Liberalism today is associated with social liberalism and social democracy, yet it is a word which once was representative of liberty in both the cultural and economic sense. To fully understand what liberalism represented, it is important to understand its effect on modern society. In the 17th century in England, the ideas of early liberalism (the right to vote, religious tolerance and equality under the law) gained relevance, culminating in the Glorious Revolution of 1688. The civil wars of the 17th century had established that the monarch could not rule without consent of parliament, but 1688 established parliament as the ruling power of England. Philosopher John Locke, regarded as the founder of this school of thought, proposed that the government must receive consent from the governed in order to govern, straying from the concept of a divine right to govern. The basis of this proposition, outlined in Two Treatises, was that all men are created equal by the creator and that without their consent, a government could be overthrown.

Locke’s legacy was not only seen in England, but in the American Revolution. The Declaration of Independence is echoic of Locke, declaring the right to ‘life, liberty, and the pursuit of happiness’ as inherent to man, endowed by the creator. The formation of the federal government occurred after the writing of the Constitution (and subsequently the Bill of Rights) outlining the role of government and the way in which it should be restricted. The Constitution of the United States is the embodiment of liberalism, or as this form of liberalism is now referred as: classical liberalism.

The meaning of liberalism shifted at the end of the early 18th century, after classical liberalism was combined with what became new liberalism in England. John Stuart Mill was a major contributor to this school of thought, mixing passionate defense of free speech and limits on the power of government through constitutionalism, with a more socialist-leaning economic philosophy. Despite originally being in support of free markets and opposed to progressive taxation, he later shifted towards socialism. His legacy on liberalism led to reforms in the early 20th century under the preposition that liberty was only achievable with a level of economic and social well-being. The people’s budget of 1909, introduced higher takes on the rich and the introduction of the welfare state, or wealth distribution, as well as passing acts like the National Insurance Act of 1911, in large part as a solution to healthy men to defend the country. Locke’s legacy of equality by the law had lived on, but the then modern ideas of Stuart Mill offered a differing interpretation of Locke’s beliefs.

An analysis of economic thought in liberalism

After over 100 years, the Western world lives with much less wealth inequality and greater social mobility as a result of new liberalism, and the position of their ideological descendants is one of complete support for the preservation of the methods in which this was achieved. Closer to the political center than socialism, liberalism seeks to balance civil liberties with the welfare state. Whilst being in close agreement on social issues, it is on economic issues in which classical liberalism is distinct. People who refer to themselves as classical liberals are in support of making the welfare state smaller, with issues such as deregulation and privatization equally important, believing in a purer form of Locke’s beliefs. It is important to stress that economic liberalism is also supported by many conservatives; therefore the following will merely be an analysis on the economic policy of which classical liberals wish to apply.

The economic theory supported by classical liberals is in contrast to Keynesianism, spanning a mixture of free market schools, varying from the Monetarism of Milton Friedman to the Austrian School, of which Friedrich Hayek is most commonly associated with. For the purpose of presenting an opposing viewpoint to Keynesianism rather than forming an argument on which viewpoint is the best, they will be summarized as economic liberalism, or neoliberalism. Influenced by Friedman and the economic crises of the 1970’s, the governments of Thatcher and Reagan adopted neoliberal ideas, mixed with a conservative approach to social issues and an increase in defense spending.

Neoliberalism offered two changes to the economic consensus that followed the ideas of Stuart Mill. Returning to an emphasis on the free market, this economic philosophy was responsible for tax cuts and massive reductions in regulation, known as supply-side economics, the theory that this would result in economic growth, allowing consumers to benefit from a greater supply of goods at lower prices. Secondly, it was responsible for reduced government spending, therefore reducing the size of the welfare state.

To their opponents, Reagan and Thatcher were responsible for decreasing the wellbeing of society, with wealth inequality growing, with income growth occurring for the upper class yet reducing for the middle and lower-classes. To their supporters, they were responsible for essential economic growth. Since Thatcher, the United Kingdom has had economic growth higher than the other large European countries, in addition to lower unemployment.

This was also the case in Reagan’s government, with the unemployment rate falling 1.6% by the time he left office. Inflation was reduced from 13.5% to 4.1% despite increased interest rates contributing to a brief recession. The most impressive statistic is the misery index, which rates the inflation rate added to the unemployment rate, assuming that higher rates correlate with a poorer economy. At the start of Reagan’s presidency, this was at 19.33 (a lower number is better) which is the worst a president elected since the Second World War had begun with. By reducing this this by 9.61, the change that occurred during Jimmy Carter’s presidency was reversed and Reagan achieved the second best economic growth of the presidents listed, narrowly behind post-WW2 president Harry Truman.

