History: The Struggle for Liberty: Recent Episodes

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Humans are prone to envy, writes Helmut Schoeck in Envy: A Theory of Social Behavior. Humans try to set up a society in which none is envious of another. George Stigler of the Chicago School saw man as always a utility maximizer.

Robert Higgs disagreed with Stigler’s position. Higgs presents that the kind of person one becomes confirms a self-image. When acting politically, people are often concerned about what might be right or wrong.

Russia was fertile grounds for socialist ideas. European intellectuals had made capitalism an object of horror. The Marxist dream was to be obtained by abolishing private property. One prevailing historical myth has been part of socialist pseudo-history. Did German big business play an essential role in the rise of Hitler? No, finds Henry Ashby Turner, but historians keep repeating this story.

Jean-Jacques Rousseau was not a socialist, but was an enemy of capitalism. His views and his activities were destructive. Rousseau and Voltaire hated each other. Rousseau’s famous book is The Social Contract. It is very different from Locke’s. Rousseau should not be put into the liberal camp. Raico calls Rousseau historical rubbish.

Robespierre was one of the most influential figures of the French Revolution and the Reign of Terror. Surprising to Marx, socialism arose in Paris not in London. The best book on socialism is by Alexander Gray –The Socialist Tradition: Moses to Lenin. Gray was Rothbard’s favorite historian of economic thought.

Lecture 7 of 10 from Ralph Raico's History: The Struggle for Liberty.

[This transcript is edited for clarity and readability. The Q and A at the end of the lecture has been omitted. Annotations have been added by Ryan McMaken.]

I now want to mention a book by German-American sociologist Helmut Schoeck in regard to the question of why intellectuals tend to be opponents of the marketplace. Schoeck wrote an important book that is titled simply, Envy. Schoeck was a very smart man, very widely read and learned, a sociologist and anthropologist. He was not an economist, although he was familiar with economics. The book begins by saying that it’s a very funny thing, it is as clear as anything can be, that envy is a universal human motivation. You find it in every culture. However, there’s very little in the sociological literature of the West on the question of envy. Why? Because if it is as universal as it seems to be, and as deep-seated as it appears to be, then it stands in the way of that beautiful, perfectly harmonious utopian society that the left-wingers and the socialists wish to bring into existence.

The Problem of Envy

In connection with envy, he uses social psychology, history, anthropology, and sociology. This is basically what his theory is: human beings are by nature prone to envy, which springs from a primitive conception of causality that interprets the good fortune of others as having been achieved at the cost to oneself; for instance, in economic and financial matters. People are equally subject, however, to an aligned feeling, a kind of reaction to this, to “a universal fear of one’s neighbor’s envy and the envy of the gods and spirits.”

There is also fear of the envy of others, in regard to the “evil eye.” The evil eye is a concept that is found all over the world, certainly among the Mediterranean peoples, the Italians, the Greeks, the Arabs, and even in Northern Europe, throughout Africa, throughout South America, and in the Far East. The evil eye is a malediction directed at you by somebody who envies something you have. Folklore of all peoples are filled with stories about the evil eye being wielded by envious people against somewhat more prosperous neighbors. The wish is that the neighbor’s cow doesn’t give milk anymore, or his wife is not fertile. For anything that someone else has, there are people who envy them for it, and wish to deprive them of it. So, there is this envy and it gives rise to a “primitive, pre-religious, irrational sense of guilt”

With these behavior patterns that aim at avoiding the envy of others, in various societies varying means have evolved to cope with this sense of guilt and to ward off the retribution of the envious. A characteristic of Western society, that is, capitalist society, is that envy has been suppressed much more than it has in any other society in history. The result is that although people are envious, they tend to be somewhat ashamed of their envy and try to hide it. This is Schoeck’s theory: “With intellectuals in capitalist society, envy avoidance, trying to avoid the envy of others, manifests itself in support for egalitarian causes. The diffuse dread of the envy of others,” Schoeck finds, is “the root of that general, aimless sense of guilt which, during the past hundred years…”—now 150 years—“…has exercised so disrupting and disorienting an influence. The pangs of guilt (social conscience), and the naïve assumption that there could ever be a form of society that was either classless or otherwise non-provocative of envy, have been responsible for the adherence to leftist movements of large numbers of middle and upper-class people.” In adhering to movements that preach social and economic equality, they assuage their guilt and anxiety, for now they can feel that they’re helping to set up a society in which no one is envious.

Schoeck’s theory has the advantage of accounting also for the peculiar self-righteous idealism often displayed by leftist intellectuals, especially among the young. He says,

Sensitivity to the envy of others is so deep-rooted in the human psyche that most people erroneously interpret the sense of redemption and peace, which they feel when they have made concessions to envy, as confirmation not only of their moral superiority, but also of the expedience of their action in the reality of the here and now.

We may add that the blessed release experienced by those who have, they feel, placed themselves safely beyond the envy of the resentfully dispossessed, often turns to fury when they are faced with those of their class brethren who have casually spurned the psychological capitulation.

Do Intellectuals Matter?

We’ve talked about theories that try to account for the anti-capitalism of intellectuals, but is it really so important what intellectuals think? The authors so far considered have agreed, at least, in assigning a great deal of weight, in the ultimate determination of political events, to intellectuals and the ideologies they generate. But, the political relevance of the intellectuals has been challenged by another group of classical liberal scholars that would include today Gary Becker, but most particularly George Stigler, whom I’ve mentioned before.

Stigler with Milton Friedman was the head of the Chicago School in its heyday. Stigler was aware that despite the many benefits they reap from the capitalist system, intellectuals have by and large been its implacable critics in all the sectors they dominate. In Stigler’s view, claims regarding the decisive influence of intellectuals, however, are unscientific, since the claims have never been quantified and subjected to empirical testing. This is a typical Chicago school positivist approach. In fact, he says, there is a total lack of any theory of how ideologies originate and change. Stigler proposes to attack the problem with the conventional analytical methods of neoclassical economics. Hypotheses are to be formulated in quantifiable terms and tested against the data. A central implication of economic theory, he says, “is that man is eternally a utility maximizer, in his home, in his office—be it public or private—in the church, in the scientific work, in short, everywhere.” Just as they act on the market to maximize the personal utility, “so individuals consistently behave in a utility-increasing manner with respect to the use of the state.” That is, these individuals are supporting measures that in the aggregate constitute the historical expansion of state power. Stigler therefore recognizes the existence of ideology. The question is: does ideology really have much of an impact on individual decisions, or are those more or less determined by the individual’s perception of his own self-interest and utility maximization? Very sensibly, Stigler warns against defining utility in such a way as to make the hypotheses tautological, conceding that “there is no accepted content to the utility function.” He proposes one. Namely that a person’s utility, “depends upon the welfare of the actor, his family, plus a narrow circle of associates.”

How far this advances the argument, however, is unclear. After all, a person’s adherence to a given ideology is usually conditioned by his belief that it will in some sense promote his welfare and that of his family and close associates. So, that reliance on utility functions does not automatically obviate the need to reckon with the impact of ideology. In fact, with Stigler, utility appears, for all practical purposes, to mean maximization of income. This is sensible, from his point of view, since employing another value—for instance, maximization of power—would seem to create insuperable difficulties for formalizing and empirically testing in Stiglerian terms. Stigler further holds that the desire of intellectuals to maximize their incomes—sometimes he says “income” includes prestige and apparent influence—explains the distribution along the political spectrum.

He refers to Schumpeter as having partially accepted this position, but that is incorrect. Schumpeter’s description of economic motives to the intellectuals is a very different one from Stigler’s. As we have noted, Schumpeter held that economic factors—e.g., overproduction of university trained individuals and their underemployment—tend to create a mindset among intellectuals which is apt to generate anticapitalistic ideologies. That, in turn, spread throughout society. Stigler seems to maintain that economic factors operate upon intellectuals directly and immediately.

Stigler, who was in my understanding a very great scholar, sometimes says things which are very hard to believe. (That could also be said for Milton Friedman, by the way, especially in regard to his remarks on Austrian economics.) Stigler sometimes combined his deprecatory estimation of the influence of intellectuals with a similarly low evaluation of the influence of individual human beings altogether, including political leaders.

As a general explanation of political change, Stigler’s own hypothesis is as follows: we live in a world of reasonably well-informed people acting intelligently in pursuit of their self-interest. In this world, leaders play only a modest role acting much more as agents than as instructors or guides of the classes they appear to lead.

This view illustrates why there are very few economists, I think, who can be trusted when they discuss historical matters. Here Stigler really gets himself into trouble. He says, as a rule, the effect of prominent leaders on history is “almost infinitesimal.” It is safe to say that this assessment would find little agreement among students of the careers of Mohammed, Napoleon, Bismarck, Hitler, Lenin, and Stalin. Those individuals made quite a difference.

Why Ideology Matters: the Case of the Soviet Union

We can take as a case study of the impact of ideology, the Soviet Union itself. Authors who minimize the impact of ideology in politics would seem to have a very hard time accounting for the rise, duration, and final demise of communism in Russia. It is difficult to imagine what could explain crucial episodes in the history of Soviet communism if ideology is relegated to a subordinate position. Such episodes include Lenin’s own revolutionary career, the formation of the Bolshevik Party, the coup d’état of October 1917, the institution of war communism,—as it was called—victory in the Civil War for the Bolsheviks, and the fanatical dedication of the cadres who carried out the collectivization and the terror famine.

It's very difficult to believe how those could possibly be explained without bringing in the major role of ideology. In a major study, Martin Malia—I’ll be talking about him when I discuss Soviet Communism. He is now Professor Emeritus from Berkeley—wrote a book called The Soviet Tragedy: A History of Socialism in Russia, 1917-1991. Malia asserts that “the key to understanding the Soviet phenomenon is ideology,” specifically Marxism-Leninism. He traces the story back to mid-nineteenth-century Russia. It’s a great book, with a lot of important information there. In Russia, civil society was weak—I mentioned that in discussing the European Miracle—and the state was strong. Russia proved to be fertile ground for the spread of socialist ideas very early on. Liberal social theory, the ideas of Locke, Hume, Adam Smith, Turgot, Madison and others, never really struck root in Russia. By the time an intelligentsia sprang up in Russia, European intellectuals, from whom the Russians derived most of their political ideas, had made capitalism into an object of horror. The chaos following the fall of its Tsar and the demoralization caused by the First World War, permitted Lenin and his highly disciplined ideologically driven Bolsheviks to effect their coup d’état.

I say “coup d’état,” by the way, since modern research has shown that there was no October Revolution. There was in fact a coup d’état in Petrograd, and then in Moscow and other cities that brought the Bolsheviks to power. The Bolsheviks at once set about to realize the Marxist dream, to construct a free and prosperous society by abolishing private property in the market. That task, Malia maintains, was inherently impossible. Malia cites the Austrian school, by the way, particularly Mises and Hayek, and Malia was somebody who realized that Mises and Hayek had something to say about central economic planning. Malia calls the idea of trying to plan society in the way that the Bolsheviks intended—and that Marx intended—as inherently impossible. He calls it an assault on reality. From the start, the Soviet Union was, he says, “a world-historical fraud.” The land that was supposedly in the vanguard of progressive humanity was in truth an arena of endless oppression, mass poverty, and boundless despair. Suppressing this reality, and generating and propping up a pseudo-reality became the job of the legions of state intellectuals at home and abroad. This included the fellow traveling intellectuals in every Western country.

Similarly, the collapse of the Soviet regime can only be understood as a case study in the operation of ideology in this sense—of the end of a particular ideology’s sway. The subversion of the Leninist faith began after Stalin’s death. It was the intellectual and cultural thaw introduced by Khruschev. In the 1960s, a few dissident intellectuals, often “samizdat” publishers—that’s the Russian word that meant the publishers of illegal anti-regime writings generally by using carbon paper on typewriters— sowed the seeds of doubt in small urban and university circles. That’s what samizdat intellectuals were often reduced to, since they by law and terror had no access to reproduction of writings by other means.

