In terms of the economy the only point on which modern and classical liberals agree is that economic wellbeing should be meritocratic. Classical liberals believe that there needs to be a free market (laissez-faire) and low taxes in order to maintain people’s negative freedom and prevent state interference. Economists such as Adam Smith argued against mercantilism, believing that a free market reflected the freedom of individuals to make their own choices and would maximise pleasure for all. This theory is linked to utilitarianism as it considers people to be self-interested. If everyone is attempting to further their own prosperity then the market will be self-regulating. Modern liberals on the other hand believe that it is necessary for the state to intervene in the economy and regulate it to prevent exploitation and economic inequality. As the market became more complex liberal thinkers believed it was increasingly unlikely that it could be successfully self-regulating. Due the high unemployment levels which resulting from the Depression and the World Wars, the free market was deemed to have failed. Policies of economic intervention were adopted, particularly after the Second World War, based upon Keynesian economics which involves government spending and taxes.
The role of the state is also another issue about which classical and modern liberalism disagree. Classical liberals advocate a minimal state as shown by their belief in the sufficiency of negative liberty. They believe that the state should be limited and have very few functions: its only role should be protection. This involves protecting people from each other and protecting individuals from any accumulation of economic or political power. As long as something was not harmful to anyone it would not be controlled. In contrast modern liberals believe in an enabling state. This means that the state has many functions and there is much state intervention and regulation in order to ensure positive freedom and to prevent economic inequality. However both classical and modern liberals agree that the state is necessary in order to prevent a state of nature, there is a hypothetical consent.
Classical liberals believe that individuals all have natural inalienable rights, as stated by Mill and Jefferson; life, liberty and (disputably) property. This coupled with Bentham’s theory of utilitarianism led classical liberals to view the individual as atomistic and egotistical, working for their own self-interest, specifically material. As the state should be minimal, classical liberals believe that it is up to the individual to look out for themselves. Modern liberals developed on this and used Mill’s utilitarianism to create a more positive view of human nature with people not only acting in their own interests, but having their egoism constrained by some altruism. Modern liberals believe that the individual can flourish and can experience both higher and lower pleasures. T H Green in particular advocated this more positive outlook. Both strands do, however, believe in the importance of individualism.
Another difference between the two strands is their outlook on equality. Though they both support it they define it differently. They both consider political equality to be a necessity and, due to our natural rights there must be some degree of social equality, classical liberals allow for much more inequality, particularly socially, as they believe that everyone is capable of doing what they want and the state should not intervene. Modern liberals think that there should be less economic and social inequality which is why the economy needs to be regulated and why the enabling state creates an equality of opportunity.
However though there are many differences in the ways that classical and modern liberalism attempt to achieve and maintain their core principles, the principles themselves are the same, meaning that although the two strands are made up of different beliefs which will result in different outcomes they are still part of the same ideology. Though the differences between the strands outweigh the differences, they are still more similar than they would be with strands of any other ideology.
by
atfullstretch (student)
