Liberalism

2008/9 Schools Wikipedia Selection. Related subjects: Systems of government

Liberalism refers to a broad array of related ideas and theories of government that consider individual liberty to be the most important political goal. Modern liberalism has its roots in the Age of Enlightenment.

Broadly speaking, liberalism emphasizes individual rights and equality of opportunity. Different forms of liberalism may propose very different policies, but they are generally united by their support for a number of principles, including extensive freedom of thought and speech, limitations on the power of governments, the rule of law, the free exchange of ideas, a market or mixed economy, and a transparent system of government. All liberals — as well as some adherents of other political ideologies — support some variant of the form of government known as liberal democracy, with open and fair elections, where all citizens have equal rights by law.

Liberalism rejected many foundational assumptions that dominated most earlier theories of government, such as the Divine Right of Kings, hereditary status, and established religion. Social progressivism, the belief that traditions do not carry any inherent value and social practices ought to be continuously adjusted for the greater benefit of humanity, is a common component of liberal ideology. Liberalism is also strongly associated with the belief that human society should be organized in accordance with certain unchangeable and inviolable rights. Different schools of liberalism are based on different conceptions of human rights, but there are some rights that all liberals support to some extent, including rights to life, liberty, and property.

Within liberalism there are two major streams of thought which compete over the use of the term "liberal" and have been known to clash on many issues as they differ on their understanding of what constitutes freedom. Classical liberals, believe that the only real freedom is freedom from coercion. As a result they see state intervention in the economy as a coercive power that restricts the economic freedom of individuals and favour laissez-faire economic policy. They oppose the welfare state. Social liberals argue that governments must take an active role in promoting the freedom of citizens. They believe that real freedom can only exist when citizens are healthy, educated, and free from dire poverty. They generally favour the right to an education, the right to health care, and the right to a minimum wage. Some also favour laws against discrimination in housing and employment, laws against pollution of the environment, and the provision of welfare, including unemployment benefit and housing for the homeless, all supported by progressive taxation.

Etymology and historical usage

The word "liberal" derives from the Latin liber ("free, not slave"). It is widely associated with the word "liberty" and the concept of freedom. Livy's History of Rome from Its Foundation describes the struggles for freedom between the plebeian and patrician classes. Marcus Aurelius in his Meditations writes about "...the idea of a polity administered with regard to equal rights and equal freedom of speech, and the idea of a kingly government which respects most of all the freedom of the governed... ." Largely dormant during the vicissitudes of the Middle Ages, the struggle for freedom began again in the Italian Renaissance, in the conflict between the supporters of free city states and supporters of the Pope or the Holy Roman Emperor. Niccolò Machiavelli, in his Discourses on Livy, laid down the principles of republican government. John Locke in England and the thinkers of the French Enlightenment articulated the struggle for freedom in terms of the Rights of Man.

The Oxford English Dictionary (OED) indicates that the word liberal has long been in the English language with the meanings of "befitting free men, noble, generous" as in liberal arts; also with the meaning "free from restraint in speech or action", as in liberal with the purse, or liberal tongue, usually as a term of reproach but, beginning 1776–88 imbued with a more favorable sense by Edward Gibbon and others to mean "free from prejudice, tolerant."

The first English language use to mean "tending in favour of freedom and democracy", according to the OED, dates from about 1801 and comes from the French libéral, "originally applied in English by its opponents (often in Fr. form and with suggestions of foreign lawlessness)". An early English language citation: "The extinction of every vestige of freedom, and of every liberal idea with which they are associated."

The American War of Independence established the first nation to craft a constitution based on the concept of liberal government, especially the idea that governments rule by the consent of the governed. The more moderate bourgeois elements of the French Revolution tried to establish a government based on liberal principles. Economists such as Adam Smith, in The Wealth of Nations (1776), enunciated the liberal principles of free trade. The editors of the Spanish Constitution of 1812, drafted in Cádiz, may have been the first to use the word liberal in a political sense as a noun. They named themselves the Liberales, to express their opposition to the absolutist power of the Spanish monarchy.

Beginning in the late 18th century, liberalism became a major ideology in virtually all developed countries.