Still, the great mass of Soviet citizens remained indoctrinated until the declarations of perestroika and glasnost under Gorbachev. Those reforms were a big mistake of his, especially glasnost—the open airing of political and other opinions. He himself wanted to preserve communism, at least in its last Leninist form of the new economic policy, but the reforms undermined everything. It was then that the truth of the crimes of Lenin, as well as Stalin—the truth of the poverty prevailing in the socialist homeland, the true nature of the fantasy world, the pseudo-reality woven by Soviet ideologists for decades—came to light. This fantasy world had been propagated by what Hayek called “the secondhand dealers in ideas” in the press, television, and radio. And Malia says, that by 1991, the majority of Soviet citizens, and a substantial majority of urbanites had lost that basic faith in the system. The Soviet world picture had been wrecked, not by tanks and bombs, but by facts and opinions—by the release of information bottled up for decades. What changed minds was the cumulative synergistic effect of a great deal of new information on a variety of subjects at once. The swelling cascade of information shattered the faith of the Soviet ruling class, which is an important point of a revolution. It what happened in France, for instance, after 1789, when the ruling class itself lost faith in its right to rule. The faith of the Soviet ruling class was shattered, including, finally, its will even to coerce. It was impossible, with this cascade of information, for anybody not to laugh or snort in derision at the great slogan of the Brezhnev years: “Soviet communism, the radiant future of all mankind.”

Well, it seems to me that this is a very good counterexample to the Stiglerian position. Some scholars have also reasserted the importance of the intellectuals in regard to politics, particularly Robert Higgs and Douglas North, whom I’ve mentioned before in connection with his work in the economic history of the European Miracle. North freely concedes that public choice theory is invaluable in explaining much of political behavior, especially in democratic societies. Interest-group pressures do account for a good deal of political decision making, but to regard this as the whole story is to fall victim, in North’s view, to the “myopic vision” of neoclassical economics. He says,

Casual observation provides evidence that an enormous amount of change occurs because of large group action which should not occur in the face of the logic of the free rider problem. . . . Large groups do act when no evident benefits counter the substantial costs to individual participation; people do vote, and they do donate blood anonymously. . . . Individual utility functions are simply more complicated than the simple assumptions so far incorporated in neoclassical theory.

It may be noted that it would be especially difficult to explain the phenomenon of voting on the simple assumptions North rejects. It is well known that in the United States fewer than half of those eligible to vote do so in national elections. Still, tens of millions take the trouble to go to the polls to cast their individual vote, which they can be certain could not possibly affect the outcome of the national election. I’ll grant you 500 votes in Florida might, and if I had 500 votes to be cast, I probably would bother to go to the polls. But, a single individual vote can’t possibly make a difference. It is morally certain, I think, that there are more people who get killed in traffic accidents on the way to the polls than people who can make a difference in a national election with their one single vote.

Ideology, according to North, is ubiquitous. It is “an economizing device by which individuals come to terms with their environment and are provided with a ‘world view’ so that the decision-making process is simplified.” The fundamental aim of ideology is to energize groups that behave contrary to a simple hedonistic individual calculus of costs and benefits. Aside from rare exceptions, to cap the argument, ideologies develop under the guidance of intellectuals. A crucial part of ideologies—ignored by scholars who minimize the significance—are judgements of right and wrong, just and unjust. In this connection, North presents an argument that might well give pause to followers of Stigler’s position:

If the concept [of just and unjust] is not crucial to the way in which choices are made, then we are left with the puzzle of accounting for the immense amount of resources invested throughout history in attempting to convince individuals about the justice or injustice of their position.

In other words, if, as Stigler believed, people are reasonably well-informed and act intelligently in pursuit of their self-interest, how are we to account for the massive and continual “misuse” of resources in contending over questions of right and wrong?

Robert Higgs is another critic of the Stiglerian position. Higgs’s book, Crisis and Leviathan is a treasury of important insights, analyses, facts. In just a few pages, as far as I’m concerned, he settles of whether ideology and intellectuals are important. In the book he presents a detailed examination of the growth of the US federal government in the twentieth century, highlighting the importance of intellectuals. “An understanding of ideology,” he asserts, “is essential to an understanding of the growth of government.” Higgs too believes that the conventional neoclassical approach does not explain a wide range of political behavior. Drawing on the accepted conclusions of social psychology, as well as the writings of Amartya Sen, Higgs notes that individuals often act to confirm or validate their “self-image.” For instance, he says, “The kind of groups to which a person chooses to belong is closely connected with the kind of person he takes himself to be—a prime concern to the typical individual.” (Sen won the Nobel Prize and is generally considered a left-wing intellectual, but is an interesting writer nonetheless.) This also holds for the political dimension of the self-image that people have. Again, like North, Higgs stresses that in acting politically, people are often truly concerned with what is right and wrong, just and unjust. These are issues that cannot be reduced to a narrow hedonistic calculus. Citing Schumpeter on the purely formal nature of the utility theory of value as employed by the Chicago people—which implies nothing regarding the content of people’s wants—Higgs concludes that one cannot demolish an ideological fortress with the weapons of neoclassical economics.

Higgs’s insight that much political behavior involves the affirmation of one’s self-image prompts the question: “how do people acquire political identities which they then act to instantiate and confirm?” A fountainhead of such identities is clearly the system of formal education. From this point of view, it would prove highly instructive to examine how the educational establishments of Western countries, especially higher education, function not only to convey the panoply of particular anti-capitalist ideas, but also to impart a particular self-image to a significant portion of the students it processes. This is then a self-image—their identities as members of the adversary culture—which they will try to live out as the bearers of a lifelong animus against private enterprise. You’re all aware of fellow students who identify themselves as whatever type of leftist in some sense. How did they get that self-image? How did they come to adopt that self-image which then will be with them probably for the rest of their lives?

Historical Myths, National Socialists, and Big Business

Hayek, in his essay “History and Politics,” analyzes how historical myths influence how we think about the Industrial Revolution. It may be useful to focus on another example of a legend that has been part of the socialist pseudo-history—and which has also been exploded, as the myth of the immiseration of working people under the Industrial Revolution has been exploded. For decades, the prevailing view was that German big business played a central and essential role in the Nazi rise to power. Oddly enough, this interpretation echoed the official Comintern line set forth in the 1920s and 1930s. According to this myth, a generic fascism—including its German variant—represented the naked fist of a bourgeoisie confronting the final proletarian assault. The Comintern, the Communist International, played a crucial role in the terrible history of the twentieth century. It was set up by Lenin to promote the communist revolution in every country in the world, by any means necessary. It was very active in the 1920s, 1930s, the early 1940s and the Comintern had a particular definition and analysis of German National Socialism which turned out to be the one that was accepted by so many historians.

For years, socialists continued to tout the line that the financial and political support of German big business was to a great degree responsible for Hitler’s coming to power, and of course, German big business was then responsible for World War II and all its atrocities. In the Federal Republic of Germany, when it was still just West Germany, intellectuals never tired of repeating Max Horkheimer’s aphorism couched in the patented portentousness of the unspeakable Frankfurt School: “He who does not want to speak of capitalism should also be silent about fascism.” The view was shared and propagated, however, not just by leftists like Horkheimer and communists, but also by prominent non-socialists writers—famous writers on the subject— like Lord Alan Bullock, Norman Stone, H. Stuart Hughes, and others.

In 1985, a work of superb scholarship, German Big Business and the Rise of Hitler, was written by Henry Ashby Turner of, in those days, the great Yale History Department. Turner demonstrated that this interpretation was simply a myth. His own analysis is now accepted by practically all writers in the field. Will Turner have any more success in seeing his version passed onto the educated public? I doubt it, because, don’t you feel, don’t you have the impression, somehow, that Hitler was brought to power by German big business? So, whether Turner’s interpretation will have any more success than the demolition of the myth of the Industrial Revolution, remains to be seen. Turner posed the question: “why do we observe the persistence of historical accounts that are demonstrably false?” Towards the end of his work, he reflects on why so many professional historians have accepted the view, and there you can see a great scholar at work. He goes into details. He went into the files of all of these German companies. He found out important details such as the fact that a company’s vice president couldn’t have met with Hitler at a certain time because Hitler was known to be somewhere else at that time. Turned discovered those sorts of details. To put it very briefly, what Turner finds is that the Nazis adopted the fundraising techniques of the German Social Democrats and applied those methods to a substantially more affluent part of the population: the middle class. The Nazis charged for entry into their meetings. They sold matchbooks and playing cards with Hitler’s picture on them, and all sorts of fundraising techniques, and that was the major source of their funding, together with certain middle-class businessmen. Big business hardly came into the picture at all. Now, why should so many historians keep repeating the myth? Turner concludes “Bias, in short, appears over and over again in the treatment of the political role of big business, even by otherwise scrupulous historians.” It’s not a question of fabricating evidence, but the historians are biased. His general conclusion is this:

Professional historians generally have little or no personal contact with the world of big business. Like so many intellectuals, they tend to view big business with a combination of condescension and mistrust. … Since almost all of those who have concerned themselves with the relationship between the business community and the Nazis, have, to one degree or another, stood left or at least left of center. A great many have found it difficult to resist the temptation to implicate big business … in the rise of Naziism. Although deliberate distortion does figure in some publications on the subject, the susceptibility of most historians to the myths dealt with in this volume, is attributable not to intellectual dishonesty, but rather to a sort of preconception that hobbles attempts to come to grips with the past.

Another way of putting Turner’s explanation is in terms of one of the several components of the Marxist concept of ideology, as refined by John Elster. The individual’s comprehension of social relations—any individuals, you, me, anyone—is inevitably skewed by the particular position he himself occupies in the network of these relations. He necessarily comes to understand “the whole from the point of view of the part.” Seen in this light, the root of the problem lies in the social position, the way of life, of the academic intellectual whose views in turn profoundly shape and condition those of virtually all other intellectuals. Everybody, almost everybody, who becomes an intellectual goes through college. Essentially, the academic intellectual is a mandarin, accustomed—to reiterate the point that von Mises made—to living from an assured source of income, usually taxes. But, the case is similar with guaranteed endowments. As such, you rarely find it possible to appreciate or even understand the way of life of capitalists, entrepreneurs, traders, speculators—men and women who live and die by the vicissitudes of the market. Thus, the problem turns out to be one not so much of invidious personal motivation, as of a socially determined distorted cognition. But, in reply, one might object that it is academic intellectuals who, of all people, are morally obliged to free themselves from socially imposed blinders and to strive to see the market order as it really is. That they have manifestly not lived up to this obligation is, however, just another way of posing the problem that we’ve considered all along, of the intellectuals’ animosity towards the marketplace.

Rousseau and the Utopian Socialists

I want to go on to discuss some of the most prominent particular intellectuals who have opposed capitalism, beginning with the French Enlightenment, and to the rise of what Marx and Engels called utopian socialists.

There was, in fact, a trend of socialist thinking during the French Enlightenment, but it was scattered and rare and not centralized. In fact, the author I’m going to talk about now was not himself a socialist. However, he was such an enemy of capitalist society that he deserves a good deal of attention. This is Jean-Jacques Rousseau.

Jean-Jacques Rousseau is, to my mind, one of the most destructive characters in modern intellectual history. He’s also really quite interesting. You all know as sensible people that the ad hominem argument is invalid. We can’t say that somebody’s ideas or claims are wrong because of the sort of person that he is. That’s an invalid argument and generally I agree with that, but really we shouldn’t make a fetish of this or be overly fanatical. There are some cases where one has to bring in the ad hominem argument. Two cases that I can think of are obviously the case of Jean-Jacques Rousseau, and the other is Woodrow Wilson.

Rousseau’s mother died in giving birth to him. He came from a family in Geneva, so he was not a Frenchman to begin with. For the first part of his life he didn’t accomplish very much or have much success. Then he moved to France and to Paris—which he hated, he hated cities. His friend Denis Diderot pointed out that there was an essay competition by one of the provincial academies. The question that was posed was “how has the progress of arts and sciences affected society and human life?” In those days of the Enlightenment, almost everybody would be writing an essay saying progress has tremendously advanced human life, and so on. Rousseau cleverly took the negative and tried to show that the advance of arts and sciences was very destructive of true humanity. And he won the prize.

