The Classic Liberals and their mistake

In his book “For a New Liberty: The Libertarian Manifesto” Murray N. Rothbard gives us a little history of the Classical Liberals of the 17th and 18th century. He wrote the following:

The libertarian creed emerged from the “classical liberal” movements of the seventeenth and eighteenth centuries in the Western world, specifically, from the English Revolution of the seventeenth century. This radical libertarian movement, even though only partially successful in its birthplace, Great Britain, was still able to usher in the Industrial Revolution there by freeing industry and production from the strangling restrictions of State control and urban government-supported guilds. For the classical liberal movement was, throughout the Western world, a mighty libertarian “revolution” against what we might call the Old Order — the ancien régime — which had dominated its subjects for centuries. This regime had, in the early modern period beginning in the sixteenth century, imposed an absolute central State and a king ruling by divine right on top of an older, restrictive web of feudal land monopolies and urban guild controls and restrictions. The result was a Europe stagnating under a crippling web of controls, taxes, and monopoly privileges to produce and sell conferred by central (and local) governments upon their favorite producers. This alliance of the new bureaucratic, war-making central State with privileged merchants — an alliance to be called “mercantilism” by later historians — and with a class of ruling feudal landlords constituted the Old Order against which the new movement of classical liberals and radicals arose and rebelled in the seventeenth and eighteenth centuries.

The Classical Liberals sought to overturn the Old Order and level the playing field for all people to the extent that they could, which meant that the State was to be kept extremely small and its tax revenues were to be kept as small as possible. The classical liberals saw that taxes enabled the State and gave it power over the people and they knew that power corrupts.

I once saw a list of beliefs of those of us who urge voluntary cooperation. This list is also a fairly good description of what the Classical Liberals were urging in the 17th and 18th century.

1. Private ownership of property; not only of personal possessions but also of land, homes, natural resources, tools, and capital goods;
2. Contracts and voluntary exchange of goods and services, by individuals or groups, on the expectation of mutual benefit;
3. Totally free competition among all buyers and sellers — in price, quality, and all other aspects of exchange — without ex ante restraints or burdensome barriers to entry;
4. Entrepreneurial discovery, undertaken not only to compete in existing markets but also in order to discover and develop new opportunities for economic or social benefit; and
5. Spontaneous order, recognized as a significant and positive coordinating force — in which decentralized negotiations, exchanges, and entrepreneurship converge to produce large-scale coordination without, or beyond the capacity of, any deliberate plans or explicit common blueprints for social or economic development.

The above list is essentially the Classical Liberal vision of laissez-faire capitalism and it is essentially the librarian view as well. The problem is that the list allows for the State in the view of a Classical Liberal. This is the idea of a “night watchman” state where the government is constrained to a few well defined and necessary duties. The government of the US started out just that way under the Articles of Confederation but look at how short a time it took to see power accumulate at the center. After just nine years of the Articles of Confederation we saw the enactment of the present Constitution and then centralized power really took off. From a “night watchman” start, we now have a central government with seemingly unlimited power to do as it pleases. Many recognize that we live in a police state now.

I have seen many people try to put a date on where America really went wrong. A favorite is the war between the states which meant that no state could secede from the union and “vote with its feet” any longer. Others say that it was WWI and the emergence of Empire by the US. Still others blame the reaction to the great depression by Franklin D. Roosevelt. I reject all the various guesses as to where we went wrong. I think that the new nation went wrong by forming a government in the first place. There was no way to write down some rules on a piece of paper that would constrain power-seeking men over time. Sooner or later the new government would grow teeth and bite the people. History is a testament to my view.

After centuries of experience most people continue to believe that “all good things flow from the compassionate nature of government.” Has the record of the actions of governments in the 20th century not shown us the true nature of the beast?

I am convinced that the Classic Liberals have been on the right path, but they need to recognize that the state is far too dangerous to ever make use of. We need to let people interact via mutual free-will consent. People will need protection since men are not Angels, and so private companies will arise to offer that protection to their customers. The free market can provide anything that the state claims to provide — and without pointing a gun at your head to make you buy it.