The concept of ''liberalism'' emerged in the early 19th century in European political literature. For the first time this term was used in Cadiz Constitution in Spain in 1811, when a group of politicians defined the constitution drawn up by them as liberal. Later this concept was included in the English, French, and then in all the European languages. The term ''liberalism’' comes from the Latin ''liberalis'' which means freedom (Merriam-Webster Dictionary). Today, liberalism is a complex system that characterizes the economic and political relations in the country. Initially, liberalism was a purely political notion; economic sphere, although emphasized, was not of a primary importance. Conventionally liberal thought can be divided into three stages: the political, economic and neoliberal. The main thesis of the essay is an assertion that the economic and political liberal ideas are interrelated and have the same ideological background. The neo-liberal debate at the end of the essay will show a clear synthesis of these two currents of thought.
Political liberal thought
The main tenets of liberalism, which express the philosophical and ideological basis for the idea, were developed in the anti-feudal struggle, which aimed at liberation from caste and guild restrictions as well as from the authority of the church. Liberalism is organically linked with the development of capitalism in Europe in the XVII-XVIII centuries, and in the early stages was a means of struggle between the Third Estate and absolutism. Therefore, the interests and aspirations of the merchants and owners of large and small factories, which sought to power after the anti-feudal revolutions, were initially determined the content of liberalism. The emerged class of merchants and industrialists needed economic freedom and social institutions in which their representatives would be elected and allow independence from the whims of the monarch, aristocracy and clerics. Liberal political theory originated in the late 17th century on the basis of the idea of the social contract. The original idea belonged to Thomas Hobbes, who was not liberal. Hobbes’ ‘’Leviathan’’ does not contain the fundamental concepts of liberalism and justifies the monarchy rather than a liberal state. John Locke was the first to use the idea of a social contract to define natural human rights in a liberal sense. Locke's political concepts were developed in the "Two Treatises of Government" (1689), which sets out a theory of constitutional (parliamentary) monarchy. It serves as the foundation of social and political order established in the England under king’s power limited by the parliament and laws. Locke 's theory of natural rights and the social contract justify the inevitability of such an institution of the government. Unlike Hobbes, Locke transferred not all but only a part of the "natural rights" (justice, external relations, etc.) to the government for the sake of effective protection of all other human rights, especially the rights of ownership. Locke also developed and proved the concept of separation of powers into legislative, executive and federal (Locke 188). The federal power, according to Locke, was in charge of international relations. He gave the priority in making decisions to parliament not the government. The government itself must obey the law. People remain the undisputed sovereign and have the right not to support or even subvert irresponsible government. Locke played an exceptionally large role in the development of natural rights’ theory with its most important provisions - the right of the individual to life, liberty, and property (Locke 57-61). The next significant liberal thinker was Charles-Louis de Montesquieu. Montesquieu tried to explain the origin of the state, to reveal the nature of law and, on the basis of social reforms, to advance the project. In his main work "The Spirit of the Laws" (1748), he argued that the climate, the soil and the size of the territory determine people’s moral experience, the nature of the laws and form of government. Montesquieu put forward three basic forms of government: republic, monarchy and dictatorship (Montesquieu 37-47). His ideal form of government was constitutional monarchy, but he also noted that the republican form of government is just as natural (Montesquieu 22). The thinker regarded despotic form of government with abhorrence. Montesquieu is credited for proof of concept of the separation of powers between the legislative, executive and judicial powers (instead of the federal, as John Locke did). In the separation of powers he sees a guarantee of the citizens’ security from lawlessness and abuse of power in the state. The social contract idea was further taken by Jean-Jacques Rousseau, who modified it so that the social contract guaranteed freedom of the person instead of justification for the state (as Hobbes did). He sharply criticized feudal relations based on inequality and exploitation of the people. Rousseau contrasted them with "state of nature" where all people are free and equal. In his major work, "The Social Contract " (1762), he argued that income inequality, which arose with the emergence and development of private property, has given rise to political inequality in the state, which was the result of a social contract (Rousseau 15-17). But in contrast to the Hobbes’ theory of the "social contract" Rousseau justifies the right of the people to revolution (the sovereignty of the people), the people's right to terminate the contract unprofitable and create a form of government that suits their interests (Rousseau 33). He also justified the need to replace the large property by shallow, based on people’s own labor. Rousseau's ideas of equality, freedom, and popular sovereignty (democracy) received legislative recognition in the Declaration of the Rights of Man and of the Citizen in 1789. Thus the first period of liberal thought has focused on ideological and legislative support for the rights and freedoms of man and citizen. Economic aspects were frequently mentioned, but the main idea remained replacement of absolute power of the monarch by the immutable human rights.