From then on, he became more and more celebrated, among other reasons, because he was a fantastic and beautiful stylist. It seems that he never wrote anything down that he hadn’t first repeated in his head. That is, every single sentence in every part of a sentence had to sound right. So he was a master of French and became, together with Voltaire, the most famous figure of the French Enlightenment.

I don’t care for Voltaire as much as many people do—as much as I once did. However, the choice between Voltaire and Rousseau—as human beings—is no choice, as far as I’m concerned. Voltaire, of course, he had the mores of the eighteenth century. He had many lovers, but in succession, and the ladies were always ladies of accomplishment. One of his mistresses, at one time in his life, for instance, had written a book explaining Newtonian physics to the average person, and so on. Also, Voltaire made his own money through the sale of his books, pamphlets, plays and so on, and became a very rich man.

Rousseau, on the other hand, lived off aristocrats—rich people who liked to have a star like Rousseau around. Voltaire loved Paris and the salon society, the wit, the repartee, and so on. Rousseau hated it. Voltaire read Rousseau’s second important work on equality and inequality because Rousseau had sent him a copy of it. Voltaire thanked Rousseau kindly for the gift of showing why human beings really should go back to the jungle and operate as if they lived in trees. From the start, Rousseau and Voltaire hated each other. They kept reporting each other to the police. Voltaire once said Rousseau is to philosophers as the ape is to man.

Now, in contrast to Voltaire’s private life, whatever you want to think of that, nonetheless, there was certainly a certain style to it. Rousseau had a common law wife, Thérèse Levasseur, who was a domestic servant in the boarding house where he lived, and he fell in love with her. He fell in love with her because she had a provincial accent and everybody made fun of her. She was a kind of poor pathetic creature, and I guess he was faithful to her through his life. However, she was not what you could call a polished lady of the sort that Voltaire preferred. She could never remember the correct sequence of the months of the year, for instance. Once, when some priest came to visit Rousseau in his room, she thought he had been the Pope, and she boasted to her girlfriends that the Pope came to visit her husband.

Now let’s get into his social philosophy and how that comes out of some of his own personal experiences. Rousseau had five children from this woman, and every single one of them he gave up for adoption. A friend of his, one of these aristocratic ladies, wrote him and said, “how could you do that? You who have written on education and on the cultivation of the mind of the young? You who have talked in such glowing terms about childhood and youth? How could you give up your own children?” He said, “madam, please, I’m not in a position to give them what they need. I can’t give them riding lessons. I can’t give them fencing lessons. I can’t pay for an expensive education. I do not have the means. Let society, which makes these demands on parents, to spend in this way for their children, let society take care of them.”

This is only one example of the fact that he was the originator, as far as I can see, of the “society made me do it” excuse. It’s the idea that people aren’t responsible for their own actions and it’s evil society that makes them do the sort of things that they do. By this thinking, somehow, if we got back to nature in some primitive form, we would be much better off. As I say, Rousseau had a good style and some of his very deeply flawed ideas caught on for that reason.

In his essay on inequality he says private property originated when the first scoundrel fenced off a piece of land and said “this is mine,” and found the first fool that believed him. Voltaire answered this in correspondence by asking how it can be that a person who goes into the woods, clears the ground, makes it arable, sets up a farm there, sows and reaps a harvest for himself and his family, and still has no right to private property. Rousseau really didn’t care. For one thing, he didn’t deduce from his own analysis the idea that property should be abolished. He was not a socialist in that way. Yet, because of his anti-capitalist views, he was influential in the formation of later socialists.

Here is another aspect in which he’s a modern: he deified nature. This was not the tradition in Europe. This was certainly not the tradition among the philosophes. But, he said the lakes, the woods, the mountains, and so on, this is where the human being gets in touch with his deepest most authentic feelings. Rousseau loved to roam around in nature.

Rousseau wrote many books and his most interesting book is really his Confessions. In the Confessions, there is another aspect that makes Rousseau a modern, let’s say, of a certain sort. Rousseau says in his Confessions, “I will tell you everything. I will make myself transparent to you.” So, you see who Jean-Jacques Rousseau really was. He tells us things which I’m not going to get into here because, among other things, the Mises Institute doesn’t allow it in public lectures. He tells us things that we really didn’t want to know. (Voltaire was, by the way, a bourgeois. He was not an aristocrat. Voltaire had a bourgeois sense of discretion and dignity.)

On the other hand, Rousseau shows in his Confessions that one of the deepest—maybe the deepest feeling—that he had was his hatred of inequality. He says that sometimes he’d see a big dog attack a small dog and he’d throw rocks at the big dog because it just seemed so unfair to him. For Rousseau, this inequality of power and inequality in private property leads to all sorts of viciousness. Rousseau suggests that merchants hope that their competitors sink at sea, and, of course competition is something he hated very deeply.

His most famous book is The Social Contract. Don’t think that this has anything really in common with the social contract of John Locke. Rousseau is sometimes put in the liberal tradition. You can put Keynes in the liberal tradition, and that’s bad enough, but to put Rousseau in the liberal tradition causes a total collapse of any kind of coherence in the conception of liberalism. One reason people do that is because, I would say, they don’t read very carefully.

This is how The Social Contract begins: “Man was born free and he is everywhere in chains. How did this transformation come about? I do not know. How could it be made legitimate? That question I believe I can answer.” Maybe you’ve heard those lines? “Man is everywhere in chains.” Does Rousseau say he’s going to strike off the chains? No. He says “How can that be made legitimate?” Do you follow what I’m saying? Scholars don’t seem to be able to get what Rousseau’s talking about here. He’s talking now about how to legitimate the enslaved condition, or relatively enslaved condition, of human beings in society.

His answer is the social contract, but Rousseau’s version is very different from Locke’s. Locke’s social contract was setting up a government in order to ensure the natural rights of life, liberty and property and government to be given certain very restricted authority and power. In Rousseau’s view it’s different. The different articles of association of human beings in society are reducible to a single one, namely,

the total alienation by each associate of himself and all his rights to the whole community. Thus, in the first place, as every individual gives himself absolutely, the conditions are the same for all and precisely because they are the same for all, it is in no one’s interest to make the conditions onerous for others. Since each man gives himself to all, he gives himself to no one and since there is no associate over whom he does not gain the same rights, as others gain over him, each man recovers the equivalent of everything he loses and in the bargain acquires more power to preserve what he has.

This is very typical of Rousseau. He has a very nice style, but did you notice the contradiction? Each individual gives up everything to the community and now Rousseau says the individual acquires the power better to preserve what he has. But, he doesn’t have anything. He’s given everything up, according to Rousseau. That’s the essential problem with Rousseau: total alienation of everyone’s rights to the community, and through that, the creation of something he calls the general will. He has a chapter here—that people who consider him a liberal, should pay more attention to—called “The Lawgiver” or “The Legislator.” Rousseau writes “The Lawgiver is the engineer who invents the machine.” —the machine of society—“Whoever ventures on the enterprise of setting up a people must be ready, shall we say, to change human nature, to transform each individual who by himself is entirely complete and solitary into a part of a much greater whole, from which the same individual will then receive, in a sense, his life and his being.”

Now, “setting up a people” here is written as “Instituer un peuple,”—to “institute a people.” This is the puerile theory— the idea that a super genius somehow created a society—that Rousseau and other writers of the French enlightenment had as to how society comes into existence. Society is instituted by some great lawgiver. Moses instituted the Hebrews, Solon instituted the Greeks. Lycurgus instituted the Spartan people, and so on. The puerile nature of this theory is one reason reason why scholars pay much more attention nowadays to the Scottish Enlightenment—the enlightenment of Adam Smith and David Hume and others, who were writing around the same time—than to writers like Rousseau when it comes to these questions.

So much more can be said about this. For instance, Rousseau says, “sublime reasoning, which soars above the heads of the common people,” produces those rules which the lawgiver puts into “the mouths of the immortals.”

This lawgiver, this really superhuman individual, institutes a people by setting up the basic social rules and pretends that some god made up these rules,. This suggests, for instance, that Moses created the Hebrew people by pretending that God had sent down the Ten Commandments.

There’s more along these lines, but people should also pay attention to a couple of chapters towards the end of The Social Contract. In the ideal society that Rousseau proposes, in the true republic, Rousseau says he’s going to revive the Roman institution of the censors. These censors are not so much what we think of when use the term now in regards to literature and other artistic productions. The censors described by Rousseau are boards empowered to inquire into the personal morality of individuals, the personal behavior of individuals—and to expose individuals who have acted immorally. “Just as a general will is declared by the law, so is the public judgment declared” by the office of the censor. There is no limitation on what the censor may investigate because it is legislation that gives birth to morals. A more perverse and ridiculous statement on social theory could hardly be imagined. According to Rousseau, first there was the lawgiver and he comes up with these laws. Then, somehow, morality comes from that. It’s a truism of social theory of anthropology, sociology, and so on, that every society—every tribe, even—produces a set of morals. How could it exist otherwise? After this, eventually and very gradually, legislation comes into existence.

Rousseau has another chapter, “The Civil Religion.” Rousseau was not an atheist, as some of the French philosophes were. He was really what can be called a deist. That is, a believer in god but not in any particular religion. In fact, he rejected organized religion and rejected religious dogma, religious services, and so on. Nonetheless, he thought that it was important to believe in the existence of god and rewards and punishments in the afterlife. In this chapter, he attacks Christianity. This is the great enemy, as far as he’s concerned. One reason is that Christianity created a system of dual power in European history. The consequence of this dual power has been an endless conflict of jurisdiction. According to Rousseau, this has made any kind of good polity impossible in Christian states where men have never known whether they are to obey the civil ruler or the priest. He says, this led to all kinds of confusion. The church interfered in political matters, and Rousseau believes society would have been better if there had been no church—or a church with no pretentions to political influence—and the princes could have ruled at will.

Rousseau continues: “Of all the Christian authors…”—he’s wrong about Hobbes being a Christian—"…the philosopher Hobbes is the only one who saw clearly of the evil and the remedy and who dared to propose reuniting the two heads of the eagle.” That is, making the state supreme in religious matters as well as in civil matters. Rousseau, the great liberal—some people think—is here praising Hobbes for his authoritarian position. Rousseau hated Christianity. He was born in Protestant Geneva, but living in France, Rousseau hated especially the Catholic church.

Rousseau goes on: “Christianity is a wholly spiritual religion concerned solely with the things of heaven. Christian’s homeland is not of this world.” He goes on about this. This is one reason why Rousseau can be considered the start of many things such as Romanticism—a kind of proto-socialism—but also nationalism because the highest duty of the individual, in his view, was to devote himself totally to his fatherland, and if necessary, to die for his fatherland. Here he says the Christian doesn’t believe that the state is the individual’s fatherland. The individual’s home, his true destination, is in heaven with Augustine and The City of God. So, Rousseau says a Christian republic can never really be a home of patriots: “But I err in speaking of a Christian republic, for each of these terms contradicts the other. Christianity preaches only servitude and submission.”

He’d never heard of the Presbyterian preachers rebelling against the Stuarts. or the New England preachers rebelling against George III—admittedly that came later—or the Dutch Protestants.

Rousseau continues: “Christianity preaches only servitude and submission. Its spirit is too favorable to tyranny, the tyranny not to take advantage of it. True Christians are made to be slaves; they know it and they hardly care; this short life has too little value in their eyes.”

Well, I don’t know what you want to make of that. I think it’s hysterical rubbish, by this “great” political philosopher. To think that so much effort has been devoted to trying to disentangle the contradictions and the nonsensical statements of Rousseau, on the one hand, whereas Benjamin Constant, until recent years, has been relatively relegated to oblivion in the English speaking world, at least.

Rousseau and the French Revolution

Rousseau’s impact, politically, was obvious during the French Revolution.

