The Many Stripes of Liberalism

In my last post I gave a critical assessment of conservatism.  My main point was that in its effort to preserve established traditions and authority, conservatism may become an impediment to social progress and it is ill-prepared to adjust to developments that challenge its preference for the known and tried.  I now turn to liberalism and its own complications.

If conservatism believes in the wisdom of established traditions and order, liberalism believes in the individual and trusts that individual freedom and self-actualization will also secure the good of the whole.  The linchpin in the relationship between the individual and the whole (especially the state) is consent.  That’s why liberalism is associated with democratic governance.  Consent is what makes the individual to cede part of his freedom to the law and order of the state.  Very aptly, Jean Jacques Rousseau said that when individuals make their own laws, to obey them means to obey themselves.

To leave, however, humans to their own designs may have harmful consequences for them, individually or as a whole.  Assuming that individuals are rational and knowledgeable beings allows us to expect they are capable to weigh the consequences of their choices to themselves and the whole and choose wisely.  That was the liberalism that came out of the Enlightenment; it was built on human rationality and knowledge and a social contract that recognized the right of consent to the governed. 

But even in the era of Enlightenment, not everybody believed that reason and knowledge could be trusted.  This skeptical version of liberalism found expression in the American Constitution, which adopted the system of indirect representation.  Differing perceptions regarding the capacity of the individual to engage in civic political participation have resulted in political systems that grant different degrees of political empowerment.  Curtailing political rights on the basis of property, race or gender were expressions of that early skepticism in the exercise of liberty.   Thus, liberalism can ironically be the privilege of the few.

Over time, liberalism has evolved to recognize more individual freedoms.  The modern liberal tradition (originating with John Locke) initially aimed at liberating the individual from religious authority and prejudice, from tyrannical government, and economic serfdom.  The French Revolution expanded liberalism to include protection of civil and human rights.  Over the years, the breadth of human rights has itself expanded to mean full political participation and equality regardless of race, gender, social or economic status as well as freedom of sexual and gender orientation.  How far these freedoms go is always subject to cultural variations and the tension between individual-centric and socio-centric attitudes.

The many shades of liberalism can be also seen in the organization of the economy.  In the liberal economic tradition from Adam Smith to Friedrich Hayek and Milton Friedman, the paradigm of economic freedom is that of autonomous individuals, who acting out of self-interest manage to solve the economic problem of production and distribution and they do so with as little government interference as possible.  This type of economic liberalism, also called economic libertarianism, considers opportunities and, especially outcomes, the result of individual abilities, work ethic, and prudent decisions. 

By the end of the 19th century, libertarianism was challenged by the strand of new liberalism, which, in the U.S., ushered in the Progressive Era.  What came of that strand were the New Deal in the U.S. and, under the influence of socialist ideas, the welfare-state economy and democratic socialism in Europe.  The premise of new liberalism was its distrust in the fairness of opportunities and outcomes and the possible harm of self-centered liberalism on the common good.  That more socio-centric liberalism saw economic outcomes associated with poverty, sickness, illiteracy, and social decay as detrimental to the capacity (even the right) of the individual to act as a free agent – think of Roosevelt’s freedom from want.  Therefore, it is the duty of the government to set the individual free from certain debilitating conditions regardless of individual abilities or fortunes.    

Because liberalism can apply to different areas of human activity and thought, it can split a person’s stance toward it.  A person can believe in state regulation of the economy and also have liberal social and moral values.  Or consider the American Constitution with its distrust of the individual to directly make political choices (the case of Electors) while it grants individuals full agency in economic choices.  

The pitfalls of liberalism can be found in its extreme forms of certainty for moral and epistemological superiority and the positive role of top-down governance.  The current criticism of liberalism in America focuses on attempts by liberals in the academy, the media and the arts to impose their understanding of correct social and political thought and speech in general.  Although the freedom of thought and beliefs has also suffered in the hands of illiberal American movements (a topic for another post) it is now the liberals that stand accused of practicing some form of a cancel culture on their opponents.  

The tension between individual-centric and socio-centric liberalism is another difficult challenge to liberalism.  Favoring individual freedom too much is vulnerable to unchecked and irresponsible excesses that can harm the whole.  Too much preoccupation with the collective interest can lead to excessive top-down governance that goes beyond the consent of citizens. 

Finally, global problems arising due to threats from climate change and pandemics or the disruptive effects of new technologies, are as serious a challenge to liberalism (how much freedom to cede) as they are to conservatism (how much loss in tradition and authority to tolerate).

Notwithstanding these drawbacks, liberalism has been a positive force for human progress and its prerequisite of consent allows it to reflect the values, concerns and aspirations of the governed.  It does that by moving the needle either toward the freedom of the individual or toward the interests of the whole.  The balance is not always perfect but it is better than the alternative.

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Author: George Papaioannou

Distinguished Professor Emeritus (Finance), Hofstra University, USA. Author of Underwriting and the New Issues Market. Former Vice Dean, Zarb School of Business, Hofstra University. Board Director, Jovia Financial Federal Credit Union.

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