Trends within liberalism

Within the above framework, there are deep, often bitter, conflicts and controversies among liberals. Emerging from those controversies, out of classical liberalism, are a number of different trends within liberalism. As in many debates, opposite sides use different words for the same beliefs, and sometimes use identical words for different beliefs. For the purposes of this article, we will use " political liberalism" for the support of (liberal) democracy (either in a republic or a constitutional monarchy), over absolute monarchy or dictatorship; " cultural liberalism" for the support of individual liberty over laws limiting liberty for patriotic or religious reasons; " economic liberalism" for the support of private property, over government regulation; and " social liberalism" for the support of equality under the law, and relief provided by the government from suffering caused by poverty or natural disaster. By "modern liberalism" we mean the mixture of these forms of liberalism found in most First World countries today, rather than any one of the pure forms listed above.

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Liberalism wagers that a state... can be strong but constrained – strong because constrained... Rights to education and other requirements for human development and security aim to advance equal opportunity and personal dignity and to promote a creative and productive society. To guarantee those rights, liberals have supported a wider social and economic role for the state, counterbalanced by more robust guarantees of civil liberties and a wider social system of checks and balances anchored in an independent press and pluralistic society. – Paul Starr, sociologist at Princeton University, The New Republic, March 2007

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Some principles liberals generally agree upon:

• Political liberalism is the belief that individuals are the basis of law and society, and that society and its institutions exist to further the ends of individuals, without showing favour to those of higher social rank. Magna Carta is an example of a political document that asserted the rights of individuals even above the prerogatives of monarchs. Political liberalism stresses the social contract, under which citizens make the laws and agree to abide by those laws. It is based on the belief that individuals know best what is best for them. Political liberalism enfranchises all adult citizens regardless of sex, race, or economic status. Political liberalism emphasizes the rule of law and supports liberal democracy.

• Cultural liberalism focuses on the rights of individuals pertaining to conscience and lifestyle, including such issues as sexual freedom, religious freedom, cognitive freedom, and protection from government intrusion into private life. John Stuart Mill aptly expressed cultural liberalism in his essay "On Liberty," when he wrote,

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The sole end for which mankind are warranted, individually or collectively, in interfering with the liberty of action of any of their number, is self-protection. That the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant.

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Cultural liberalism generally opposes government regulation of literature, art, academics, gambling, sex, prostitution, abortion, birth control, terminal illness, alcohol, and cannabis and other controlled substances. Most liberals oppose some or all government intervention in these areas. The Netherlands, in this respect, may be the most liberal country in the world today.

However, some trends within liberalism reveal stark differences of opinion:

• Economic liberalism, also called classical liberalism or Manchester liberalism, is an ideology which supports the individual rights of property and freedom of contract, without which, it argues, the exercise of other liberties is impossible. It advocates laissez-faire capitalism, meaning the removal of legal barriers to trade and cessation of government-bestowed privilege such as subsidy and monopoly. Economic liberals want little or no government regulation of the market. Some economic liberals would accept government restrictions of monopolies and cartels, others argue that monopolies and cartels are caused by state action. Economic liberalism holds that the value of goods and services should be set by the unfettered choices of individuals, that is, of market forces. Some would also allow market forces to act even in areas conventionally monopolized by governments, such as the provision of security and courts. Economic liberalism accepts the economic inequality that arises from unequal bargaining positions as being the natural result of competition, so long as no coercion is used. This form of liberalism is especially influenced by English liberalism of the mid 19th century. Minarchism and anarcho-capitalism are forms of economic liberalism. (See also Free trade, Neo-liberalism, liberalization)

• Social liberalism, also known as new liberalism (not to be confused with 'neoliberalism') and reform liberalism, arose in the late 19th century in many developed countries, influenced by the utilitarianism of Jeremy Bentham and John Stuart Mill. Generally speaking, social liberals support free trade and a market-based economy in which the basic needs of all individuals are met. Furthermore, socially progressive ideas are commonly advocated by social liberals, based on the idea that social practices ought to be continuously adapted in such a manner as to benefit the substantive freedom of all members of society. According to the tenets of this form of liberalism, as explained by writers such as John Dewey and Mortimer Adler, since individuals are the basis of society, all individuals should have access to basic necessities of fulfillment, such as education, economic opportunity, and protection from harmful macro-events beyond their control. To social liberals, these benefits are considered rights. ; this concept of positive rights is qualitatively different from the emphasis that economic liberals place on negative rights. Social liberals believe that in order for all people to have substantive liberty, the provision of basic necessities to all citizens ought to be ensured by the political community through means such as taxation, towards ends such as public education, universal healthcare, infrastructure, and social security.