Rousseau says that everything he’s talking about has to do only with a small state where individuals can assemble and vote. Delegated authority, he says, is no true legitimate authority. So what is he saying here? He seems to be saying that this whole system of the social contract holds only for a place like Geneva or maybe ancient Athens. It doesn’t hold for a modern state like France. Well, at other times he contradicts that and says that the Kingdom of France could also be a system manifesting a “general will” under certain circumstances. But in The Social Contract, he denies that. There remained a question as to the relevance of the general will if it holds only for a situation where people can get together and directly and immediately vote on issues without intermediate representation.

Nonetheless, Rousseau had followers and the followers had to deal with the possibility, the potential, and the opportunity of instituting Rousseau’s ideas for France. This occurred during the Revolution and Rousseau’s major declared follower was the terrorist Robespierre. Robespierre claims to have actually met Rousseau when he was younger, and Robespierre constantly talks about Rousseau. Robespierre was the major figure in the Reign of Terror and he pushed the idea that Rousseauian virtue—total dedication of the individual to the welfare of the state—had to be brought about in France. France had to be made over in the favored image of people like Rousseau and Robespierre, which was ancient Sparta. The model was not even so much Athens. It was Sparta. It was this, and not practical need to oppose invasion or anything else, accounts for the last burst of terror under Robespierre in the spring and summer of 1794.

Did the French Revolution show any examples of socialism? A potential example can be seen when the assignat paper money led to runaway inflation and the revolutionary government’s implementation of price controls. Guess what effect price controls had? Shortages were created as people were living on the margin already. This led to further terror and then a general “Law of the Maximum,” as it was called, which created controls over all prices and wages. This then led to state management of the economy, which lasted just a very few months. You could call that an example of socialism, but aside from the confiscation of the property of the enemies of the revolution—like the church and the aristocrats—there was no general urge towards socialism.

However, around 1797, the first socialist-movement conspiracy occurred in Paris under François-Noël Babeuf. It was called the “Conspiracy of the Equals.” They were somewhat inept conspirators. They would hold meetings to plan and further their conspiracy and hand out leaflets to people announcing where the meeting was to take place. They were all arrested. They were all put on trial.

Babeuf and his co-conspirators had a bit of a theoretical structure and one thing that’s interesting from these writings is this: everything is to be run by the community, there’s not going to be any private property. Everybody will work for the community, everything that they produce is going to be put into storehouses and then distributed to people according to need. They say, “if you think that this can’t work, look at our great revolutionary armies. Our armies are an example of this kind of system.” They don’t use the word socialist yet, but essentially what they’re saying is, “our armies are socialized enterprises and look how immensely successful they are. They’re conquering all of Europe.” Nowadays, people say “we can put a man on the moon, why can’t we do X, Y and Z?” So, the Babeuf conspirators argued “if we can conquer Europe through this kind of socialized effort, why can’t we run the economy in the same kind of way?”

But, they were put on trial and most of them were executed.

There follows a period of thought—and Paris is the center of it—during which the Rousseauian idea and Jacobin idea never die out. Paris is “Red Paris” until the last gasp of radicalism and revolution in Paris in the Paris Commune of 1871. After that, it’s the case that real estate prices in Paris, virtually everywhere, get so high that it becomes quite a conservative town. But Paris is a center of revolutionary radical—and what is now safe to call—socialist thought and education for the next few decades.

This itself, by the way, is one superfluous refutation of the Marxist theory of history. In the Marxist theory of history, socialism should have arisen in England because England was much more advanced in the way of capitalism than France was. It didn’t. There was Robert Owen in England, but he was a very minor figure compared to the French thinkers because in the first decades of the nineteenth century, you have a series of French thinkers as we’ll see, who decisively influenced Karl Marx and the German socialists.

The Utopian Socialists

The best book—the best large single volume—on socialist thought, by far, is by Alexander Gray and it’s called The Socialist Tradition from Moses to Lenin. That “Moses” part of it is a kind of example of Gray’s donnish wit. He was a Scottish professor and the book is filled with—if you like that kind of humor, which I do—witticisms along that line. One of the things he tries to prove in the book is that there is no socialism in the Old and New Testaments; that is, when people talk about socialism under the Mosaic law or socialism in the early Christian church, these are misnomers. He deals with other figures who could reasonably be put in the socialist tradition, like Plato or Thomas Moore—the author of Utopia—and others. For our purposes, the interesting chapters have to do with modern socialism, starting with the French utopian socialists, as they’re called.

The utopian socialists were given this name by Marx and Engels in The Communist Manifesto. The most important of them are Charles Fourier and Henri de Saint-Simon and his followers. Marx and Engels call them “utopians” not because they had a kind of utopian vision of what society could become—an unrealistic utopian vision—because Marx and Engels had exactly the same vision. They were “utopians” because they did not believe in the historical inevitability of socialism. They didn’t have a Hegelian understanding of the historical process. They just hoped that somehow socialism would come into existence. Fourier had his plans for setting up communities and he’d be in some Paris café at a certain hour of the day available to any millionaire who wanted to come and invest in the socialist communities. Marx and Engels say “that’s ridiculous, that’s so unrealistic, that’s so visionary.” That should be kept in mind, I think, because Marx and Engels themselves had an absurd view of what socialism would bring about in the way of total harmony, total freedom, absolute prosperity, and so on.

I want to say a few things about Fourier. He believed that communities could be set up where everyone had to work and work could be made such that people would bound out of bed in the morning to run to go to work. And how is that possible? How that was possible was that every single human instinct was going to be satisfied by the work that is done. There is, for instance, the “papillon instinct,” the butterfly instinct. That is, you don’t want to do the same work all day long—you get tunnel vision from that kind of thing. So, it would be platoons doing different kinds of work and you’d go from one platoon to another every couple of hours. You could be digging ditches one time, you could be building a housing unit another time, you could be putting out a newspaper another time, and all during the same day. It’s abolition of the division of labor. There are dirty jobs that have to be done in society. However, it is a very happy circumstance that children like to mess around in the mud. So, we have kids doing that.

He went around as a traveling salesman and spent his evenings writing this stuff up. All of these different labor platoons somehow would be so arranged as to have young ladies also involved in that, so that this would add to the merriment in the course of the day. Ultimately, he literally says—and he was a disturbed man—that the seas would turn to lemonade, lions would be tamed to be ridden by humans, and on and on.

Don’t think that this is of no historical interest. Fourier always had a steady influence over the years. It was not a major influence, but it was steady. Fourier influenced generations of supporters of a certain variant of socialism, a kind of bohemian socialism, you might say, which shrugged off any real responsibility or need for hard work in society. This brings in also a kind of bohemian attitude towards sexual relations and so on. Fourier's socialism was not as important, however, as that of Saint-Simon and the Saint-Simonians.

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Utopian socialism was a term created by Marx and Lenin to denigrate the enemies of Marx and Lenin. Henri de Saint-Simon’s ideology of the industrial class, opposed to the idling class, inspired and influenced utopian socialism.

Capitalists were seen to be an important component of the industrial class. Saint-Simon did not promote class conflict. Auguste Comte was his disciple. Comte founded sociology and the doctrine of positivism. He is regarded as the first philosopher of science.

Main Currents of Marxist Thought by Kolakowski is an indispensable work about Marxism and Marxism-Leninism. He describes Marxism as the “greatest fantasy of the twentieth century.” Marx was after the human race achieving real human dignity. Man will only achieve control of his own destiny by creating planned societies. There is no invisible hand. Man must be conscious masters of nature. Everything will be planned. That will free mankind.

Trotsky’s book, For Literature and Revolution, claimed that the average human type will rise to the stature of an Aristotle. Lenin first put into place the Stalinist planned society – communism.

Lecture 8 of 10 from Ralph Raico's History: The Struggle for Liberty.

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Intellectuals are pro-power and anti-market. Great presidents are war presidents who glorify power. The Costs of War and Reassessing the Presidency are recommended books on this topic. The First World War was a turning point which vastly extended state power, and vastly destroyed social power.

Bismark united all of the German tribes into one state to preserve a German peace. The understanding in 1907 linking Great Britain, France and Russia was called the Triple Entente. This alliance in 1914 entered WWI as Allies against the Central Powers Germany and Austria-Hungary. The creation of a German navy put them on a collision course with Great Britain.

Germany’s strategy was to quickly knock France out of the war by sending troops through Belgium. The Archduke is killed in Sarajevo. Austria declares war on Serbia. Austrians could then invade Serbia and do away with it. Germany declares war on Russia and France. France convinces Britain that she must declare war against Germany, although no Britain had any clue about the war or any say about it. Yet, war was greeted with enthusiasm. The intellectuals were rapturous.

German U-boats sank British ships, bringing America into the war. The 1915 sinking of the Lusitania with some Americans aboard was used to justify Wilson’s position against Germany. Wilson had a hidden agenda to create a New World Order. The case of Eugene Debs was an example of how vindictive Wilson was and how individual liberties lost more ground in WWI than during WWII.

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Germany surrendered conditionally in 1919 under the Treaty of Versailles. Everybody opposed the treaty, but it was forcibly implemented. Revisionism is necessary to combat state propaganda, e.g. the lie in WWII that FDR was surprised by Pearl Harbor.

The welfare state was actually begun by Bismarck in the 1880s. The welfare state that now exists will simply keep expanding in its agenda of rooting out older values and substituting others. As the crisis of the welfare state is approached, only newcomers from the third world can become taxpayers for retired elders. Identities of European peoples will be extinguished.

Constitutions and Bills of Rights will not be the protectors of our liberties. The liberals in classical liberalism had no answers because they still held to the power of the state. The centralized state must be broken down by means such as secession even to the level of the individual.

History shows the struggle for liberty. He who controls the present controls the interpretation of the past.

Lecture 10 of 10 from Ralph Raico's History: The Struggle for Liberty.

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Ralph Raico covers classical liberalism’s growth, development and possible future. Liberalism arose in Europe entwined with Christianity. Why Europe? The East lacked the idea of freedom from the state and never established the legal system that could protect wealth. Europe had multiple, decentralized competing powers, not a universal empire.

Europe came into existence in the Middle Ages. The contractual relationship between princes and subjects was similar to the Magna Carta. The Middle Ages [5th to the 15th century] were not dark ages. The sign of a freeman was that he had the right to keep and bear arms.

The powerful, international Church of Rome was the strong institution that acted as a counterweight to secular power. It was the largest property owner in Europe and concerned about taxation.

Lecture 1 of 10 from Ralph Raico's History: The Struggle for Liberty.

Transcript[This transcript is edited for clarity and readability. The Q and A at the end of the lecture has been omitted. Annotations have been added by Ryan McMaken.]

This week, my subject is going to be history as a struggle for liberty. This conception of history, what history is, goes back to Lord Acton, a famous nineteenth-century historian who spent all his life accumulating notes and materials for what would be thought a great history of liberty—the greatest book never written, people say. Nonetheless, Acton wrote many essays on the subject and he’s a historian well worth consulting.

What I’m going to be discussing this week is classical liberalism. I might slip and just call it liberalism from time to time, but you’ll understand what I’m saying. We’ll be discussing its growth, its development, and finally, I’ll say something about the possible future of liberalism.

Now, the history of classical liberalism is intertwined in the history of Europe and its outposts, especially America. Europe has sometimes been defined as extending from Warsaw to San Francisco—and one might amiably throw in also Vancouver and Melbourne. Some people would consider this a very Eurocentric kind of approach. Well, so is the history of modern science Eurocentric.

The story that I’m going to be outlining will serve as an antidote to what some of you, at least, have experienced in your high schools and colleges and that is the demonization of Europe and Europeans as mass genocidal murderers and imperialist exploiters. If you doubt that this is standard in American education today, then you can read the works of Alan Kors, a Professor at The University of Pennsylvania who has specialized in this. He is a great scholar of France and the French enlightenment otherwise, but has made it a point to detail how this demonization takes place through sensitivity training and many other respects. Now, of this view of the Europeans as genocidal murderers and demons and so on, much could be said. I’m not going to go into any great detail. The first thing that comes to mind is that Europeans, like everybody else, are subject to original sin and have a proclivity to temptation of putting their own perceived self-interests above others to any extent that they feel necessary. Another thing that could be said is that power corrupts, as Acton famously said.

