“Liberalism Doesn’t Carry the Critique of Capitalism That Progressivism Does“

I’ve been fascinated lately with the meaning of the terms “liberal” and “progressive.” It’s clear that what we now call “liberalism” is really a variant, a side branch of the real thing, and should be more properly named “FDR liberalism” or “social liberalism.” Today’s “liberalism” — FDR-liberalism — is an offshoot of pre-FDR liberalism that diverges from its original meaning in a rather important way, by including a role for government. Prior to FDR, “liberalism” just meant basic free-market capitalism.

That’s why so-called modern (Clintonian) “neoliberals” are so different from FDR liberals, and why they’re so similar to Milton Friedman free-market conservatives. “Classic liberalism” — the pre-FDR version — is best defined below (my paragraphing):

Classical liberalism is a philosophy committed to the ideal of limited government andliberty of individuals including freedom of religion, speech, press, assembly, and free markets.[1]

Classical liberalism developed in the nineteenth century in Western Europe, and theAmericas. Although classical liberalism built on ideas that had already developed by the end of the eighteenth century, it advocated a specific kind of society, government and public policy required as a result of the Industrial Revolution and urbanization.[2]

Notable individuals who have contributed to classical liberalism include Jean-Baptiste Say,Thomas Malthus and David Ricardo.[3] It drew on the economics of Adam Smith, a psychological understanding of individual liberty, natural law and utilitarianism, and a belief in progress.

Classical liberals established political parties that were called “liberal”, although in the United States classical liberalism came to dominate both existing major political parties.[1]There was a revival of interest in classical liberalism in the twentieth century led by Friedrich Hayek and Milton Friedman.[4]

Note the following:

First, the united concepts of “limited government” and “liberty of individuals.” This is the essence of classic liberalism, pre-FDR. Get government off your person; get government out of markets. It’s two parts of one 18th century idea — and I would argue two parts that are in total contradiction to each other, held together only by the arrogance of late-stage (18th century) Calvinism, but that’s for later. (Hint: Read Erich Fromm’s classic Escape from Freedom to see why.)

Second, that those twin concepts are the essence of modern “libertarianism” as well. The labels are similar for a reason.

Third, “classic liberalism” was born in the 18th century with writings by Adam Smith and others, and developed fully in the 19th century, the time of the conversion of farmers, sheep herders and users of “the commons” into property-less, poverty-wage, factory slaves during the first great era of predatory capitalism (ours being the second). Classic liberalism supported those policies and changes.

Fourth, did you see at the end of the quote, the inclusion of the “classic liberal” Hayek and Milton Friedman as brothers-in-thought? They are. When Democrats in the 1930s diverged from “classic liberalism” by admitting a central role for government after all, instead of a limited role — and when this modified “social liberalism” became simply “liberalism” in common parlance — Hayek free-marketeers needed a different name, and post-war Milton Friedman gave them one — “free-market conservatives.”

Fifth, the “neoliberalism” of Bill Clinton, Tony Blair and others (including Hosni Mubarak, by the way) is only “neo” relative to FDR-liberalism. It’s actually a return to pre-FDR liberalism — free markets for all (who can afford to dominate them), and lose those government regulations, please. As the writer says, “in the United States classical liberalism came to dominate both existing major political parties” — but under different labels.

Finally, as many have noted, FDR didn’t have a critique of capitalism. His “liberalism” was a compromise that averted a potential revolution, and preserved capitalism by adding a regulatory regime. (He also added a tax regime aimed at reducing extreme wealth, something modern neoliberals and Friedman free-marketeers alike are dismantling.)

With this in mind, listen to this short excerpt from a recent Virtually Speaking podcast. The historian Kevin C. Murphy discusses his view of the differences between what modern “progressives” believe and what most modern “liberals” believe. The first voice is Murphy; the second is the host, Stuart Zechman. (The full interview is here, and it’s fascinating. Both Murphy and Zechman are good.)

Murphy:

“Liberalism doesn’t carry in its DNA the critique of capitalism that progressivism does.”

And at the close of the clip, Murphy again:

[Near the end of the New Deal era] People who have views about how to change the relationship between government and the economy come to the Keynesian consensus, where instead of trying to change how the pie is divided, they … want to grow the pie.

Which explains why the tax part of the FDR program was the first to be attacked and scuttled.

Zechman disagrees with the first statement above, and they come to a meaning for “liberalism” that satisfies both. But for me, Murphy hits the nail on the head. Liberalism, as vague as the term now is, implies a modified capitalism that reigns in its excesses while accepting its premises.

That’s a compromise, one that some say just doesn’t work. In my view, it’s OK to prefer the compromise; that’s not the issue here. It’s important, however, to recognize that compromise, at least regarding “liberalism” as most people understand it.

Murphy knows his stuff, by the way. He’s the author of a terrific book: Uphill All the Way: The Fortunes of Progressivism 1919-1929. Click and read; it’s nicely chunked out at the link. You can easily hop around as you like.

Side note — Murphy mentions in passing Obama’s recent “income inequality” speech. My thoughts here.