Social liberalism advocates some restrictions on matters that economic liberals view as fundamental rights. For example, social liberals may favour minimum wage laws, which classical liberals view as violating of the liberty to contract. Social liberals argue that power disparities cause contracts to favour the rich. To which economic liberals reply, "Then don't sign."

The struggle between economic freedom and social equality is almost as old as the idea of freedom itself. Plutarch, writing about Solon (c. 639 – c. 559 BCE), the lawgiver of ancient Athens, wrote:

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The remission of debts was peculiar to Solon; it was his great means for confirming the citizens' liberty; for a mere law to give all men equal rights is but useless, if the poor must sacrifice those rights to their debts, and, in the very seats and sanctuaries of equality, the courts of justice, the offices of state, and the public discussions, be more than anywhere at the beck and bidding of the rich.

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All forms of liberalism claim to protect freedom. They disagree only about the true meaning of freedom. Liberalism is so widespread in the modern world that most Western nations at least pay lip service to individual liberty as the basis for society.

Comparative influences

Early Enlightenment thinkers contrasted liberalism with the authoritarianism of the Ancien Régime, feudalism, mercantilism and the Roman Catholic Church. Later, as more radical philosophers articulated their thoughts in the course of the French Revolution and throughout the nineteenth century, liberalism defined itself in contrast to socialism and communism, although modern European liberal parties have often formed coalitions with social-democratic parties. In the 20th century liberalism defined itself in opposition to totalitarianism and collectivism. Some modern liberals have rejected the classical Just War theory, which emphasizes neutrality and free trade, in favour of multilateral interventionism and collective security.

Liberalism favors the limitation of government power. Extreme anti-statist liberalism, as advocated by Frederic Bastiat, Gustave de Molinari, Herbert Spencer, and Auberon Herbert, is a radical form of liberalism called anarchism (no state at all) or minarchism (a minimal state, or sometimes called "the nightwatchman state.") Most liberals claim that a government is necessary to protect rights, yet the meaning of "government" can range from simply a rights protection organization to a Weberian state. Recently, liberalism has again come into conflict with those who seek a society ordered by religious values: radical Islamism often rejects liberal thought in its entirety, and radical Christian sects in Western liberal-democratic states — especially the US — often find their moral opinions coming into conflict with liberal laws and ideals.

Development of liberal thought

Origins of liberal thought

The focus on liberty as an essential right of people within the polity has been repeatedly asserted throughout history. These include are the conflicts between the plebeians and patricians in ancient Rome and the struggles of Italian city states against the Papal States. The republics of Florence and Venice had forms of elections, the rule of law, and pursuit of free enterprise through much of the 1400s until domination by outside powers in the 16th century. The Dutch resistance against (Spanish) Catholic oppression during the Eighty Years' War is often — despite its refusal to give freedom to Catholics — considered a predecessor of liberal values. Other precursors to liberalism include certain aspects of the Magna Carta and medieval Islamic ethics.

The modern ideology of liberalism can be traced back to the humanism which challenged the authority of the established church during the Renaissance, and the Whigs of the Glorious Revolution in Great Britain, whose assertion of their right to choose their king can be seen as a precursor to claims of popular sovereignty. However, movements generally labeled as truly "liberal" date from the Enlightenment, particularly the Whig party in Britain, the philosophes in France, and the movement towards self-government in colonial America. These movements opposed absolute monarchy, mercantilism, and various kinds of religious orthodoxy and clericalism. They were also the first to formulate the concepts of individual rights under the rule of law, as well as the importance of self-government through elected representatives.

The definitive break with the past was the conception that free individuals could form the foundation for a stable society. This idea is generally dated from the work of John Locke (1632-1704), whose Two Treatises on Government established two fundamental liberal ideas: economic liberty, meaning the right to have and use property, and intellectual liberty, including freedom of conscience, which he expounded in A Letter Concerning Toleration (1689). However, he did not extend his views on religious freedom to Roman Catholics . Locke developed further the earlier idea of natural rights, which he saw as "life, liberty and property". His "natural rights theory" was the distant forerunner of the modern conception of human rights. However, to Locke, property was more important than the right to participate in government and public decision-making: he did not endorse democracy, because he feared that giving power to the people would erode the sanctity of private property. Nevertheless, the idea of natural rights played a key role in providing the ideological justification for the American revolution and the French revolution.