In the modern period, it’s Europeans who had the power. It would be interesting to see what would have happened if it had been the Aztecs— Aztecs famous for their ritual murders and cannibalism—who landed in Spain rather than the other way around and what scenes we would have witnessed. Finally, I want to say that there were Europeans who opposed those various crimes of the men of power in their own countries and among them—among the most prominent—were the classical liberals that we’ll be talking about this week.

What Made Europe Different

Now, the first thing to say about liberalism is that it arose in Europe, specifically in western Christendom. This is the Europe that grew up in communion with the Bishop of Rome, at one time or another, so that the history of Europe and the history of liberalism, are intimately intertwined. The question of why this should be the case has given rise to an enormous literature. This approach to trying to find out why Europe was different, why Europe was distinctive, is sometimes called the institutional approach of economic historians. This phenomenon could be called “the European miracle,” after the title of a book by one of the major authors of this approach, E.L. Jones, the Australian economic historian. The miracle in question consists in a simple but momentous fact: it was in Europe that human beings first achieved per capita economic growth over a long period of time. In this way, European society eluded the Malthusian trap and this enabled new tens of millions—hundreds of millions really—to survive, and it enabled the population as a whole to escape the hopeless misery that had been the lot of the great bulk of the human race in earlier times. The question is: why Europe? Why is Europe in this way set apart from other great civilizations: China, India, Islam, and so on? Geographic factors played a role, no doubt, but I think that Mises put his finger on the essential point when he wrote the following:

The East lacked the primordial thing, the idea of freedom from the state. The East never raised the banner of freedom, it never tried to stress the rights of the individual against the power of the rulers. It never called into question the arbitrariness of the despots. And first of all, it never established the legal framework that would protect the private citizens’ wealth against confiscation on the part of the tyrants.

Mises was not primarily an historian. In my view, on the basis of what I know, he was the greatest economist of the twentieth century. On the other hand, he had this ability to put his finger on the solution to some historical problem in a way that other professional historians weren’t able to do. We’ll see when we discuss the Industrial Revolution later on, the same thing there. Now, the question is still: why was Europe in this kind of position? Now, one of the authors in this general school of thought— it’s an international movement, Americans, British, French or Australians— is Jean Baechler of Paris. Baechler’s pioneering work pointedly expressed this, as he said,

The first condition of the maximization of economic efficiency is the liberation of civil society with respect to the state. The expansion of capitalism owes its origins and raison d’être to political anarchy.

We’ll see what that means. Among others who have developed this is Douglass North, who won a Nobel Prize in Economics for his work in this area, in economic history. North wrote, “It was precisely the lack of large scale political order that created the environment essential to economic growth and ultimately human freedoms” in Europe. Now, this institutional approach was adumbrated by John Hicks, the Nobel Laureate in Economics in the late 1960s. But the essentials of the view were sketched by the great economic historian—now Emeritus from Harvard—David Landis, who, by the way, is no particular classical liberal. But he’s a good historian in a book of his called The Unbound Prometheus. Landis said,

There were two factors that set Europe apart from the rest of the world, the scope and effectiveness of private enterprise and the high value placed on the rational manipulation of the human and material environment. … The role of private enterprise in the West is perhaps unique, more than any other factor that made the modern world.

Still, why was there the scope and leeway for private enterprise? Landis also points to the radical decentralization of Europe, what Baechler had called political anarchy and this is what he writes:

Because of this crucial role in a context of multiple competing polities (the contrast is with empires of the Orient and the Ancient World) private enterprise in the West, possessed a political and social vitality without precedent or counterpart.

Now, of course, it wasn’t a linear progression to some kind of a libertarian utopia. However, we’re talking relatively and in contrast with other civilizations. Keep that in mind. There’s radical decentralization based on a context of multiple competing polities. Baechler, as others might well have written, says that this is the crucial non-event of European history. After the fall of Rome, no empire was able to arise in Europe to establish hegemony over the continent. There was no universal empire although this was tried from time-to-time. Instead, Europe developed into a mosaic of kingdoms, principalities, city-states, ecclesiastical domains, and other political entities. Within this system, it was highly imprudent for any prince to attempt to infringe the property rights in the manner that was customary elsewhere in the world. And these authors— again I want to emphasize—they’re not "doctrinaire," if you want to call it that, libertarians or free market people for the most part. They’re simply very good historians and they talk about the customary behavior of states as based on predatory taxation and continual confiscation. States throughout history have acted like the Mafia does in some neighborhoods: what they would very often do is pick out somebody who rises above the rest, who has higher assets—a successful doctor or small businessman—and then the extortion starts with him. This is what states have typically done through history: confiscations and predatory taxation. States apply taxation to the victim to the degree it’s possible. Sometimes, in the case of the late Roman Empire, taxation went beyond what even was natural, was rational, even for the predatory state. The victim died from excessive taxation or regulation and inflation.

What does the decentralization of Europe have to do with this? It created the indispensable condition for what we’re calling the European miracle and that is the possibility of exit—the term used by these scholars. For example, suppose you’re a successful businessman in Antwerp or Amsterdam, and suppose that you were pressed by the state and the state was confiscating or heavily taxing your assets. In western Europe, you could “exit.” You could exit without leaving the whole cultural area of Christian Europe. You didn’t have to go to a totally different civilization. You could go across the North Sea to England, you could go down the Rhine River to the Archbishopric of Cologne. This possibility of exit held generally among the Italian city-states. It was very easy to go from one to another, depending on how the state was treating you there. This did not hold in every case, but it was a constant factor and the possibility of exit created limitations to what the state could do to its productive citizens.

Now, this story goes back many centuries. It goes back into the Middle Ages and, by the way, this historical interpretation I’m giving you has also been the basis of the works of other scholars. The great Peter Bauer, for instance, in his work on economic development in Europe, vis-à-vis economic development of the third world, simply assumes this basic interpretation of why Europe grew rich. Paul Kennedy of Yale, in that book on The Rise and Decline of the Great Empires, assumes as his basis, this interpretation. Or William McNeill of Chicago and his other synthetic works on European history, assumes this as a correct interpretation. And Peter Bauer said in one of his essays that this economic development goes back at least 7-8 centuries, which means the heart of the Middle Ages. So we have to examine something about the Middle Ages to explain why Europe was different. In fact, it is in the Middle Ages that what we call Europe, not the geographical continent, but Europe, the civilization, came into existence.

Here, there are a number of important factors. Feudalism, that is the European version of Feudalism, played a role. In Russia, for instance, there was a nobility, however, it was based on state appointed dukes, archdukes, counts, etc. In Europe, Feudalism was based on a contractual relationship between powerful Lords and the King—contractual, that is, there were obligations and duties on both sides. Already, by this time, some limits were placed on what the Prince or the King might do. Within each of these realms, which were relatively small anyway, there was often a struggle between powers and this gave rise to distinctive European institutions. Again, this was part of what made Europe different.

There were representative bodies, representing the taxpayers, which didn’t exist in other civilizations. There were parliaments. In France, the Estates General or the Provincial Estates. In Castile, there was the Cortes. These bodies existed throughout Europe. There was, I think, no area of Europe that didn’t have such a parliamentary representative body. Certainly, the different parts of the Low Countries did; Scandinavia also. Castile had a Cortes, as I mentioned, but there was also a Cortes in Aragon, there was a Parliament in Sicily, in Naples, and the German states, and in Hungary and in Poland.

Princes often found their hands tied by charters of rights, which they were forced to grant their subjects. The Magna Carta is the best known of these, but there’s a famous similar document called the Joyous Entry of Brabant, which each ruler of what is today Belgium and The Netherlands and Holland had to agree to on his ascension to power. This stipulated that no new taxes were to be imposed without the consent of the various diets of the different parts of what are today Belgium and The Netherlands. No new customs contrary to the traditions of the areas were to be introduced; there were to be no foreign office holders, and so on. In other words, we had in that very important area of the Low Countries, something similar to the Magna Carta.

Now, perhaps more crucial than anything else in the whole distinctive development of Europe was the existence of a powerful international church whose interests were not synonymous or often really compatible with the interests of the state. Lord Acton, who was a Catholic, emphasized this, but it’s not something that you have to be a Catholic in order to agree to. It’s a question of what is actually the historical development. You could be a freethinker, you could be a Protestant, and as a matter of fact, today there are scholars who are not Christians at all who think that the role of the Catholic Church was crucial. Things are different when we’re talking about the post-Reformation, or especially the post-French-Revolution Church. At that later point, you found the state of the church coming closer to the state; coming closer especially to Catholic rulers and Church and state, each using the other.

The Medieval Origins of the European Miracle

The critical point was, again, the Middle Ages and there you had an adversarial position between the Church and the state that was, in fact, crucial. It goes back even before the Middle Ages, to the first centuries of the Church.

This is represented, for example, in a painting by Flemish painter Van Dyke which shows St. Ambrose blocking the entrance to the Cathedral of Milan to the Emperor Theodosius. Ambrose did this because Theodosius had been involved in the massacre of many innocents in Thessalonica in the eastern Mediterranean and this was considered a sin by St. Ambrose that the Emperor had not repented of. This was around the late fourth century. The scene of the painting is not the great Duomo of Milan that you see now, but it was a forerunner cathedral and St. Ambrose, of course, was the Archbishop of Milan and the man who converted St. Augustine to Christianity. The painting demonstrates in a very stark kind of way that the Archbishop is standing there in front of the doorway and the Emperor Theodosius had never experienced such a thing. You can see that he’s enraged, he’s totally frustrated: “What is this Church doing preventing me from entering a building of my empire?” But, the Emperor is not permitted to come into the building. Now this is another example of the conflict between Ambrose and Theodosius. Theodosius demanded that Ambrose hand over the cathedral to the Emperor and Ambrose responded,

It is not lawful for us to deliver it up nor for Your Majesty to receive it. By no law can you violate the house of a private man and do you think that the house of God may be taken away? It is asserted that all things are lawful to the Emperor, that all things are his, but do not burden your conscience with a thought that you have any right as Emperor over sacred things. It is written: God’s to God, Caesar’s to Caesar. The palace is the Emperor’s. The churches are the Bishop’s.

That statement, by the way, comes from the New Testament: “Render unto Caesar what is Caesar’s and unto God what is God.” And Lord Acton, earlier in his career, had identified that, in his view, as the origin of the idea of liberty. That is, there’s a realm that is not the state’s. Division now exists between what belongs to the state and what belongs to God, whereas ancient polities, the Greeks and the Romans—especially the later Roman Empire—did not make this distinction between what belonged to the state and what belonged to the gods. In the late Roman Empire, the emperors themselves were gods.

Now, as a matter of fact, Ambrose, who was, as I mentioned, responsible for the conversion of St. Augustine. With St. Augustine we have an interesting development in his work on the City of God. This has been called the desacralization of the state. In the Roman Empire, Roma was a god with the particular sacrifices and religious obligations due to this god, representing the Roman state. Among the sacrifices—very stark kinds of sacrifices—were the ones that you would see in the Colosseum, sacrifices of Rome’s enemies in ways that are not even shown on Fox TV today. But, what Augustine said was that this is Rome—“Rome Schmome,”—and that this is the city of man. In contrast to the city of man, what is important is the city of God. As our eventual and permanent habitation, the city of God is infinitely more important than the city of man, thus desacralizing the state, which had been considered godlike by the Romans.

The Conflict Between Church and State

Now, much could be said about this adversarial position and hostile interaction between the state and the Catholic Church in the Middle Ages. One important thing to keep in mind is that this did not hold for Christianity in general. In Byzantine Christianity, for instance, the state prevailed with what was called caesaropapism. That is the situation where the Church was pretty much under the thumb of the emperor.

This was characteristic of Greek Christianity and this is the kind of Christianity that the Russians inherited. So, under the Russian rulers and “Czars”—they took that title—they were effectively in charge of the Church. It was a different kind of situation from Europe, and again we come across this idea of decentralization and division of power that was important because of the different small decentralized polities.

Also important was the big division between the state and the church whereas in other civilizations, the ruler himself was a god. We might point to the Roman Emperor, or Pharoah, or the Emperor of Japan—who was a direct descendant of the goddess of the sun—or the Emperor of China. It was quite different in the West. And we can see this in a number of different ways and the role of the Church.

