Among the most persistent narratives in modern politics is the idea that liberalism lost its way in the early 20th century, betrayed its roots and principles, and was supplanted by the welfare state philosophy that now bears its name. True liberals, as the narrative runs, decry the socialism of the New Deal, and keep the flame of limited government, free markets, and individual liberty alive as libertarians and small-government conservatives. Variants of this story drove the tax revolts of the late 1970’s and the Reagan Revolution, as well as contemporary efforts such as Grover Norquist’s anti-tax crusade. Democrats and Republicans alike accept this narrative, which has come to structure much of the current attack on New Deal-era social programs and progressive politics in general.
The “lost liberalism” narrative derives, in part, from twentieth century commentators like Joseph Schumpeter and Milton Friedman. In particular, Friedman set up the dilemma of modern liberalism by placing liberty and equality at odds:
The [classical] liberal will therefore distinguish sharply between equality of rights and equality of opportunity, on the one hand, and material equality or equality of outcome on the other…At this point, equality comes sharply into conflict with freedom; one must choose. One cannot be both an egalitarian, in this sense, and a [classical] liberal.1
Or can one? Progressive liberals should consider the possibility that the “lost liberalism” narrative is an oversimplified history, verging on myth. If the dominant narrative is a myth, or fails at the very least to capture the whole truth about classical and modern liberalism, then the attack on modern liberalism by small-government conservatives loses much of its moral force and intellectual basis.
We might start deconstructing the lost liberalism narrative by noting a significant difference between the richness of classical liberal writers versus the narrowness and relative aridity of modern classicals such as Friedman and Friedrich Hayek. Hayek, in his Constitution of Liberty, defines liberalism as an anti-statist philosophy incorporating limited government and exclusively protecting so-called negative rights — protections afforded citizens against government action. Yet we find classical theorists far more balanced in their view towards state power. Montesquieu, in The Spirit of the Laws, imagined that sovereign state power was crucial to guaranteeing freedom from traditional forms of oppression, including private injustice among citizens. No less a capitalist icon than Adam Smith agreed, as did the architect of our Constitution, James Madison, when he wrote:
It is of great importance in a republic not only to guard the society against the oppression of its rulers, but to guard one part of society against the injustice of the other part.2
Classical liberals were concerned about more than individual liberty from government power; at the core of liberalism is a concern about concentrated power — any power — and its effects on human freedom. This concern naturally causes liberals to favor limited government and the rule of law, but it should also keep liberals from treating private economic power as “natural” and beyond the scope of community and political decision-making. Private power, however, is explicitly off limits in the narrow version of liberalism on offer by modern libertarians and would-be inheritors of the liberal tradition.
In defending the narrowing of liberalism to protection of private property and free markets, contemporary “classical liberals” draw upon the deep defense of property and the market offered by Madison and others. Yet the defense of private property offered by Hume, Locke, and others is far from absolute, despite the modern libertarian rhetoric to the contrary. Locke, for example, wrote that “In Governments the Laws regulate the right of property, and the possession of land is determined by positive constitutions.” 3 Madison’s defense of private property also displayed large doses of pragmatism; if property owners are not protected from fellow citizens as well as the government, they will not willingly cooperate in self-rule. 4
Nor does the market fare any better in comparisons between true classical and modern classical writers. Neither Locke nor even Adam Smith fetishized the market to the degree seen in Friedman’s Capitalism and Freedom. If anything, the emergence of commercial markets and free trade were seen as a means of redistributing wealth away from landed aristocracies and systems of primogeniture which virtually guaranteed noble monopolies on land and wealth.
And in the latter example we see liberalism in its original historical context. Classical liberals were using the power of newly formed, republican governments and commercial trade to assault ancient tyrannies. Markets were good because they opened the economy to all citizens, regardless of station or inheritance. Limited government was good because it prevented the abuses of public power seen in aristocratic societies and absolute monarchies. Redistribution, in those days, was considered a fine goal if it meant redistributing wealth from those who had wielded it as power for centuries.
As the power of the ancient tyrannies waned, new threats became uppermost in the mind of many liberals. The development of social democracy and outright socialism in Europe caused a hardening of laissez-faire commitments among late nineteenth century liberal theorists. It is possible to trace much of the modern classical view of liberalism, and the liberalism characteristic of European political parties, to this era. Yet liberals in America continued to respond in innovative ways to new threats. In particular, the American experience of capitalist monopolies in the Gilded Age caused a resurgence of the ancient concern over the tyranny of unchecked private power. Rapid industrialization and rapid immigration-led population growth resulted in massive shifts in income disparities, of a type never before seen in America. The former reality of small business, family ownership, and individual effort were replaced within several generations by massive corporations, concentrations of private wealth and power, and the typical abuses seen in the pursuit of the same. And liberalism did not stand still. One sees reactions to abuses of private power beginning with the Populist movements after the Civil War, continuing in the Progressive Era and achieving real power during the New Deal. The result, as we see today, is twofold. Regulatory capitalism is designed to provide protection against the enormous distortions that concentrated economic power can create in the market. And welfare liberalism aims to provide a decent minimum to those who are the losers in what has become the only economic game in town.
I began this essay by pointing out that the New Deal is often portrayed as the moment where classical, or true liberalism was lost in America. My aim has been to show that if the New Deal is a departure from anything, it is a departure only from modern caricatures of liberalism, or of the excessively laissez-faire version of liberalism popular among elites in the Gilded Age. Progressives own a proud, and yes, liberal narrative stretching from John Locke through James Madison to Franklin Roosevelt. And I suggest that if we hope to seize control of the modern political narrative, we start by reclaiming our past, and stamping out the notion that liberalism took a detour in 1932.
For the essence of liberalism, and especially progressive liberalism, is not just private property, representative government, markets, or any specific scheme of rights. Each is merely a method for reaching a goal, and each method has been crucial at various points in our history. None should be considered uppermost, but neither should any be considered obsolete. The essence of liberalism is the search for a politics in which liberty and equality are sufficiently balanced so as to avoid the danger of the many absolutisms which threaten us, whether public or private. For only by avoiding absolutisms can we achieve, preserve, and defend the liberty to which we aspire.