On the European continent, the doctrine of laws restraining even monarchs was expounded by Charles de Secondat, Baron de Montesquieu, whose The Spirit of the Laws argues that "Better is it to say, that the government most conformable to nature is that which best agrees with the humour and disposition of the people in whose favour it is established," rather than accept as natural the mere rule of force. Following in his footsteps, political economist Jean-Baptiste Say and Destutt de Tracy were ardent exponents of the "harmonies" of the market, and in all probability it was they who coined the term laissez-faire. This evolved into the physiocrats, and to the political economy of Rousseau.

The late French enlightenment saw two figures who would have tremendous influence on later liberal thought: Voltaire who argued that the French should adopt constitutional monarchy, and disestablish the Second Estate, and Rousseau who argued for a natural freedom for mankind. Both argued, in different forms, for changes in political and social arrangements based around the idea that society can restrain a natural human liberty, but not obliterate its nature. For Voltaire the concept was more intellectual, for Rousseau, it was related to intrinsic natural rights, perhaps related to the ideas of Diderot.

Rousseau also argued the importance of a concept that appears repeatedly in the history of liberal thought, namely, the social contract. He rooted this in the nature of the individual and asserted that each person knows their own interest best. His assertion that man is born free, but that education was sufficient to restrain him within society, rocked the monarchical society of his age. His assertion of an organic will of a nation argued for self-determination of peoples, again in contravention of established political practice. His ideas were a key element in the declaration of the National Assembly in the French Revolution, and in the thinking of Americans such as Benjamin Franklin and Thomas Jefferson. In his view the unity of a state came from the concerted action of consent, or the "national will". This unity of action would allow states to exist without being chained to pre-existing social orders, such as aristocracy.

A main contributing group of thinkers whose work would become considered part of liberalism are those associated with the " Scottish Enlightenment", including the writers David Hume and Adam Smith, and the German enlightenment philosopher Immanuel Kant.

David Hume's contributions were many and varied, but most important was his assertion that fundamental rules of human behaviour would overwhelm attempts to restrict or regulate them, in A Treatise of Human Nature, 1739-1740. One example of this is in his disparaging of mercantilism, and the accumulation of gold and silver. He argued that prices were related to the quantity of money, and that hoarding gold and issuing paper money would only lead to inflation.

Although Adam Smith is the most famous of the economic liberal thinkers, he was not without antecedents. The physiocrats in France had proposed studying systematically political economy and the self organizing nature of markets. Benjamin Franklin wrote in favour of the freedom of American industry in 1750. In Sweden-Finland the period of liberty and parliamentary government from 1718 to 1772 produced a Finnish parliamentarian, Anders Chydenius, who was one of the first to propose free trade and unregulated industry, in The National Gain, 1765. His impact has proven to be lasting particularly in the Nordic area, but it also had a powerful effect in later developments elsewhere.

The Scotsman Adam Smith (1723–1790) expounded the theory that individuals could structure both moral and economic life without direction from the state, and that nations would be strongest when their citizens were free to follow their own initiative. He advocated an end to feudal and mercantile regulations, to state-granted monopolies and patents, and he promulgated " laissez-faire" government. In The Theory of Moral Sentiments, 1759, he developed a theory of motivation that tried to reconcile human self-interest and an unregulated social order. In The Wealth of Nations, 1776, he argued that the market, under certain conditions, would naturally regulate itself and would produce more than the heavily restricted markets that were the norm at the time. He assigned to government the role of taking on tasks which could not be entrusted to the profit motive, such as preventing individuals from using force or fraud to disrupt competition, trade, or production. His theory of taxation was that governments should levy taxes only in ways which did not harm the economy, and that "The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state." He agreed with Hume that capital, not gold, is the wealth of a nation.

Immanuel Kant was strongly influenced by Hume's empiricism and rationalism. His most important contributions to liberal thinking are in the realm of ethics, particularly his assertion of the categorical imperative. Kant argued that received systems of reason and morals were subordinate to natural law, and that, therefore, attempts to stifle this basic law would meet with failure. His idealism would become increasingly influential, since it asserted that there were fundamental truths upon which systems of knowledge could be based. This meshed well with the ideas of the English Enlightenment about natural rights.