These medieval limitations on the state are generally ignored today, and it is almost literally impossible for me to convince my students that the Middle Ages were not “the Dark Ages.” This Dark Ages myth is maybe the biggest—or one of the biggest, next to the myth of the Industrial Revolution—historical frauds perpetrated by Renaissance humanists and French philosophes.

One thing in particular I tell my students is that in the High Middle Ages, as scholastic philosophy had been established, it was universally taught in every university from Oxford to Salamanca to the Jagiellonian University of Krakow that the prince was under the law. The ruler himself had to obey the law. Jacob Viner, the great economic historian and scholar at the University of Chicago, mentions, for instance, a reference to taxation by St. Thomas Aquinas where Viner says Aquinas treats taxation as more or less an extraordinary act of a ruler which is as likely as not to be morally illicit. Viner points to a medieval papal bull, republished every year into the late eighteenth century, which threatened to excommunicate any ruler “who levied new taxes or increased old ones except for cases supported by law or in express permission from the Pope.” The popes were not into this adversarial situation for their health. It was a question of one power against another power. It was good for us that there was countervailing power for the state in the West that did not exist in other civilizations. Nonetheless, we find Thomas Aquinas himself talking about taxation as probably illicit. Similarly, this papal bull is saying that taxes would be illicit and not permitted except with papal control.

Magna Carta and Democracy of the Taxpayers

There is a series of books published by Stanford under the general inspiration of John Hexter and one of them, for instance, is called The Origins of Modern Freedom in the West. I have almost all of them and they’re mostly very, very useful. Here’s a quotation by one of the contributors to this volume, The Origins of Modern Freedom in the West. Professor Koenigsberger:

Almost everywhere in Latin Christendom, the principle was, at one time or another, accepted by the rulers, that apart from the normal revenues of the prince, no taxes could be imposed without the consent of Parliament. … By using their power of the purse, [the Parliaments] often influenced the ruler’s policy, policies especially restraining them from military adventures.

Now all of that is important. The parliaments—in England, for instance, the House of Commons as well as the House of Lords, in the Italian city-states, in the low countries, the representative assemblies—were elected generally by taxpayers. That’s very different from the modern situation where you have mass electoral democracy. Now, the income tax is being given back to people paying low taxes, so it’s a smaller and smaller part of the population that pays income tax in the United States whereas the rest of the people have an interest in increasing taxes since they feel they can get benefits from it. But, in the Middle Ages into the modern period, it was taxpayers who were represented in these different assemblies. So, when people talk about, let’s say, the democratic factor in the Dutch cities or the Italian city-states, this is not to be understood in the sense of present-day democracy. It’s not mass democracy, by any means, it’s democracy of the taxpayers. And that was what was involved in these assemblies.

Now, I mentioned representative assemblies. There was also the general scholastic philosophy of natural law and I mentioned the different charters granted by rulers and acting as sets of limitations on the rulers’ power. Most famous is the Magna Carta in English history. The barons of England, the lords, spiritual and temporal, forced bad King John to sign this great charter, the Magna Carta. You can look it up, it’s not very long, and naturally, considering the age it comes from, there’s a good deal of the Medieval to it, explicitly and also in the general tenor. Nonetheless, what’s being established comes through.

Here’s one chapter: “No scutage nor aid,” —basically, taxes—“shall be imposed on our kingdom unless by common counsel of our kingdom…” Already now we have the beginning of the right of representative assembly to okaying taxes, “except for ransoming our person, for making our eldest son a knight, and for once marrying our eldest daughter.” So, in other words, you have the medieval element there, but nonetheless, a limitation on arbitrary taxation that has to be common counsel involved. Another: “No constable or other bailiff of ours shall take corn…”— corn in the British sense, that is, your grain—“or other provisions from anyone without immediately tendering money therefore, unless he can have postponement thereof by permission of the seller.” Hence if we send the soldiers out among the peasants and take their harvest away, we can’t act like the Bolsheviks in the Ukraine. Here’s another one: “No sheriff or bailiff of ours or other person shall take the horses or carts of any freeman for transport duty against the will of the said freeman.” Horses or carts are essential in an agricultural society, but the king’s men can’t just go and take them because the king needs it. The rulers have to pay for it. “No freeman shall be taken and imprisoned or exiled or in any way destroyed, nor will we go upon him or send upon him except by the lawful judgment of his peers and the law of the land.” That is, the rule of law and trial by jury. Another item: “All the merchants shall have safe and secure exit from England and entry to England with the right to tarry there and to move about as well, by land as by water except in time of war, such merchants being from the land at war with us, and if such are found in our land at the beginning of the war, they shall be detained without injury to their bodies or goods.” Again, respect for private property, the commercial freedom, even for enemy and aliens. Finally, and this is what the king was forced to sign: “Whereof, it is our will and we firmly enjoin that the English church be free, that the men of our kingdom have and hold all of the aforesaid liberties, rights and concessions … fully and wholly for themselves and their heirs by us and our heirs”—pledging the future rulers of England to these rights—"Given under our hand, in a meadow which is called Runnymede, between (the rivers) Windsor and Staines on the fifteenth day of June, in the seventeenth year of our reign,” the year of our Lord 1215. A committee is set up of the barons to enforce this to make sure that bad King John does what he promises to do and the first name on the committee is Stephen Langton, the Archbishop of Canterbury—Catholic Archbishop, of course, in those days. So what you have here is, in this case, the Catholic Church throwing its weight into the balance against the power of the secular ruler.

I want to emphasize that this is not something that you have to be a Catholic to believe, by any means. It’s a certain interpretation of medieval history and the rise of the West, which many people who are not Catholic—take Peter Bauer, for instance, who is a Budapest Jew—adhere to.

Contrasting East and West

Now, we can make clearer what’s involved here if we contrast Europe with other civilizations. With the East or with another Christian civilization—that is, Russia—already the contrast of the East was an established view in the Middle Ages themselves.

In the thirteenth century, the German Emperor Frederick II, Hohenstaufen, who has been called by some the first totalitarian ruler, tried as much as he could to establish totalitarian control. He was a holy Roman Emperor and ruler of Germany, but he made his court in the south of Europe. He prohibited the inhabitants of Sicily or Naples from going to other places to study at the university. To keep control, he established the prototype of the secret police and he was involved famously in a conflict with the papacy and defeated, ultimately. In one of his writings, Frederick praised happy Asia, “Felix Asia.” By “Asia,” he meant anywhere in the East, where, he says, “rulers need not fear the weapons of their subjects and the machinations of priests.” He’s putting together two very interesting elements: the right to keep and bear arms, which the Europeans had, but which the elite Romans had abandoned. The Germanic people made the right to bear arms into a sign of a free man from the early years, in fact, while they were still barbarians on the other side of the Rhine. At the time, they would get together in council, and if something was being suggested by the chieftain, the freemen would signal their agreement by clashing their arms together, their weapons together. That became, among the Anglo-Saxons, a settled individual right, as I’ll probably mention in some other lecture. So, what Frederick II hated was the fact that his subjects seemed to have weapons all around the place and also, Frederick II was worried about the machinations of priests, trying to subvert the ruler at all times.

Now, we can go on to the seventeenth century, there was a famous Frenchman named Francois Bernier, who visited many different places. He was trained as a physician at the famous medical school in Montpellier, in the South of France. So, as a physician, he went to many different places and he was even down in Ethiopia, Persia, but especially in India, and wrote about his experiences there. As he returned to France, he published Travels in the Mogul Empire, that is the empire over India, which incidentally later became the basis of Karl Marx’s concept of the Asiatic mode of production. This is what Bernier says:

[because of the] cupidity of a [neighboring] tyrant … when wealth is acquired … the possessor … studies the means by which he may appear indigent; … In the meantime, his gold and silver remain buried at a great depth in the ground.

Remember the Arabian Nights stories about the treasure maybe sometimes guarded by cobras or something? Gold and silver and diamonds and so on. Why do people have treasure in that form? Why are they hiding their wealth? The Dutch did not hide their wealth, as we’ll see. They put their wealth into their herring boats that traveled throughout the North Sea and into the Baltic Sea. This was enormously productive, even for the late Middle Ages. Why in the East was this custom established of hiding wealth on the part of productive citizens? Bernier gives the reason, confirmed by historians, because there was no rule of law protecting private property. With property accumulated to a certain degree, the tyrant, the soldiers who has the guns or swords, simply went and confiscated it. This is Bernier:

“[The nations of Asia] have no idea of the principle of meum et tuum [mine and thine], relatively to land or other real possessions; and having lost that respect for the right of property, which is the basis of all that is good and useful in the world, necessarily resemble each other in the essential points: they fall into the same pernicious errors … have to suffer tyranny, ruin and misery.”

There is much more along the same lines in Bernier, on the basis of his personal experience. Now, one interesting thing about this is that many of these observations were written to the minister of Louis XIV, Jean-Baptiste Colbert. Now, in the history of European economic development, Colbert is known as kind of the ideal type of the mercantilist minister. You follow what I’m saying? My point is that even in regard to a minister who’s not a total believer in free trade, Bernier is saying the East doesn’t even have what we have in France: basic protection of private property. In other words, Colbert would go down as somebody who is really a government interventionist and a prime mercantilist, but nonetheless, even under mercantilism, the Europeans had this regard for private property, the sanctity of contracts and so on, that allowed them to develop in contrast to the East.

Baechler says when you want to talk about China, “[e]ach time China was politically divided, capitalism flourished.” Now in regard to Japan, there’s a very interesting situation. The stereotype has it that the Japanese were hopelessly backwards and third-world and so on until Commodore Perry came and introduced them to the modern world. The fact of the matter is that in the previous centuries, two centuries or so, called the Tokugawa period, Japan flourished economically and this has been investigated by economic historians who have come to the conclusion that the Japanese situation in some ways resembled Europe also. That is, you had a feudal class, you had a merchant class with guaranteed property rights in the towns. You had a stock exchange in Japan. You had the defined rights including rights to water. You had defined rights of individuals in their own labor. So, in other words, you had kind of an institutional infrastructure in Japan in a way similar to the one that existed in Europe.

Now, when we talk about Russia, you have a different situation, unfortunately. This is not to say anything against the great Russian people. Everybody, in a way, is a victim of the history of the society he's born into, and the Russian people are one of the great peoples of Europe. Nonetheless, they are burdened by history that deviates from the mainstream history of Europe. It was very, very late that any limitations were put on the power of the ruler at all: maybe the eighteenth century with Catherine the Great who was converted to free trade for a while.

Another was Peter the Great, for instance, around the year 1700, who wanted to modernize Russia. (Every once in a while, a ruler comes along and says, “heavens, we’re so far behind Europe, we have to do something about it, let’s modernize.”) So, he built his new capital in St. Petersburg—with serf labor, of course—and then took a famous trip to Europe. It’s a very interesting story if you look it up sometime about Peter the Great, and sometimes he’s disguised as an ordinary seaman, but he was stunned by what he found in Europe. (The present Russian flag, by the way, has the same colors as the Dutch flag, introduced by Peter the Great.) He saw that Europe had entrepreneurs and capitalists and development of modern industry, and had a high standard of living compared to the Russian masses. So he decided to do the same thing in Russia and he began with a draft—conscription of entrepreneurs to put them in charge of new factories, of mines. What he didn’t begin with was a definition of property rights, which by that time had been well established in Europe. And so this is a problem through Russian history.

What’s going to happen to the Russians is impossible to say. Russia is a case history of a society that deviated from Europe that we can talk about. Spain would be another example.

The Dutch Model of Secession, Commercial Freedom, and Religious Tolerance

We can take a positive example and positive model of European development and that is the Dutch experiment. The Low Countries—that is, today, the Netherlands and Belgium—had long benefitted from the legal system inherited from the Dukes of Burgundy who had ruled the area. These were rulers who governed in collaboration with the States General. The States General is a meeting of representatives of all of the estates, or in other words, legal categories of noble, commoner, and sometimes clergy. The Dukes of Burgundy and the acts of the States General promoted open commercial and industrial system based on the protection of property rights. Naturally enough, the States General was constituted of representatives of the property-owning classes.

