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Liberalism is a political ideology that promotes freedom of the individual, democracy, tolerant society and free-market capitalism. There are two types; modern and classical liberalism. Modern liberalism and classical liberalism are similar to an extent. In modern liberalism, individuals became free by the use of state or government for the benefit of society as a whole whereas, in classical liberalism, freedom was achieved through restricting the power of government, by diminishing the idea of ‘divine right’ of the monarchs. These branches of liberalism have the same core ideas yet their approaches to endorse them differ significantly.
Both classical and modern liberals believe that each individual is unique, independent and rational therefore individualism is an aspect central to both. They regard individualism as the essential feature of politics and society and regard the claims of social groups and collective bodies as less important. For example, classical liberal John Stuart Mill believed in the ‘harm principle’ where he asserted that individuals should be free to do anything except harm other people. This suggests that individuals should be left to govern themselves when it concerns self regarding actions (affecting only the person undertaking the action). This was also outlined in his book ‘On Liberty’ which later became known as ‘negative freedom’ (absence of restraint on an individual). Similarly, modern liberal Betty Friedan argued that women had been restricted and prevented from being as free as men as they were trapped inside societal expectations which was the primary reason for their underachievement, therefore undermining the concept of individualism, hence liberalism. This links to the theme of society where women were expected to fulfil domestic roles rather than pursue careers which restricted their opportunity of becoming more independent and self-reliant. Thus, even though classical liberals believe in negative liberty and modern liberals, like Betty Friedan, believe in positive liberty, the notion of individual freedom is predominant in both.
Both classical and modern liberals agree that the state should be ‘constitutional’ in nature, which limits and disperses political power. They both agree on a form of separation of powers and believe that powers in individual branches of government should be laid out. They also think that a ‘contract’ between government and the governed should be cemented by a formal constitution which should be preceded by extensive discussion and consensus over what government should do and how it should do it. In this way, the constitutional rule is in stark contrast to the arbitrary rule characteristic of monarchical states, where rulers claimed they possessed the ‘divine right’, meaning that they justified doing whatever they pleased, using whatever method they wished. For this reason, a constitutional government may be described as a limited government. This brings into mind the liberal ideas, classical liberal John Locke explored in ‘Two Treatises of Government’; Social contract theory and Limited government. Locke did not accept the traditional view that the state was God-given or the monarchs had a ‘divine right’ to govern. His idea of a social contract theory wherein society, state and government is based on a voluntary agreement or contract limited the government as they represented the interests of the people by gaining their ongoing consent, limiting government power. This limited nature of the state would be achieved by dispersing its power between the executive, legislature and judiciary leading to a better-dispersed state. Hence, although classical and modern liberals disagree on the details, they fundamentally believe in a constitutional state to limit government power.
Both classical and modern liberals believe in a market-based capitalist society. They argue that capitalism is the best economic system because it reflects the liberal conviction that private property being a natural right, complement liberal individualism through economic self-striving and is seem to benefit everyone, in keeping with liberal optimism and belief in progress. Though, they do endorse different approaches to capitalism. Classical liberals’ support for negative liberty and a minimal state, as well as their optimistic view of human nature, let them endorse laissez-faire capitalism. For example, classical liberal Adam Smith argued that laissez-faire capitalism, operating through the ‘invisible hand’ of market forces retain the capacity to make individuals and society more prosperous. That is as long as the state adopted a ‘hands-off’ approach to the economy meaning taking a laissez-faire (let-it-happen) approach. Otherwise, the wealth of successful individuals would 'trickle down’ to the rest of society improving the lives of the rest of the population. For this reason, Smith advocated the end of tariffs and duties which had ‘protected’ domestic producers to promote free-trade globally and bring about the ‘wealth of nations’. Under such conditions, countries and their business communities could enlarge in unrestricted trade to their mutual benefit. This laissez-faire capitalism links to the theme of human nature as it rests on egotistical individualism and human rationalism/virtue; the latter prevented destructive selfishness and competition. However, modern liberals advocate government or state intervention (enabling state) in the economy, drawing on Keynesianism, or John Keynes’s ideas. They maintain that the capitalist economy has to be preserved but the free market is not self-regulating since it is prone to cyclical slums, which brings mass unemployment and consequent loss of individual freedom hence the state or government is required to guide the economy and regulate demand to deliver sustainable economic growth and maintain employment. To prevent a slump, governments should manage the level of demand in the economy to preserve full employment. When facing a slump, governments should introduce public spending programs to create jobs and stimulate the economy meaning that this Keynesian economic approach was partly designed to prevent economic depression. Thus, although both classical and modern liberals believe in a market-based capitalist society, their approaches to endorse it differs massively as classical liberals argue that under the laissez-faire capitalism, the ‘invisible hand’ of market forces delivers prosperity to individuals and society whereas modern liberals maintain that the free market is self-regulating and susceptible to cyclical slumps, leading to mass unemployment and loss of individual liberty.
In evaluating to what extent modern and classical liberalism are similar, it should be noted that they both possess fundamental features they seek to promote such as individual rights, civil liberties and free enterprise, even though their methods may differ.