Revolutionary liberalism

These thinkers, however, worked within the political framework of monarchies and in societies in which the class system and an established church were the norm. Although the earlier Wars of the Three Kingdoms had resulted in the republican Commonwealth of England between 1649 and 1660, the idea that ordinary human beings could structure their own affairs had been suppressed with the Restoration and then remained theoretical until the American and French Revolutions. (The Glorious Revolution of 1688 is often cited as a precedent, but it replaced one monarch with another monarch. It had, however, weakened the power of the monarch and strengthened the British Parliament which had refused to accept the Jacobite succession.) The republican ideas of Radicals influenced these two late 18th century revolutions which became the examples which later revolutionary liberals followed. Both used as their philosophical justification the Rights of Man or the rights given, in the words of Henry St. John, by "Nature and Nature's God". They rejected both tradition and established power.

Thomas Paine, Thomas Jefferson, and John Adams would be instrumental in persuading their fellow Americans to revolt in the name of life, liberty and the pursuit of happiness, echoing Locke, but with one important change (opposed by Alexander Hamilton). Jefferson replaced Locke's word "property" by "the pursuit of happiness". The "American Experiment" would be in favour of democratic government and individual liberty.

James Madison was prominent among the next generation of political theorists in America, arguing that in a republic self-government depended on setting "interest against interest", thus providing protection for the rights of minorities, particularly economic minorities. The American constitution instituted a system of checks and balances: federal government balanced against states' rights; executive, legislative, and judicial branches; and a bicameral legislature. The goal was to insure liberty by preventing the concentration of power in the hands of any one man. Standing armies were held in suspicion, and the belief was that the militia would be enough for defense, along with a navy maintained by the government for the purpose of trade.

The French Revolution overthrew monarch, aristocratic social order, and an established Roman Catholic Church. These revolutionaries were more vehement and less compromising than those in America. A key moment in the French Revolution was the declaration by the representatives of the Third Estate that they were the "National Assembly" and had the right to speak for the French people. During the first few years the revolution was guided by liberal ideas, but the transition from revolt to stability was to prove more difficult than the similar American transition. In addition to native Enlightenment traditions, some leaders of the early phase of the revolution, such as Lafayette, had fought in the U.S. War of Independence against Britain, and brought home Anglo-American liberal ideas. Later, under the leadership of Maximilien Robespierre, a Jacobin faction greatly centralized power and dispensed with most aspects of due process, resulting in the Reign of Terror. Instead of an ultimately republican constitution, Napoleon Bonaparte rose from Director, to Consul, to Emperor. On his death bed he confessed "They wanted another Washington", meaning a man who could militarily establish a new state, without desiring a dynasty. Nevertheless, the French Revolution would go farther than the American Revolution in establishing liberal ideals with such policies as universal male suffrage, national citizenship, and a far reaching " Declaration of the Rights of Man and Citizen", paralleling the American Bill of Rights. One of the side-effects of Napoleon's military campaigns was to carry these ideas throughout Europe.

The examples of United States and France were followed in many other countries. The usurpation of the Spanish monarchy by Napoleon's forces in 1808 led to autonomist and independence movements across Latin America, which often turned to liberal ideas as alternatives to the monarchical-clerical corporatism of the colonial era. Movements such as that led by Simón Bolívar in the Andean countries aspired to constitutional government, individual rights, and free trade. The struggle between liberals and corporatist conservatives continued for the rest of the century in Latin America, with anti-clerical liberals like Benito Juárez of Mexico attacking the traditional role of the Roman Catholic Church.

The transition to liberal society in Europe sometimes came through revolutionary or secessionist violence, and there were repeated explicitly liberal revolutions and revolts throughout Europe in the first half of the 19th century. However, in Britain and many other nations, the process was driven more by politics than revolution, even if the process was not entirely tranquil. The anti-clerical violence during the French Revolution was seen by opponents at the time, and for most of the 19th century, as explicitly liberal in origin. At the same time many French liberals too were victim of the Jacobin terror.