In the rise of the northern Netherlands—or the United Provinces or Holland, as we say—we have a near perfect example of the European miracle of decentralization in operation. First, the area had been a major participant in European economic, political and cultural developments for centuries and by the time the Reformation came along in the sixteenth century, they were about as developed as the city-states of northern Italy, which were the most developed parts of Europe.

And as I mentioned, the herring fleet was famous and proverbial in Europe. They had herring boats that not only caught the herring, but dressed them, packed them in salt, packed them in boxes, ready for delivery as soon as they got back home to Antwerp or Amsterdam. That is, at the end of the Middle Ages, an enormous capital investment. Now, what happened at a certain point is that the Hapsburgs, when the Reformation came along, decided to deal with their recalcitrant subjects, mainly in what is today the Netherlands, who had the nerve to become Calvinists. Maybe even worse was that they had the nerve not to pay the new taxes that the Spanish monarchy required because of its imperialist plans and ambitions. The Spanish Netherlands were the most productive parts of the Spanish possessions. So, new taxes were introduced without the consent of the particular diets of the different provinces and also the Spanish Inquisition was introduced to extirpate Protestantism.

This led to the revolt of the Dutch, the first war of national liberation in modern history. The Revolt of the Dutch was a crucial, pivotal event in European history. What happened was that the Dutch, after a long, bitter, bloody struggle, succeeded in separating. By the way, it was another secession, just as with the American Confederate states. The Dutch didn’t want to take over the Spanish Empire. They just wanted to withdraw from the Spanish Empire, as the American colonists wanted to withdraw from the British Empire. And after a very long struggle of decades, the Dutch finally did. And what they set up became a model for Europe for decades, and was the first European economic miracle or “Wirstschaftswunder.”

There was no king, there was no court. There was a united diet for all of the provinces, but each of the individual provinces like Holland or Groningen or the other of the eight provinces, sent their representatives to this united diet who could not pass on anything until their principals at home had agreed to it. In other words, it was all highly decentralized. And it was basically ruled by mercantile elite, the burghers of Amsterdam and so on, and the other towns. In a short while it became even more prosperous than it had been before. There were poor, of course—in what I’ll call Holland, it was a major province so the whole country is sometimes called that. On the other hand, the poor were much better off than the poor virtually anywhere else in Europe.

Now, I say this is a perfect example of the European decentralized model in operation for a number of reasons. For one thing, one reason they had been able to defeat the Spaniards is that they had the support of other European countries, particularly Elizabeth I in England. In other words, if Europe had already been one huge empire, they could have easily crushed the Dutch. But since it was divided, they could call on other independent areas to support them and that was the reason, eventually, why Philip II sent the Armada against the English. Not only were they Protestant, but they had given aid to the Dutch rebels. And now the new Dutch Republic is set up, it’s increasingly prosperous. It’s tolerant relative to the rest of Europe because two-thirds of the people are Protestants—Calvinists—and about a third is still Catholic. And the society is controlled by businessmen who generally don’t like to kill their customers for religious or other reasons. So there was a general toleration, de facto more than by law.

The Dutch printers were willing to print virtually anything, including what was in those days considered extreme—especially heretical works—considered heretical by one church or another. The Dutch printers just cared for one thing: whether you settled your bill. They didn’t care what language. They’ll publish it in French and then it could be smuggled into France. So Holland became a model that was recognized by everyone. Here is an American historian who wrote,

Both foreigners and Dutchmen were apt to believe that the Dutch Republic was unique in permitting an unprecedented degree of freedom in the fields of religion, trade, politics. In the eyes of contemporaries, it was this combination of freedom and economic predominance that constituted the true miracle of the Dutch Republic.

One characteristic of the Dutch Republic was that they welcomed religious dissidents, philosophical dissidents also, like John Locke or Descartes, who lived there for a while. They welcomed the Iberian Jews, the Portuguese and Spanish Jews who had been thrown out and therefore set up important Jewish communities in Antwerp, or most famously Amsterdam. And this is what one Amsterdam Jew named [Baruch] Spinoza wrote:

The city of Amsterdam reaps the fruit of this freedom and its own great prosperity and the admiration of all other people. For in this most flourishing state and most splendid city, men of every nation and religion live together in the greatest harmony and ask no questions before trusting their goods to a fellow-citizen, save whether he be rich or poor, and whether he generally acts honestly, or the reverse.

In other words, this is a case of commerce producing tolerance, producing harmony, producing a willingness to interact, of course, for the mutual benefit. We’re not talking about a nation of altruists here, but what they discovered was the rule of peaceful interaction for the benefit of all, based on respect for private property. I suppose you know that this Jewish community of Amsterdam lasted for quite a while and contributed a great deal to the prosperity and fame of the Dutch. It lasted to around the time of Anne Frank when it was put a violent end to.

I’m going to be talking next hour about how the Dutch model was observed and taken up by other Europeans. As I mentioned a few minutes ago, John Locke had to leave England because of possible political persecution, and spent time among the Dutch, and learned a good deal from them.

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Mises’ book, Liberalism, states that liberalism sufficed to change the face of the earth. The term liberal has since been hijacked by social democrats, so they don’t have to use the tainted word socialism. Raico defines liberalism to be civil society, minus the state, running itself within the bounds of private property.

After the end of the Middle Ages, the Renaissance created the late scholastics – the School of Salamanca. Their legitimate theory of value had nothing to do with labor as it did in England. They saw that buyer and seller are each better off by an exchange, not equal.

The Dutch produced a fairly free society, but not a political philosophy. The French felt the period 1846-1940 to be almost a hundred years of true laissez-faire policy.

During the English Civil War, the Levellers began the history of liberalism by their demands to free John Lilburne from prison. The Leveller cause was effectively crushed in 1649. Their legacy was abstract natural rights. Rothbard called them the world’s first self-consciously libertarian mass movement.

John Locke is a fountainhead of crucial ideas about society being self-ruled with property being the fundamental right to life, liberty, and estates. Government was meant only to protect that right. Such an uncoerced vision animated Jeffersonians. The laissez-faire society worked well.

Adam Smith, David Hume, and Adam Ferguson were chief thinkers of the Scottish Enlightenment. They held that the fundamental importance of human reason should be combined with a rejection of unreasonable authority.

Lecture 2 of 10 from Ralph Raico's History: The Struggle for Liberty.

Transcript[This transcript is edited for clarity and readability. The Q and A at the end of the lecture has been omitted. Annotations have been added by Ryan McMaken.]

This lecture will concern classical liberalism itself.

Now, I think that you’ve been given—free of charge in the usual generous tradition of the Mises Institute—or somewhere along the line, gotten hold of a copy of Mises’ book called Liberalism. In the original German it’s called just Liberalism, and in the current English version, Liberalism in the Classical Tradition. At the very beginning of the book, Mises talks about liberalism and says,

The philosophers, sociologists, and economists of the eighteenth and early part of the nineteenth century formulated a political program that served as a guide to social policy first in England and the United States, then on the European continent, and finally in the other parts of the inhabited world as well. Nowhere was this program ever completely carried out. Even in England, which had been called the homeland of liberalism…

Mises says Liberalism was never permitted to come to full fruition: “Nevertheless, brief and all too limited as the supremacy of liberal ideas was, it sufficed to change the face of the earth.”

And it goes on in that vein. Well, as I say, he uses the term “liberalism” which for a long time was the word associated with this program that he’s developing. But it may seem strange to you to associate liberalism with basically laissez-faire and the other elements of the liberal program, considering that liberalism—not only in the United States, but now in other countries as well—has come to mean something quite different.

There’s a rather well-known story how, in English-speaking countries first of all and then elsewhere, around the turn of the century—that is, the turn of the nineteenth to the twentieth century—the term liberal was hijacked by people who were essentially social democrats.

What Is Liberalism, and Why Do Social Democrats Call Themselves Liberals?

Joseph Schumpeter is an economist from Austria—but not what we would call an Austrian economist—and a very famous social philosopher and well worth consulting. He wrote a very big book that I think is still in print from Oxford called History of Economic Analysis. In a famous passage there, he ironically states that it was a kind of compliment, if an unintended one, when the enemies of the system of free enterprise confiscated the name liberal for what was basically the opposite of what liberalism had stood for from the start. Nowadays, you can find writers who express astonishment that free market economists still sometimes insist on calling themselves liberals rather than conservatives.

Some might say why argue over a name, why not just call your position anything at all and go on from there to argue the case for it? Stephen Holmes, a political scientist from Chicago, has called the dispute over the term, liberal, a matter of bragging rights; the right to brag “I’m the real liberal in the liberal tradition and you’re not.” On the other hand, he insists that he’s in the real liberal tradition and thinks it’s worth arguing about.

It seems to me there are good reasons to hold onto the name “liberal” from the point of view, say, of Ludwig von Mises and not of John Kenneth Galbraith. First, we must hold on the name in order to preserve a conceptual coherence, when dealing with an intellectual history. How can you make sense of the history of ideas if you say there was an important school of thought called liberalism while Galbraith, John Maynard Keynes, John Rawls, and Franklin Roosevelt are just as entitled to the name “liberal” as Mises, Hayek, Nozick and say, Grover Cleveland? Second, there was demonstrably, a very deliberate political aim when Leonard Hobhouse, J.A. Hobson, John Dewey, Friedrich Naumann and others in Germany, promoted the transformation of the term. There was a theory underlying the terminological change, a kind of ideological subtext, one might say, that is still operative. This is what the idea was: there was an old liberalism of laissez-faire that is now antiquated and obsolete, made so by massive changes in society.

Those writers at the turn of the century that pioneered the new liberalism, as they sometimes called it, based their claims on a ridiculously inflated view of the power of business enterprise vis-à-vis the individual workers or the labor market. This was accompanied by an equally inflated view of the business corporation’s alleged enormous power vis-à-vis the individual consumer. In any case, the hijacking of the term, liberal implied that the old liberalism, the liberalism of Mises, for instance, in his book, was dead and certainly need not be considered a plausible candidate for support.

Then, some of the English old-fashioned liberals like Auberon Herbert and the extreme followers of Herbert Spencer started saying “let’s call ourselves something else, let’s call ourselves individualists.” Then, John Dewey started saying “well, you know, there was an old individualism that is now obsolete.” The new individualism, which is the same thing as the new liberalism, called on all of the powers of society to support the individual in his or her self-development and on and on in that vein. Finally, I submit that there is no intellectually honest reason to bestow the term liberal on those nowadays who favor a never-ending list of government funded programs. These programs, we are told, are necessary to deal with every real or imagined ill of society and favor a constantly expanding state apparatus to wage war on the traditional ways and values of civil society. The people who support this are the people who are called liberal nowadays.

Peculiarly enough, to complicate it even further, in some cases the term liberal does retain its old meaning. In the case of France, for instance, the term liberal or sometimes ultraliberal means a believer in laissez-faire or an extreme believer in laissez-faire. So the French—unlike the English, the Americans, the Canadians, even the Germans to an extent—have preserved the older meaning. In those countries, there is a name for the position that calls itself liberal or liberalism in America. It is called “social democracy” or “democratic socialism.” These are perfectly legitimate names. Why do they want to take over the name liberal?

The “new” liberalism of Hobhouse and Hobson is indistinguishable from the position, for instance, of Eduard Bernstein, the founder of the vision of socialism in Germany. This has today become socialism altogether in the modern world, just as the position of American liberal intellectuals is indistinguishable from that of people who call themselves social democrats in Europe. This is what Eduard Bernstein said around 1920 or so:

The development and protection of the free personality is the goal of all socialist measures, even of those which superficially appeared to be coercive measures. A closer examination will always show that it is a question of a coercion that increases the sum of freedom in society, that gives more freedom and to a wider group than it takes away.

