The Brainchild of Earnest Gentlemen

What went wrong with liberalism. Or, from Cobden to Dukakis in four generations.

These are confusing times for people who are fond of political labels. Most Americans admire Eastern European “liberals.” They’re the folks championing economic and political reform. Their principles, however, often resemble what passes for conservatism in the United States. Soviet “conservatism,” on the other hand, is closet Stalinism.

But if Americans applaud Eastern European “liberalism,” they are considerably less enamored of the domestic brand. On the eve of the last presidential election, the conservative-to-liberal ratio stood at between 1.4 and 2.2 to 1, depending on the survey. Michael Dukakis may not have been able to balance the Massachusetts budget, but he knew how to count. The Duke studiously avoided the “L-word” until the closing days of the campaign.

For most Americans, liberalism means that government abdicates responsibilities it’s expected to assume-protecting people’s lives and property from the likes of Willie Horton and takes on new, unwarranted responsibilities. These new activities tend to be costly, so the second hallmark of contemporary liberalism is high spending, high taxes, and high deficits.

The word liberalism still implies an admirable commitment to civil liberties. But it once meant not only the freedoms conveniently identified in the Bill of Rights but a smaller, less intrusive government. It meant political and economic freedom. An understanding of the manner in which Western liberalism changed, and the rationales for this make-over, is essential to understanding the contradictory sentiments the term elicits today.

Even those who know that liberalism isn’t what it used to be may not appreciate the insidious modifications introduced by a handful of little-known thinkers around the turn of the century. The revisionists meant well, but so did Frankenstein. The history of liberalism is the story of how superficially plausible, even promising, transplant operations altered a political philosophy beyond recognition and helped create a prodigious and predatory golem.

The story begins-and mostly unfolds-in Britain. Once upon a time there was a small island that became the richest and most powerful nation in history. The sun never set on its empire, the islanders boasted. But its proudest claim was that enlightened men and women all over the world looked to it for the key to their own well-being. The island nation, in an uncanny way, seemed to combine the two things people valued most-freedom and prosperity.

But 100 years after its heyday, people no longer looked to it for intellectual or moral leadership. People no longer even bought its products, except for a few luxury goods. Dissension set in among the island’s shabby inhabitants, once considered the exemplars of civilized behavior. Class and racial antagonisms were never fiercer, strikes never more bitter, crowd violence never uglier. The tone of public dialogue became at once more shrill and more coarse. The sun had set, and in the growing darkness the inhabitants were disfigured by resentment.

Textbooks commonly offer two explanations for this downward slide. The first, the more popular, stresses the inevitability of the decline following the rapid industrial expansion of Germany and the United States. The second explanation is a bit more sophisticated. What happened was a failure of entrepreneurship. The culture was to blame. The British middle classes were too snooty. They sent their sons to Eton and Harrow, where they learned to despise their fathers. And hard work. And business savvy. The middle classes got co-opted by their betters.

There’s some truth in both explanations. But something else was happening that fewer historians have troubled themselves with. Government was growing-at first modestly, then by leaps and bounds. Government spending as a percentage of GNP increased from 9 percent in 1870 (the beginning of the end) to 52 percent in 1979 (the beginning of the beginning, for those believing in Thatcherism). The percentage of that spending devoted to social welfare rose from less than 35 percent to more than 80 percent, from 3.2 percent to 41.8 percent of GNP. By 1979, the government employed nearly a quarter of the work force, a 10-fold increase over the percentage administering the sprawling empire a century earlier.

You can’t pocket 52 percent of people’s income without offering them some plausible rationale. This was the task of the revamped liberalism, which was called “New Liberalism.” New Liberal dogmas became political common sense, a status they retained until the 1980s. A philosophy of state expansion replaced one that had set strict limits on the size of government.

In 1905, the jurist Albert Venn Dicey defined the core belief of traditional liberalism this way: “Every person is in the main and as a general rule the best judge of his own happiness. Hence legislation should aim at the removal of those restrictions on the free action of an individual which are not necessary for securing the like freedom on the part of his neighbors.”

There’s controversy about the extent to which laissez faire was advocated in 19th-century Britain. Historians enjoy pointing out that regulatory legislation increased throughout this period. (The first Factory Act passed in 1801 .) Pure laissez faire, these critics say, closely resembles the traditional conservative doctrine of English country gentlemen, who jealously defended their local prerogatives against the king’s encroachments. Some historians have even suggested that the whole idea of a period of laissez-faire dominance is a late 19th-century myth concocted by defensive classical liberals and their foreign admirers.

But these counter-arguments present their own problems. First of all, when people share an assumption, they rarely discuss it. If laissez faire was indeed conventional wisdom by 1840, it needed no impassioned defenses of its premises, and historians are unlikely to stumble across them.

More important, critics of the idea that there was an “age of liberalism” have defined liberalism too narrowly. Adam Smith’s “system of natural liberty” prescribes three duties for the sovereign: defense against foreign invaders, the administration of justice, and “the duty of erecting and maintaining certain works and certain public institutions which it can never be for the interest of any individual or small number of individuals to erect and maintain; because the profit would never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.”

Smith went on to spell out what he had in mind: Not only should government provide roads, canals, a mint, etc., but it should sponsor military training and education as well. Whatever the merits of his arguments, they were accepted not only by every classical political economist but by all liberal politicians. To reduce liberalism to a caricatured version of laissez faire, and then to show that this was neither espoused nor honored as a principle of legislation, just isn’t cricket.

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