With the coming of romanticism, liberal notions moved from being proposals for reform of existing governments, to demands for change. The American Revolution and the French Revolution would add "democracy" to the list of values which liberal thought promoted. The idea, that the people were sovereign, and capable of making all necessary laws and enforcing them, went beyond the conceptions of the Enlightenment. Instead of merely asserting the rights of individuals within the state, all of the state's powers were derived from the nature of man ( natural law), given by God (supernatural law), or by contract ("the just consent of the governed".) This made compromise with previously autocratic orders far less likely, and the resulting violence was justified, in the minds of monarchists, to restore order.

The contractual nature of liberal thought to this point must be stressed. One of the basic ideas of the first wave of thinkers in the liberal tradition was that individuals made agreements and owned property. This may not seem a radical notion today, but at the time most property laws defined property as belonging to a family or to a particular figure within it, such as the "head of the family". Obligations were based on feudal ties of loyalty and personal fealty, rather than an exchange of goods and services. Gradually, the liberal tradition introduced the idea that voluntary consent and voluntary agreement were the basis for legitimate government and law. This view was further advanced by Rousseau with his notion of a social contract.

Between 1774 and 1848, there were several waves of revolutions, each revolution demanding greater and greater primacy for individual rights. The revolutions placed increasing value on self-governance. This could lead to secession – a particularly important concept in the revolutions which ended Spanish control over much of her colonial empire in the Americas, and in the American Revolution. European liberals, particularly after the French Constitution of 1793, thought that democracy, considered as majority rule by propertyless men, would be a danger to private property, and favored a franchise limited to those with a certain amount of property. Later liberal democrats, like de Tocqueville, disagreed. In countries where feudal property arrangements still held sway, liberals generally supported unification as the path to liberty. The strongest examples of this are Germany and Italy. As part of this revolutionary program, the importance of education, a value repeatedly stressed from Erasmus onward, became more and more central to the idea of liberty.

Liberal parties in many European monarchies agitated for parliamentary government, increased representation, expansion of the franchise where present, and the creation of a counterweight to monarchical power. This political liberalism was often driven by economic liberalism, namely, the desire to end feudal privileges, guild or royal monopolies, restrictions on ownership, and laws which did not permit the full range of corporate and economic arrangements being developed in other countries. To one degree or another, these forces were seen even in autocracies such as Turkey, Russia and Japan. As the Russian Empire crumbled under the weight of economic failure and military defeat, it was the liberal parties who took control of the Duma, and in 1905 and 1917 began revolutions against the government. Later Piero Gobetti would formulate a theory of "Liberal Revolution" to explain what he felt was the radical element in liberal ideology. Another example of this form of liberal revolution is from Ecuador where Eloy Alfaro in 1895 lead a "radical liberal" revolution that secularized the state, opened marriage laws, engaged in the development of infrastructure and the economy.

Splits within liberalism

Role of the State

By the end of the 19th century, a growing body of liberal thought asserted that, in order to be free, individuals needed access to the requirements of fulfillment, including protection from exploitation and education. In 1911, L.T. Hobhouse published Liberalism, which summarized the new liberalism, including qualified acceptance of government intervention in the economy, and the collective right to equality in dealings, what he called "just consent."

Opposed to these changes was a strain of liberalism which became increasingly anti-government, in some cases adopting anarchism. Gustave de Molinari in France and Herbert Spencer in England were prominent.

Natural rights vs. utilitarianism

The German Wilhelm von Humboldt developed the modern concepts of liberalism in his book The Limits of State Action. John Stuart Mill popularized and expanded these ideas in On Liberty (1859) and other works. He opposed collectivist tendencies while still placing emphasis on quality of life for the individual. He also had sympathy for female suffrage and (later in life) for labor co-operatives.

One of Mill's most important contributions was his utilitarian justification of liberalism. Mill grounded liberal ideas in the instrumental and pragmatic, allowing the unification of subjective ideas of liberty gained from the French thinkers in the tradition of Jean-Jacques Rousseau and the more rights-based philosophies of John Locke in the British tradition.

Liberalism and democracy

The relationship between liberalism and democracy may be summed up by Winston Churchill's famous remark, "...democracy is the worst form of Government except all those other forms..." In short, there is nothing about democracy per se that guarantees freedom rather than a tyranny of the masses. The coinage liberal democracy suggests a more harmonious marriage between the two principles than actually exists. Liberals strive after the replacement of absolutism by limited government: government by consent. The idea of consent suggests democracy. At the same time, the founders of the first liberal democracies feared mob rule, and so they built into the constitutions of liberal democracies checks and balances intended to limit the power of government by dividing those powers among several branches. For liberals, democracy is not an end in itself, but an essential means to secure liberty, individuality and diversity.

