Classical liberalism values individual freedom, private property, and the free market while limiting government power and collective action. It assumes rational actors with self-interest and relies on market forces. It rejects social programs and emphasizes economic freedom. Modern liberalism questions pure economic freedom and seeks to limit the role of wealth in shaping policy while valuing economic equality for other freedoms to have meaning.
Classical liberalism is a political and economic philosophy that emphasizes the importance of individual freedom. It dates back to the 18th century and was originally part of a backlash against mercantilist and statist policies prevailing in many European nations. This version of liberalism emphasizes both individual freedoms and the protection of private property and the free market. Classical liberalism typically seeks to limit the power of government and to limit the ability of groups of people to take collective action that could harm the rights of others.
Hypotheses about human nature
This philosophy is based on a certain set of assumptions about human nature. Supporters of classical liberalism argue that individuals are rational actors but that each individual’s interests are limited to his own profit or security. Larger corporations were thought to function best when those individual interests could be expressed freely, without interference from state or religious organizations.
Rely on market forces
Belief in the importance of property, trade, and the market is central to classical liberalism. This philosophy drew on the ideas of Scottish economist Adam Smith, who argued that collective decisions made in a truly free market were the best possible expression of a society’s needs and wants. Classical liberalism relies on these market forces to make most decisions about resource allocation within an economy.
The belief in the importance of a free market was a major departure from established practice. England had some tradition of free trade, but the economic philosophy of mercantilism dominated much of the European continent. In mercantilism, the state directs economic activity for its own benefit. Individuals benefit – if they benefit at all – indirectly through the growth of state wealth and power. Classical liberalism rejected this philosophy and argued that government should adopt a policy of leaving markets alone whenever possible.
Opposed to social programs
Believers in classical liberalism have also rejected the importance of many social institutions. Charity, in their view, was essentially a distortion of normal market forces and essentially self-defeating. According to proponents of this philosophy, social support networks that protected the lazy or incapable actually damaged the ability of the free market to effectively allocate goods and services.
Economic freedom
Proponents of this system have also been passionate advocates of economic freedom. They placed great value on other forms of freedom and attempted to secure individual freedom to speak, worship, and assemble without government oversight or restriction. This put them at odds with many of the powers that be.
modern liberalism
Modern liberals have often maintained their belief in the importance of individual freedom, but have come to question the role played by pure economic freedom. Classical liberalism served as a powerful defense against state oppression. Proponents of modern social liberalism have often worried that wealthy and powerful individuals might exercise an equally dangerous ability to limit personal freedom, and have sought to limit the role of wealth in shaping policy. They also often believe that some degree of economic equality is necessary for other freedoms and rights to have any real meaning.
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