Economic liberal thought
The liberal economic thought originated from the economic ideas of Physiocrats and political ideas of liberals. This synthesis led to assumption that market is the place of freedom, which should experience minimal impact of the state. The key figures of the liberal economic thought are Adam Smith, David Ricardo, Jeremy Bentham and John Stuart Mill. Formation of market economic relations in the developed world led to government’s intervention in economic activity (the principles of mercantilism), which became the main obstacle in the multiplication of national wealth. Therefore, the liberal economists required to complete non-interference of the state in the economy, which turned into a kind of market liberal economic policies’ motto since the end of XVII - beginning of XVIII century. It was at this time a brand new theoretical school of economic thought, which is called the classical political economy.
Classical School conducted a determined struggle against the protectionist mercantilist ideology, making economic freedom an essential requirement for capital expansion. Although the political economy has become a separate discipline, the idea of political liberalism created a moral and value basis, on which the specific laws of the economy were derived. Let us consider the Adam Smith's teachings in economy and the state in the context of political thought. The main Smith’s principles were formed in close connection with the doctrine of the "natural order" created by Physiocrats. However, if the latter put the "natural order" in dependence of the forces of nature, Smith believed that it is determined by human nature and corresponds it. According to Smith, the man is an egoist, as he pursues only personal goals. Personal interest of one individual is limited solely to the interests of others. Society consists of a number of individuals and the interests of society consist of the interests of its members. Consequently, the analysis of the public interest should be based on an analysis of the nature and interests of the individual. Smith tried to explain all economic processes with the concept of "economic man", whose sole motive is the desire for wealth (Coase 529). According to Smith, market laws work properly when the interests of society as a whole are considered as the sum of the interests of persons in it. The state should support the regime of natural freedom: to protect the rule of law and ensure free competition and private ownership. The state also fulfills such functions as the organization of public education, public works, communications, transportation and utilities. The basic economic doctrine of liberalism developed on a basis of Smith’s teachings. Therefore, the economic thought of liberalism extends the rights and freedoms of the individual, making the market area free from the government.
The middle of the 19th century was characterized by the activation of socialism, and liberal ideology experienced decline. Increased exploitation of the working class pushed liberalism into the background. Given that the workers formed the bulk of the population in industrialized countries, the ideology of liberalism was seen in the minority’s interests. Only after two World wars there was an attempt to restore the foundations of liberal political and economic doctrine. Milton Friedman and John Rawls played a significant role in liberalism’s rebirth. The neo-liberal discussion of the postwar period did not call into question the benefits of the market, however, sought to justify the possibility of freedom and equality under liberalism. From the standpoint of liberal economic thinker Friedman shows that democracy cannot exist without the free market, while the free market does not make a country democratic. He also emphasizes the need for economic freedom in order to achieve political freedom. Economic system contributes to the development of a free society in two ways. On the one hand, freedom of economic relations is itself a component of freedom broadly; so economic freedom is a goal in itself. On the other hand, the economic freedom is a necessary means to achieve political freedom (Friedman 8). However, economic freedom is the only condition for political freedom. It gives a person the opportunity to fulfill his aspirations, even if the political situation does not allow him to exercise political rights of the citizen. Thus, guided by the principles of classical economics, Friedman combines it with the political situation of the time. After the World War II there was a need to build a society in which economic and political freedoms are inseparable from the human in order to avoid such wars. Friedman as a follower of the liberal tradition shows that the basic political concept of liberalism - freedom, must have the economic component, thereby synthesizing the position of the classical political and economic liberal thought. John Rawls went even further and suggested that his version of a just liberal society. In his theory of justice, Rawls tries to combine the principles of a liberal market with the concepts of equality and justice. Realizing that the historical course of things cannot be changed at once, Rawls suggests that institutions should make decisions as if everyone is on equal footing. Rawls called this method the "veil of ignorance", implying that the politicians should forget about their status and the status of others when making decisions (Rawls 118-123). Rawls is also trying to reconcile differences in incomes of different people by picking up their starting points at birth to a similar level. Thus the neo-liberal theory in the face of Rawls and Friedman examines the key issues of the liberal state and tries to resolve them by reducing the difference between the political and economic liberalism to a minimum.
The origins of political liberalism are the ideas of Locke, Rousseau and Montesquieu, but it is the economic liberalism with its principle of laissez faire made it the only legitimate ideology today. Both conservatism and socialism came to the market – the most distinguishing feature of liberalism. The concepts of freedom were extended and applied to the market in the classic works on political economy by Smith, Ricardo, Bentham and Mill. The desire to increase profits during the Industrial Revolution led to the fact that liberalism and the free market became synonymous with exploitation of the working masses. Until the mid-20th century liberalism lost its influence, but was revived by neo-liberals. Friedman and Rawls contributed to consolidation of economic and political liberalism in a single system of modern values.
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Friedman, Milton. "The Relation between Economic Freedom and Political Freedom."Capitalism and Freedom. Chicago: University of Chicago Press, 1962. Print.
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Montesquieu, Charles S. The Spirit of Laws. Trans. Thomas Nugent. Kitchener: Batoche Books, 2001. Print.
Rawls, John. A Theory of Justice. Cambridge, MA: Belknap Press of Harvard University Press, 1971. Print.
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