Liberalism and radicalism

In various countries in Europe and Latin-America the nineteenth century and the beginning of the twentieth century show the existence of a radical political tendency next to or as successor of a more doctrinal liberal tendency. In some countries the radical tendency is a variant of liberalism that is less doctrinal and more willing to accept democratic reforms than traditional liberals. In the United Kingdom the Radicals unite with the more traditional liberal Whigs into the Liberal Party. In other countries, these left wing liberals form their own radical parties with various names (e.g. in Switzerland and Germany (the Freisinn), Bulgaria, Denmark, Spain and the Netherlands but also Argentina and Chile. This doesn't mean that all radical parties were formed by left wing liberals. In the French political literature it is normal to make clear separation between liberalism and radicalism in France. In Serbia liberalism and radicalism had and have almost nothing in common. But even the French radicals were aligned to the international liberal movement in the first half of the twentieth century, in the Entente Internationale des Partis Radicaux et des Partis Démocratiques similaires

Liberalism and the great depression

Despite some dispute whether there was an actual laissez-faire capitalist state in existence at the time , the Great Depression of the 1930s shook public faith in "laissez-faire capitalism" and "the profit motive," leading many to conclude that the unregulated markets could not produce prosperity and prevent poverty. Many liberals were troubled by the political instability and restrictions on liberty that they believed were caused by the growing relative inequality of wealth. Key liberals of this persuasion, such as John Dewey, John Maynard Keynes, and Franklin D. Roosevelt, argued for the creation of a more elaborate state apparatus to serve as the bulwark of individual liberty, permitting the continuation of capitalism while protecting the citizens against its perceived excesses. Some liberals, including Hayek, whose work The Road to Serfdom remains influential, argued against these institutions, believing the Great Depression and Second World War to be individual events, that, once passed, did not justify a permanent change in the role of government.

Key liberal thinkers, such as Lujo Brentano, Leonard Trelawny Hobhouse, Thomas Hill Green, John Maynard Keynes, Bertil Ohlin and John Dewey, described how a government should intervene in the economy to protect liberty while avoiding socialism. These liberals developed the theory of modern liberalism (also "new liberalism," not to be confused with present-day neoliberalism). Modern liberals rejected both radical capitalism and the revolutionary elements of the socialist school. John Maynard Keynes, in particular, had a significant impact on liberal thought throughout the world. The Liberal Party in Britain, particularly since Lloyd George's People's Budget, was heavily influenced by Keynes, as was the Liberal International, the Oxford Liberal Manifesto of 1947 of the world organization of liberal parties. In the United States and in Canada, the influence of Keynesianism on Franklin D. Roosevelt's New Deal and on William Lyon Mackenzie King has led modern liberalism to be identified with American liberalism and Canadian Liberalism.

Other liberals, including Friedrich August von Hayek, Milton Friedman, and Ludwig von Mises, argued that the great depression was not a result of "laissez-faire" capitalism but a result of too much government intervention and regulation upon the market. In Friedman's work, "Capitalism and Freedom" he elucidated government regulation that occurred before the great depression including heavy regulations upon banks that prevented them, he argued, from reacting to the markets' demand for money. Furthermore, the U.S. Federal government had created a fixed currency pegged to the value of gold. This pegged value created a massive surplus of gold, but later the pegged value was too low which created a massive migration of gold from the U.S. Friedman and Hayek both believed that this inability to react to currency demand created a run on the banks that the banks were no longer able to handle, and that and the fixed exchange rates between the dollar and gold both worked to cause the Great Depression by creating, and then not fixing, deflationary pressures. He further argued in this thesis, that the government inflicted more pain upon the American public by first raising taxes, then by printing money to pay debts (thus causing inflation), the combination of which helped to wipe out the savings of the middle class.

Only in 1974 was Hayek awarded the Nobel Prize in Economics for, among other reasons, his theory of business cycles and his conception of the effects of monetary and credit policies and for being "one of the few economists who gave warning of the possibility of a major economic crisis before the great crash came in the autumn of 1929."

Liberalism against totalitarianism

In the mid-20th century, li