powers of government
which had originated from sheer distrust of all arbitrary power had become the
chief cause of Britain's economic prosperity.
The beginnings of a liberal movement in Britain
were soon interrupted, however, by a reaction against the French Revolution and
a distrust of its admirers in England, who endeavoured to import to England the
ideas of Continental or constructivist liberalism. The end of this early
“English” development of liberalism is marked by the work of Edmund Burke who,
after his brilliant restatement of the Whig doctrine in defence of the American
colonists, violently turned against the ideas of the French Revolution.
It was only after the end of the Napoleonic
wars that the development based on the doctrine of the Old Whigs and of Adam
Smith was resumed. The further intellectual development was guided largely by a
group of disciples of the Scottish moral philosophers who gathered round the Edinburgh Review, mostly economists in
the tradition of Adam Smith; the pure Whig doctrine was once more restated in a
form which widely affected Continental thinking by the historian T. B. Macaulay
who for the nineteenth century did what Hume in his historical work had done
for the eighteenth. Already, however, this development was paralleled by the
rapid growth of a radical movement of which the Benthamite 'Philosophical
Radicals' became the leaders and which traced back more to the Continental than
to the British tradition. It was ultimately from the fusion of these traditions
that in the 1830s the political party arose which from about 1842 came to be
known as the Liberal Party, and for the rest of the century remained the most
important representative of the liberal movement in Europe.
Long before that, however, another decisive
contribution had come from America. The explicit formulation by the former
British colonists, in a written constitution, of what they understood to be the
essentials of the British tradition of liberty, intended to limit the powers of
government, and especially the statement of the fundamental liberties in a Bill
of Rights, provided a model of political institutions which profoundly affected
the development of liberalism in Europe. Though the United States, just because
their people felt [125] that they had already embodied the safeguards of
liberty ill their political institutions, never developed it distinct liberal
movement, for the Europeans they became the dreamland of liberty and the
example which inspired political aspirations as much as English institutions
had done during the eighteenth century.
The radical ideas of the philosophers of the
French Enlightenment, mainly in the form in which they, had been applied to
political problems by Turgot, Condorcet and the Abbé Sieyès largely dominated
progressive opinion in France and the adjoining countries of the Continent
during the Revolutionary and Napoleonic periods; but of a definite liberal
movement one can speak only after the Restoration. In France it reached its
height during the July Monarchy (1830‑48), but after that period remained
confined to a small élite. It was made up of several different strands of
thought. An important attempt to systematize and adapt to Continental
conditions what he regarded as the British tradition was made by Benj amin
Constant, and was developed further during the I 830s and 1840s by a group
known as the 'doctrinaires' under the leadership of F. P. G. Guizot. Their
programme, known as 'guarantism', was essentially a doctrine of constitutional
limitations of government. For this constitutional doctrine which made up the
most important part of the Continental liberal movement of the first half of
the nineteenth century, the constitution of 1831 of the newly created Belgian
state served as an important model. To this tradition, largely deriving from
Britain, also belonged the perhaps most important French liberal thinker,
Alexis de Tocqueville.
The feature, however, which greatly
distinguished the type of liberalism predominant on the Continent from the
British one was from the beginning what is best described as its free‑thinking
aspect, which expressed itself in a strong anti‑clerical, anti‑religious
and generally anti‑traditionalist attitude. Not only in France, but also
in the other Roman Catholic parts of Europe, the continuous conflict with the
church of Rome became indeed so characteristic of liberalism that to many
people it appeared as its primary characteristic, particularly after, in the
second half of the century, the church took ill) the struggle against
'modernism' and therefore against most demands for liberal reform.
During the first half of the century, up to the
revolutions of 1848, [126] the liberal movement in France, as well its
in most of the rest of' western and central Europe, had also been much more
closely allied with the democratic movement than was the case with British
liberalism. It was indeed largely displaced by it and by the new socialist
movement during the second half of the century. Except for a short period
around the middle of the century, when the movement for free trade rallied the
liberal groups, liberalism did not again play an important role in the
political development of France, nor after 1848 did French thinkers make any
important contributions to its doctrine.
A somewhat more important role was played by
the liberal movement in Germany, and a more distinct development did take place
during the first three‑quarters of the nineteenth century. Though greatly
influenced by the ideas derived from Britain and France, these were transformed
by ideas of the three greatest and earliest of the German liberals, the
philosopher Immanuel Kant, the scholar and statesman Wilhelm von Humboldt, and
the poet Friedrich Schiller. Kant had provided a theory on lines similar to
those of David Hume, centred on the concepts of law as the protection of
individual freedom and of the Rule of Law (or the Rechtsstaat, as it came to be known in Germany); Humboldt had in an
early work On the Sphere and Duties of
Government (1792) developed the picture of a state wholly confined to the
maintenance of law and order ‑ a book of which only a small part was
published at the time, but which, when it was finally published (and translated
into English) in 1854, exercised wide influence not only in Germany but also on
such diverse thinkers as J. S. Mill in England and E. Laboulaye in France. The
poet Schiller, finally, probably did more than any other single person to make
the whole educated public in Germany familiar with the ideal of personal
liberty.
