Politics: Liberalism - The Economy

This is a quiz based on how Liberals view the economy, which is covered in the AQA A-Level Politics Specification: John Locke (1632-1704) Adam Smith (1723-1790) Thomas Jefferson (1743-1826) Mary Wollstonecraft (1759-1797) John Stuart Mill (1806-1873) Samuel Smiles (1812-1904) Herbert Spencer (1820-1903) Thomas Hill Green (1836-1882) William Beveridge (1879-1963) John Maynard Keynes (1883-1946) Liberal Government (1906-1910) John Rawls (1921-2002) Betty Friedan (1921-2006) Economic Liberalism
Quiz by billyn
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Last updated: February 18, 2024
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First submittedNovember 14, 2023
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John Locke (1632-1704)
This Classical Liberal believed the 'state of nature' was to be underpinned by 'natural rights' - including the right to private property. Thus, state policy should respect this 'natural right' and arbitrate effectively between individuals competing for trade and resources.
Herbert Spencer (1820-1903)
This Classical Liberal in 'Man Versus the State' (1884), feared that the 'feeble' minority could justify the extension of state power, and therefore (what he saw as) an erosion of the majority's freedom, he sought to apply the principles of 'natural selection'.

In what became known as 'social Darwinism', he restated the Classical Liberal belief in a minimal state and negative freedom, claiming that this would lead to 'the survival of the fittest' and the gradual elimination of those unable to enjoy the benefits of individualism. The eventual outcome would be a society where rational self-reliance was the norm and where individual freedom could thrive.
Economic Liberalism
Another term for capitalism, an economic system which emerged in Europe in the late seventeenth century. The liberal aspect of capitalism stems from 3 factors:
1. Private property - early liberals like Locke considered a 'natural right'.
2. Individualistic in theory - involves individual traders cooperating and competing.
3. Thought to be ultimate benefit to all - thus reveals liberalism's eternal optimism and belief in progress.
Betty Friedan (1921-2006)
This social liberal and liberal feminist believed free-market capitalism could be an ally of female emancipation, if allied to legislation precluding sexual discrimination.
Liberal Government (1906-1910)
This government, led by Herbert Asquith and his chancellor David Lloyd-George (1868-1945), brought in the 'people's budget of 1908, introducing a state pension, designed to liberate people from the financial problems of old age and was funded by increased taxation of property owners.
This provided one of the earliest instances of modern liberalism in action in the UK.
John Rawls (1921-2002)
This Modern Liberal argued in, 'A Theory of Justice' (1971), that the core liberal principle of 'foundational equality' meant individuals required not just formal equality under the law and constitution but also social and economic equality. This was necessary to ensure the just society, where all lives could be rich and fulfilled. This could be provided only by a significant redistribution of wealth via an enabling state, with extensive public spending and progressive taxation. In simpler terms, free-market capitalism should be tempered by the state's obligation to advance its poorest citizens.

He argued that such a redistribution of wealth wasn't a 'surrender to socialism', but perfectly consistent with liberal principles. To do this, he constructed a series of philosophical conditions:
-'the original position': whereby individuals would be asked to construct from scratch a society they judged to be superior to the one they lived in currently. Central to such an exercise would be questions about how wealth and power should be distributed.
-'veil of ignorance': whereby individuals would have no preconceptions about the sort of people they themselves might be in this new society. They might, for example, be White or they might be from an ethnicity majority; they might be rich or they might be poor.

When faced with such conditions, human nature - being rational and empathetic - would lead individuals to choose a society where the poorest members fared significantly better than in present society. From a liberal angle, he argued the key point here was that this 'fairer' society, where inequalities were reduced, was the one individuals would choose.

So an enlarged state, with higher taxation and significant wealth redistribution, was indeed consistent with liberalism's historic stress upon government by consent.