I believe classical liberals have to learn from the philosophy of Stuart Mill and the foundation of new liberalism, as well as the neoliberal economics of Reagan and Thatcher, if they are to present an image for the world which can achieve success. For the success of the economy and for spending to remain at its current rate, government policy should not result in worsening the lives of the middle and working class. The welfare state has been important in the formation of the social order of today, and the social order should not be harmed as it has resulted in the almost complete loss of poverty.

On the other hand, business performs best and can employ more, as shown by Reagan’s presidency, when it is regulated to a minimum, and government performs best when it reduces spending and becomes smaller. Classical liberalism offers a realistic look at the importance of the free market, which allows it to be more successful for everyone, whilst differing from other ideologies by prioritizing more freedom from government in every aspect, in accordance to the inherent rights of the individual outlined by Locke.

The role of government

Classical liberalism promotes smaller government, yet differs from anarcho-capitalism in its beliefs over how small the government should be, essentially serving as the moderate school of libertarian thought. The aforementioned Constitution of the United States and Bill of Rights exemplify the role of government in classical liberalism, and I will use it to propose an image of how a classical liberal society should look. ‘We the People’ are just the first three words of the Constitution, yet they are the foundation of a government based in classical liberalism. These words are the overarching theme of the American political system – the idea that government’s role is to serve its citizens, and not the other way around. Classical liberals believe that this philosophy should be applied in society by not permitting the government to become too big and making sure that government is conducted in the correct manner.

As established, a liberal approach to the economy is best for society in a statistical sense, yet from a moral perspective it is essential as protecting the idea of small government protects the right of the people to be free from unjust government intervention. The right to private property, for example, is a necessity in a classical liberal society, as it guarantees that the state can’t ‘arbitrarily deprive’ people of their property, as defined in Article 17 of the Universal Declaration of Human Rights. This concept is known as a negative right, in addition to cultural ideas spread by early liberalism such as freedom of speech, freedom of religion, freedom of slavery and the right to a fair trial, all of which protect people from a tyrannous government.

The government must exist firstly to serve the people, and secondly to protect liberties, and I believe it is essential to strive to do so in both the cultural and economic sense, using its judgement in accordance to the constitution of its nation to govern in a way which is protective of liberty in all situation, which is the basis for the ideas I propose with regards to the economy and the gradual reduction of government intervention. Without respect for economic freedoms, I believe a country is put on a path away from liberty and towards control. The area in which classical liberals would differ to anarcho-capitalists is that a level of government control is justified, if it is does so in a way that is constitutional. Equally, classical liberals believe this in regards to social issues, and this is where they still align with new liberals in the belief that a level of government control is justified, but should be lowered to an absolute minimum.

Classical Liberalism in modern-day politics

The electoral system is a key area in which classical liberals have historically campaigned for, resulting in universal suffrage. This is an important issue, because government must be representative of the people in a classical liberal society. This is a relevant issue, for example, in America, as the electoral system led to a controversial result in the 2016 election, in which Hillary Clinton won with a majority of votes, but officially lost, as Donald Trump won more votes in key areas decided by the electoral college. Whilst some oppose it as unfair, others support the system as it allows states to be represented and campaigned for rather than the most populous areas, and is protective of the Tenth Amendment – states’ rights.

The Second Amendment declares that ‘a well regulated militia’ is necessary and that the ‘right to bear arms shall not be infringed.’ One of the most controversial issues of our time, especially in America which has some of the most liberal gun laws in the world, the Second Amendment is another defining issue of classical liberalism. The two main arguments against gun control, and usually espoused by classical liberals and libertarians, but also conservatives, are the right to defend private property from not only the state, but other people, and the right to defend yourself from tyranny.

A common theme with gun rights, the electoral system and other social issues is that classical liberals base many views off of a fear of government and a belief that it is a necessary evil. The ‘war on drugs’ should be ended, in the eyes of classical liberals, as it is a prime example in their eyes of government overreach, with jail sentences, for those caught with illegal drugs. Being in unapologetic support of free speech, a surprising difference of opinion has arisen between new and classical liberals, with liberal political parties often advocating for hate speech laws.


In writing about classical liberalism, my main intention has been to make the many differences between the two clear, as I believe that classical liberalism is the answer to many of our current issues. With populism on the rise, it is my fear that the political establishment’s lack of interest in the issues that are most pressing will lead to parties on the radical fringes of populism that do not have a respect for the fundamental rights of people and the role of government – as defined by those who wrote the Constitution – gaining power and support from those who I believe can be served best by the power of liberty. It is my hope that the power of liberty can once again become respected in society and in doing so create a brighter future by looking back at what allowed society to become what it is today and learning from it.

2 thoughts on “The Case for Classical Liberalism

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