There was an early beginning towards a liberal
policy in Prussia during the reforms of Freiherr vom Stein, but it was followed
by another period of reaction after the end of the Napoleonic wars. Only in the
1830s did a general liberal movement begin to develop, which from the
beginning, however, as was also true in Italy, was closely associated with a
nationalist movement aiming at the unification of the country. In general,
German liberalism was mainly a constitutionalist movement which in north
Germany was somewhat more guided by the British example, while in the south the
French model was more influential. This found expression chiefly in a [127]
different attitude towards the problem of limiting the discretionary powers of
government which in the north produced a fairly strict conception of the Rule
of Law (or the Rechtsstaat), while in
the south it was guided more by the French interpretation of the Separation of
Powers that stressed the independence of the administration from the ordinary
courts. In the south, however, and especially in Baden and Wurttemberg, there
developed a more active group of liberal theorists around the Staatslexicon of C. von Rotteck and C.
T. WeIcker, which in the period before the revolution of 1848 became the main
centre of German liberal thought. The failure of that revolution brought
another short period of reaction, but in the 186os and early 1870s it seemed
for a time as if Germany, too, were rapidly moving towards a liberal order. It
was during this period that the constitutional and legal reforms intended
definitely to establish the Rechtsstaat were
brought to completion. The middle of the 1870s must probably be regarded as the
time when the liberal movement in Europe had gained its greatest influence and
its easternmost expansion. With the German return to protection in 1878, and
the new social policies initiated by Bismarck at about the same time, the
reversal of the movement began. The liberal party which had flourished for
little more than a dozen years rapidly declined.
Both in Germany and in Italy the decline of the
liberal movement set in when it lost its association with the movement for
national unification, and the achieved unity directed attention to the
strengthening of the new states, and
when, moreover, the beginnings of a labour movement deprived liberalism of the
position of the 'advanced' party which until then the politically active part
of the working class had supported.
Throughout the greater part of the nineteenth
century the European country which seemed nearest to a realization of the
liberal principles was Great Britain. There most of them appeared to be
accepted not only by a powerful Liberal Party but by the majority of the population,
and even the Conservatives often became the instrument of the achievement of
liberal reforms. The great events after which Britain could appear to the rest
of Europe as the representative model of a liberal order were the Catholic
emancipation of 1829, the Reform Act of 1832, and the repeal of the corn laws
by the Conservative, Sir [128] Robert Peel, in 1846. Since by then the
chief demands of liberalism concerning internal policy were satisfied,
agitation concentrated on the establishment of free trade. The movement
initiated by the Merchants' Petition of 1820, and carried on from 1836 to 1846
by the Anti‑Corn‑Law League, was developed particularly by a group
of radicals who, under the leadership of Richard Cobden and John Bright, took a
somewhat more extreme laissez faire position
than would have been required by the liberal principles of Adam Smith and the
classical economists following him. Their predominant free trade position was
combined with a strong anti‑imperialist, anti interventionist and anti‑militarist
attitude and an aversion to a expansion of governmental powers; the increase of
public expenditure was regarded by them
as mainly due to undesirable interventions in overseas affairs. Their
opposition was directed chiefly against the expansion of the powers of central
government, and most improvements were expected from autonomous efforts either
of local government or of voluntary organizations. 'Peace, Retrenchment and
Reform' became the liberal watchword of this period, with 'reform' referring
more to the abolition of old abuses and privilege than the extension of
democracy, with which the movement became more closely associated only at the
time of the Second Reform Act of 1867. The movement had reached its climax with
the Cobden Treaty with France of 186o, a commercial treaty which led to the
establishment of free trade in Britain and a widespread expectation that free
trade would soon universally prevail. At that time there
emerged also in Britain, as the leading figure
of the liberal movement W. E. Gladstone who, first as Chancellor of the
Exchequer and the as liberal Prime Minister, came to be widely regarded as the
living embodiment of liberal principles, especially, after Palmerston death in
1865, with regard to foreign policy, with John Bright as hi chief associate. With
him also the old association of British liberalism with strong moral and
religious views revived.
