Liberalism – Yesterday and Today

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October 6, 2009 by D Stack

By the end of the 19th century, some unforeseen but serious consequences of the Industrial Revolution in Europe and North America had produced a deepening disenchantment with the principal economic basis of classical liberalism—the ideal of a market economy. The main problem was that the profit system had concentrated vast wealth in the hands of a relatively small number of industrialists and financiers, with several adverse consequences. First, great masses of people failed to benefit from the wealth flowing from factories and lived in poverty in vast slums. Second, because the greatly expanded system of production created many goods and services that people often could not afford to buy, markets became glutted and the system periodically came to a near halt in periods of stagnation that came to be called depressions. Finally, those who owned or managed the means of production had acquired enormous economic power that they used to influence and control government, to manipulate an inchoate electorate, to limit competition, and to obstruct substantive social reform. In short, some of the same forces that had once released the productive energies of Western society now restrained them; some of the very energies that had demolished the power of despots now nourished a new despotism.

Because they appreciated the real achievements of the market system, modern liberals sought to modify and control the system rather than to abolish it. They saw no reason for a fixed line eternally dividing the private and public sectors of the economy; the division, they contended, must be made by reference to what works. The spectre of regimentation in centrally planned economies and the dangers of bureaucracy even in mixed economies deterred them from jettisoning the market and substituting a putatively omnicompetent state. On the other hand—and this is a basic difference between classical and modern liberalism—most liberals came to recognize that the operation of the market needed to be supplemented and corrected. The new liberals asserted, first, that the rewards dispensed by the market were too crude a measure of the contribution most people made to society and, second, that the market ignored the needs of those who lacked opportunity or who were economically exploited.

– Excerpted from “liberalism.” Encyclopædia Britannica. 2009. Encyclopædia Britannica Online. 06 Oct. 2009 <>.

Of late there’s a lot of talk about the evils of the liberal agenda and how it is designed to lead to a socialist and/or fascist state. It is worth noting that the latter two entities are contradictory, but I’d prefer to focus on liberalism itself and why I have come to be a supporter of it. The initial definition of liberalism, as given by Encyclopædia Britannica is:

Political and economic doctrine that emphasizes the rights and freedoms of the individual and the need to limit the powers of government.

This is what most people tend to view as classical liberalism and most Americans, from Barrack Obama to John McCain to Ayn Rand’s fictional John Galt would subscribe to this.

However, as the article I quoted at the beginning of this post indicates, the Industrial Revolution resulted in an extremely unequal society, one which makes the modern divisions between rich and poor, while indeed serious, seem trivial in comparison. The economic system of the age was one of laissez-faire. The government took no action interfering with business. While many became rich as a result of this system, far more faced crushing poverty. Indeed, this is one of the reasons I find myself having problems with the libertarian economic model — it seems to me this was a time when that model was allowed to exist unrestrained and it resulted in a society I would not want to live in.

The modern liberal position attempts to mitigate this inequity. However, it posits that a centrally planned economy is undesirable. One need only look at the late Soviet Union to see how well that works. But the market left to its own devices leads to the inequities modern liberalism attempts to address.

Is this right? And is it legal? I would argue the answer to both is yes.

Let me address the legal issue first. As far as entitlement programs go, the US Supreme Court has ruled in favor of the Constitutionality of them. In 1937 the Supreme Court heard challenges to the old age pension and unemployment insurance aspects of social security in Helvering vs. Davis, Steward Machine Company, and Carmichael vs. Southern Coal & Coke Co. and Gulf States Paper. In all three of these the Supreme Court ruled in favor of the entitlement programs. This is the precedent which would make challenging new entitlements difficult.

Now is it right. Right is a nebulous perspective. But I argue it most certainly is. While it is true that it is possible for one to arise above the circumstance of his birth, it is awfully difficult. Where you start is a good indicator of where you will wind up. It would therefore seem very right to make certain that those born at the bottom have every opportunity to succeed — even if it costs more money in taxpayer dollars than providing the same opportunity for those born into extreme wealth. This includes insuring excellent public schools, daycare credits for children of single parents (especially teens still in high school), health care for the young, etc. I would view this as the easiest thing to justify. Is it right to deny this opportunity to someone based on accident of birth?

I would argue that other aspects of liberal policy such as social security, unemployment benefits, guaranteed minimum wage, universal health care, safe working conditions, etc. are also just as right. Should the very wealthy have a greater right to good health? Should someone whose employer shuts down face poverty and loss of health benefits? It would be nice if charity could be used as the sole means of securing these, but in a society as large as ours that does not seem a practical solution.

Does this take us on a slippery slope? Does that mean people have a right to a plasma tv? A fancy car? To be provided for by the minority class of hard workers whose earnings are taken from them at gunpoint (paraphrasing Ayn Rand)? I would say certainly not. What I advocate is a government which insures that people have a right to life, liberty, and the pursuit of happiness. And the Constitution does grant Congress the power to secure those:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States…

While the Declaration of Independence does not determine the Constitutionality of any law, it certainly can be used as a guideline for what is right, especially with its declaration of the inalienable rights of life, liberty, and the pursuit of happiness. The right to life seems to clearly point to some form of universal health care. Was that in the mind of the framers of the Declaration of Independence? Of course not. Nor were modern medical techniques. Just like wiretaps could not be imagined by drafters of the Bill of Rights.

The right to a pursuit of happiness implies opportunity. This is where I derive much of my justification for what I would call “fairness”. Good public schools to get you started right. Unemployment insurance sufficient to keep you secure in bad times.  The ability to earn a wage sufficient to meet your basic needs with some opportunity for bettering yourself and your family.

Does this conflict with liberty? I’d argue no. Those who declared independence from Great Britain did not deny the power of their government to tax, They argued that Parliament lacked the authority to tax them. They had no say in the composition of Parliament. At the same time, while the government can coerce payment of a tax, it is your right to refuse any such benefits you might be entitled to. Can you acquire superior health care on your own? Go for it. Go to a fancy private school? Fine, go for it. What I would argue though is that guaranteed services must have enough quality to guarantee reasonable opportunity and quality of life.

And none of this is to deny a role in the private sector. I myself work in a competitive industry. Competition can push towards excellence. And where it does so it should be embraced. But competition can also trample over people. And this is an area where the government should assist the people.

I should close with a frank acknowledgment that realizing all I have discussed is easy. It is certain that there are times  and places where the government interferes too much. It is always a balancing act.


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