Important to note that he argued although most individuals would indeed choose to improve the lot of the poorest, they would still want considerable scope for individual liberty, self-fulfilment and, thus, significant inequalities of outcome. Therefore, he didn't argue that the gap between the richest and the poorest should necessarily be narrowed.
Adam Smith (1723-1790)
This Classical Liberal economist wrote 'The Wealth of Nations' (1776). He argued that capitalism, via the 'invisible hand' of market forces, had a limitless capacity to enrich society and the individuals within it. The wealth acquired by individuals would accordingly 'trickle down' to the rest of the population - just as long as the state took a laissez-faire (let-it-happen) approach to the workings of a market economy.

Thus, he advocated the end of tariffs and duties, which had 'protected' domestic producers, and the spread of 'free-trade' between nation-states and their commercial classes.

These ideas were radical in the UK at the time, but became orthodox in the century that followed.
William Beveridge (1879-1963)
This Modern Liberal social scientist whose 1942 report, 'Social Insurance and Allied Services', proved the bedrock of Britain's post-war 'welfare state'. Developing the ideas first mooted by T.H. Green, he predicted that individuals in the post-war world faced 'five giants' threatening their freedom and individual potential: poverty, unemployment, poor education, poor housing and poor health care. Thus, he argued that these threats could be overcome only through a major extension of state provision (such as the national health service).
Mary Wollstonecraft (1759-1797)
This Classical Liberal argued in 18th century England, both society and state implied women were not rational, denying them individual freedom and formal equality. Women were rarely allowed land ownership or remunerative employment and sacrificed what little individualism they had in order to become wives.
Therefore, a free-market economy would be energised by the enterprise of liberated women.
John Maynard Keynes (1883-1946)
This Liberal economist, although committed to the maintenance of a capitalist economy, saw the economic depression of the 1920s and 1930s which convinced him that neither individual freedom nor the survival of capitalist economies and constitutional states was served by the cynical nature of laissez-faire capitalism. Mass unemployment, he feared, not only deprived millions of their individual freedom; it also paved the way for utterly illiberal doctrines such as fascism and communism.

In his key work, 'The General Theory of Employment, Interest, and Money' (1936), he therefore argued that the state must constantly 'steer' the economy and manage demand so as to secure full employment, without which individual liberty would be difficult. His brand of dirigisme, or state-directed capitalism, duly influenced a series of western governments in the mid-twentieth century, shaping President F.D. Roosevelt's 'New Deal' in the USA in the 1930s, and the economic strategy of every UK government between 1945 and 1979.
Thomas Hill Green (1836-1882)
This Modern Liberal argues a free market economy is the most conducive to individualism, but it can threaten equality of opportunity:
-He was prepared to argue that modern, advanced societies made a mockery of the idea that individuals were innately autonomous - the nature of modern economics and society meant individuals were increasingly subject to socio-economic forces beyond their control.
-Such forces would then make it impossible for affected individuals to seek self-determination and self-realisation, even though they might not have caused the socio-economic problems now restricting their liberty.
John Stuart Mill (1806-1873)
This Liberal's ideas are seen as the bridge between Classical Liberalism and Modern Liberalism. He initially believed laissez-faire capitalism was vital to progress, individual enterprise and individual initiative:
-His initial economic philosophy supported free markets and argued that progressive taxation penalised those who worked harder.
-However, he later altered his views toward a more socialist bent, adding chapters to his Principles of Political Economy in defence of a socialist outlook, and defending some socialist causes, including the radical proposal that the whole wage system be abolished in favour of a co-operative wage system.
Samuel Smiles (1812-1904)
This Classical Liberal argued in his book 'Self Help' (1859) that self-reliance was still perfectly feasible for most individuals, including members of the new working-class. He acknowledged that industrialised societies made it harder for individuals to be self-reliant: an increasing number were faceless employees in a bulging factory system. Yet he argued that, in seeking to overcome the new obstacles, individuals would merely be challenged rigorously and, in the process, become more fully developed.

If 'self-help were usurped by state help', he argued, 'human beings would remain stunted, their talents unknown, and their liberty squandered'.
Thomas Jefferson (1743-1826)
One of the USA's Founding Fathers, summarised the case for the minimal state by noting:
'The government that is best is that which governs least... when government grows, our liberty withers.'
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