In the intellectual sphere during the second
half of the nineteenth century the basic principles of liberalism were
intensively discussed In the philosopher Herbert Spencer an extreme advocacy of
a individualist minimum state, similar to the position of W. von Humboldt,
found an effective expounder. But John Stuart Mill in his celebrated book On Liberty (1859), directed his criticism
chiefly against the tyranny of opinion rather than the actions of government
and by his advocacy of distributive justice and a general sympathetic [129]
attitude towards socialist
aspirations in some of' his other works, prepared the gradual transition of' a
large part of' the liberal intellectuals to a moderate socialism. This tendency
was noticeably strengthened by the influence of the philosopher T. H. Green who
stressed the positive functions of the state against the predominantly negative
conception of liberty of the older liberals.
But though the last quarter of the nineteenth
century saw already much internal criticism of liberal doctrines within the
liberal camp and though the Liberal Party was beginning to lose support to the
new labour movement, the predominance of liberal ideas in Great Britain lasted
well into the twentieth century and succeeded in defeating a revival of
protectionist demands, though the Liberal Party could not avoid a progressive
infiltration by interventionist and imperialist elements. Perhaps the government
of H. Campbell Bannerman (1904) should be regarded as the last liberal
government of the old type, while under his successor, H. H. Asquith, new
experiments in social policy were undertaken which were only doubtfully
compatible with the older liberal principles. But on the whole it can be said
that the liberal era of British policy lasted until the outbreak of the First
World War, and that the dominating influence of liberal ideas in Britain was
terminated only by the effects of this war.
Though some of the elder European statesmen and
other leaders in practical affairs after the First World War were still guided
by an essentially liberal outlook, and attempts were made at first to restore
the political and economic institutions of the pre‑war period, several
factors brought it about that the influence of liberalism steadily declined
until the Second World War. The most important was that socialism, particularly
in the opinion of a large part of the intellectuals, had replaced liberalism as
the progressive movement. Political discussion was thus carried on mainly
between socialists and conservatives, both supporting increasing activities of
the state, though with different aims. The economic difficulties, unemployment
and unstable currencies, seemed to demand much more economic control by
government and led to a revival of protectionism and other nationalistic
policies. A rapid growth of the bureaucratic apparatus of government and the
acquisition of far‑reaching discretionary powers by it was the
consequence. These tendencies, already strong during [130] the first
post‑war decade, became even more marked during the Great Depression
following the US crash of 1929. The final abandonment of the gold standard and
the return to protection by Great Britain in 1931 seemed to mark the definite
end of a free world economy. The rise of dictatorial or totalitarian régimes in
large parts of Europe not only extinguished the weak liberal groups which had
remained in the countries immediately affected, but the threat of war which it
produced led even in Western Europe to an increasing government dominance over
economic affairs and a tendency towards national self‑sufficiency.
After the end of the Second World War there
occurred once more a temporary revival of liberal ideas, due partly to a new
awareness of the oppressive character of all kinds of totalitarian régimes, and
partly to the recognition that the obstacles to international trade which had
grown up during the inter‑war period had been largely responsible for the
economic depression. The representative achievement was the General Agreement
on Tariffs and Trade (GATT) of 1948, but the attempts to create a larger
economic unit such as the Common Market and EFTA also ostensibly aimed in the
same direction. Yet the most remarkable event which seemed to promise a return
to liberal economic principles was the extraordinary economic recovery of the
defeated Germany which, on the initiative of Ludwig Erhard, 'had explicitly
committed herself to what was called a 'social market economy', and as a result
soon outstripped the victorious nations in prosperity. These events ushered in
an unprecedented period of great prosperity which for a time made it seem
probable that an essentially liberal economic régime might again durably
establish itself in western and central Europe. In the intellectual sphere,
too, the period brought renewed efforts to restate and improve the principles
of liberal politics. But the endeavours to prolong the prosperity and to secure
full employment by means of the expansion of money and credit, in the end
created a world‑wide inflationary development to which employment so
adjusted itself that inflation could not be discontinued without producing
extensive unemployment. Yet a functioning market economy cannot be maintained
under accelerating inflation, if for no other reason than because governments
will soon feel constrained to combat the effects of inflation by the control of
prices and wages. Inflation has always and everywhere led to a
directed economy, and it is only too likely that the commitment to an
inflationary policy [131] will mean the destruction of the market
economy and the transition to a centrally directed totalitarian economic and
political system.
At present the defenders of the classical
liberal position have again shrunk to very small numbers, chiefly economists.
And the name 'liberal' is coming to be used, even in Europe, as has for some
time been true of the USA, as a name for essentially socialist aspirations,
because, in the words of J. A. Schumpeter, 'as a supreme but unintended
compliment, the enemies of the system of private enterprise have thought it
wise to appropriate the label'.