Now, I submit that this is what so-called liberals in America hold, that yes, we have to be coercive in this respect. We have to force employers to behave in this way, forcing consumers to behave in this way, and indoctrinating children in the public schools in this way—in order to promote a greater freedom and the total development of the human personality. Fine, if that’s what you believe. But Bernstein never called himself a liberal; he was a socialist and he said that this is the socialist vision. Why, in English speaking countries, democratic socialists should shy away from calling themselves by their proper name is a matter of political expediency more than anything else. For some reason or other, political labels suggestive of socialism have not been very popular in countries of the English heritage. As a result, what is essentially the social democratic party in the United States—the Democrats—or people who call themselves liberals in Canada— the Labor Party—or even the “liberal” Social Democratic Party in England call themselves liberals.

Now it is sometimes maintained that underlying liberalism is a particular philosophical system, in the sense of a particular metaphysics and epistemology. Often this philosophical system is taken to be British empiricism from John Locke to John Stuart Mill, but I don’t find this satisfactory. There are simply too many divergent and conflicting philosophical traditions within the history of liberalism, from Aristotelianism and Thomism, to Kantianism, to Empiricism, and so on, for this to be convincing.

The working definition of liberalism that I will adopt is this: it is the ideology that holds that civil society—understood as a sum order of society, the sum of the social order minus the state—by and large runs itself within the bounds of a principle of private property. This is liberalism as I’ll be discussing it here.

Well, with the collapse of Marxism, especially the real existing socialist regimes and Marxism especially, liberalism has become enormously popular. It seems that everybody wants to call themselves a liberal and this reflects itself in the scholarly world. There’s much more attention being paid to liberalism than there ever was before. Scholars appear to be waking up to a few facts after decades of concentrating on the history of socialism, especially of Marxism. After having examined over and over again in mind-numbing detail all of the minutia of the annals of socialist doctrine and education, academics have finally woken up to the fact that the foundations of our own society are worthy of attention as much as the sterile dreams of socialist visionaries. That is certainly a hopeful sign.

The Historical Origins of Liberalism

Let’s take up the story where I more or less left off last time: the end of the Middle Ages. The first thing we might mention is the Renaissance, and often, especially in older histories of the liberal idea, a lot of attention was devoted to the Renaissance. There was even a certain novelist well known in American and libertarian circles, whose philosophy of history can be encapsulated as: “first came Aristotle, then the Renaissance, and then came the railroads.” I must confess that I am dubious of the contribution of the Renaissance in general and especially of Renaissance philosophy, as it is ordinarily understood through the rise of liberalism. It used to be that great stress was placed on writers like Marsilio Ficino and Giovanni Pico della Mirandola. One example is Pico’s famous “Oration on the Dignity of Man” in which he states God hails man as a “maker and molder of thyself, who art free to fashion thyself in whatever shape thou shalt prefer.”

Well, this has more in common, it seems to me, with Marx’s Promethean vision of man than it does with the liberal tradition, which has usually been based in one way or another, on the view of a given nature of man ascertainable by reason. And, as Acton, of course, who very much valued the Middle Ages pointed out, the great political philosopher of the Italian Renaissance is Machiavelli.

The contrast between the Middle Ages and the Renaissance can be illustrated by the example of what is sometimes called the School of Salamanca, not entirely correctly, because it includes Spanish thinkers not connected with the University of Salamanca. It also includes some Italian and Portuguese thinkers. These are better referred to as the Late Scholastics. For more on this, I recommend Rothbard’s History of Economic Thought in two volumes. It was Murray’s last book and he never completed it. He never got into the Austrian school itself of the twentieth century which he had planned to do. Still, as it stands, it’s a magnificent work of scholarship, a liberal education in itself, in my view. Murray has an important chapter in the first volume of his book on the Late Scholastics, the so-called School of Salamanca.

The Iberian School of the Late Scholastics

The story of these writers provides another example of anti-Catholic bias. They were consistently ignored or downplayed and it was conventional wisdom that the traditional Catholic position on economics was based on the prohibition of usury and the just price. In other words, it is a kind of reactionary medieval view that runs totally contrary to basic economic thinking. This was the older view and this is maybe the view that’s come down to you. Then, in the 1950s, Marjorie Grice-Hutchinson and Raymond de Roover, professor in New York, published books and articles that began to do justice to these remarkable thinkers. A short and good study of them is by a friend of ours, Alexander Chafuen (who is the President of the Atlas Foundation in Fairfax) in a book called Christians for Freedom.

Now, briefly, these writers include Luis de Molina, Juan de Mariana, Francisco di Vitoria, Francisco Suarez and others. They presented a sophisticated analysis of many economic phenomena, starting off from a baseline with a subjective theory of value as based on utility as understood by the economic actor.

Now, if you think about that a minute, we’re talking about—in the case of some Italians—the late fifteenth century, basically the sixteenth century and early seventeenth century. Already, we have the germ of a modern theory of value that has nothing to do with the English school’s theory of value based on labor—the famous theory of value that became standard in Britain. This theory was David Ricardo’s and then was accepted by Karl Marx. It was a totally different tradition, and Murray emphasizes throughout his History of Economic Thought how the Iberian scholastic tradition then becomes the standard European tradition of Italian economic thought, and especially in French economic thought. This is in sharp contrast to what’s happening in Britain. Economics and economic phenomena in this continental tradition is based then on a subjective theory of value—on the individual actor’s sense of utility—as against some so-called objective theory of value based on labor input. These writers maintain the legitimacy of private property. They were for low taxes and against using taxation for the redistribution of wealth and they opposed the debasement of money.

Since most of them were Spaniards who lived at the time of the Spanish conquest of the New World and the influx of precious metals into Europe—which created a precious metals inflation— they were very sensitive to the issue of inflation and the debasement of money. The Mises Institute has a number of economists who know many, many times more about these issues than I do, but according to them—according to Murray— these Spaniards had very sophisticated analysis of how inflation works. Here’s one of the writers: “The origin of poverty is high taxes. In continual fear of tax collectors, [the farmers] prefer to abandon their land, so they can escape their vexations.”

That was the story of the late Roman Empire where in order to flee the tax collector, many simply fled the towns and went to put themselves under some local landlord as part of his clientele. They set up little villages of their own because taxation had become so onerous. Molina says that’s happening in Castile. Castile was a very well-developed part of Europe in the later Middle Ages. What happened—again, because of their imperialism and their religious intolerance—was the Spanish Hapsburgs were able to impoverish Spain by their high taxes. In the course of that, by the way, they had to fight it out with the Cortes, this medieval institution. The fight came down to battles between the Spanish towns and the Spanish crown, and the towns were defeated. The Cortes was rendered impotent and then the Spanish kings could do anything that they wanted. With time, Spain turned into what it became, the backwoods of Europe, the decadent power, when it had once been rich and powerful.

Another writer, Henrique de Villalobos:

“[t]axes severely weaken towns and impoverish farmers. We can see places that yesterday were flourishing and had many inhabitants and now lie fallow because farmers cannot tolerate high taxes.”

By the way, all of these men were clerics, were monks or priests, and I think it’s clear that part of their concern here is the duty that such a person felt—or a high-minded person of that calling— felt towards the poor and towards productive working people, who are suffering because of the bad policies of their rulers. Here’s Bartolomé de Albornoz, and he sounds like the nineteenth-century liberal Frédéric Bastiat:

“Buying and selling is the nerve of human life that sustains the universe. By means of buying and selling the world as united, joining distant lands and nations, people of different languages, laws and ways of life.”

And that, you know, was part of the philosophical undergirding of the free trade position from the eighteenth century on. If you were of a religious mind, one of the things that occurred to you was that the earth is given different resources, different climates and so on, in order for the peoples to trade with one another. This providential fact brought together many different people and groups in a universal harmony. They were all, of course, as late scholastics, followers of Thomas Aquinas who had written, “any exchange is for the mutual benefit of both parties, with the result that they are better-off than previously.” How long it took British political economy to learn this. The British idea was that exchange was an exchange of equal values as if people sat around trading dollar bills with each other. The scholastics understood that in order for an exchange to take place, the two parties have to have a differential valuation of what is exchanged. And many other quotations along these lines could be quarried.

That Spanish or late-scholastic school went into oblivion, although some of them, Suarez and Vitoria especially, were occasionally remembered. Everybody admitted the scholastics had a tremendous influence on political theory in the line of Samuel Pufendorf and Hugo Grotius that winds up with John Locke. But somehow these Iberians were later left out of the picture.

Early English Liberalism and the Levellers

The Dutch, interestingly enough, did produce a very close approximation of a free society in the context of Europe at the time, but as far as I’ve been able to find out, not very much in the way of a political philosophy that mirrored that freer kind of society. So now our attention turns to England. The history of liberalism in the strict sense begins with the Levellers in the mid-seventeenth century. And since they are an authentic echt-product of the great English people, we will spell their name with the double L, which your spellcheck would reject, if you’re an American: “the Levellers.”

Now, I mentioned that the attack on the traditional inherited chartered immunities and privileges of the Dutch people by the Spanish Hapsburgs was the occasion for the revolt of the Dutch. In a parallel kind of way, at the beginning of the seventeenth century, a family, a dynasty, comes to the throne of England that has similar absolutist ideas. You have to understand, the time we’re talking about is a time of monarchical absolutism. This is the idea that the king owns the country as Louis XIV thought—or stated at least—the idea that the king is above the law. It is the idea that the country should be run by the king and his bureaucracy and his paid military mercenaries. This was considered the wave of the future, just as, believe it or not, for a time in the late 1920s and 1930s, fascism was considered the wave of the future, and people sort of defensively apologized for not having a fascist regime because fascism was so obviously au courant and modern.

In England, this new regime, this Scottish family now on the throne of England, decided to introduce many of the continental ways that we know of collectively as royal absolutism. This was the House of Stuart. Like other rulers and their henchmen, the Stuarts and their apologists for absolutism, considered it the modern form of government, more streamlined than the older form that was hedged around by limitations and restrictions of a kind that we find in the Magna Carta.

The Stuarts were going to change things. The Stuarts decided to rule on their own without the benefit of the representatives of the people and the taxpayers in Parliament. When the time came that Charles I needed to raise money, he did it on his own authority. He levied “ship money” on the towns of England that had never had to pay it before. This was a special tax levied to support the Navy and the seacoast towns had traditionally paid it because they were assumed to have more to gain from the navy than other people. But now the same tax was levied simply on royal authority, on inland towns. It did not amount to very much, just as the stamp tax or the tax on tea in the American colonies did not amount to very much. But the principle was unacceptable to the people. Sometimes apologists for the first American war of secession, the Revolutionary War, said, “why did they go to war? Why did they risk their lives, their fortune and their sacred honor for a couple of pennies in the pound?” Well, it really was the principle—that is, that the king can do this. On the small scale, if we accept that principle, he can do anything. The leaders of the English resistance came to say that under this king, there’s nothing a man can call his own, which is I think more becoming the slogan of the modern democratic state: there is, in the end, nothing that you can really call your own, once the state demands it.

So, the English Civil War came and the Parliamentary forces eventually defeated the Royalists. Charles was captured, put on trial and executed and a new regime was set up under the military leader Oliver Cromwell and what remained of Parliament. However, there were radical ideas that had been let loose and there were some people who began to say, “this Cromwell and this Parliament—or what’s left of it—are beginning to act in the same way that the Stuarts did.” It doesn’t matter that the Stuarts were kings, that’s not the important point. What matters is how the government acts.

A group of writers joined together. Their major spokesman was John Lilburne. And the Leveller Manifestos are available in a number of editions. Others included Richard Overton and William Walwyn. Lilburne had been arrested under Charles I for having violated the monopoly of the Stationers’ Company by importing books from Holland.

One of the characteristics of the absolute monarch, and especially of the Stuarts, was the creation of monopolies. Monopolies, as they were understood in those days, were special privileged grants given to private individuals by the state. Monopolies were not considered a natural outgrowth of the free market. This was purely a state invention, and in this case, this particular stationer's guild or printer’s guild had a monopoly on importing books. Lilburne tried to import books and he was arrested. For this he was whipped down the length of Fleet Street and thrown into prison. But, Lilburne noticed that the stationer’s monopoly was not abolished by the new revolutionary government, but only renamed. The monopoly remained, and it was a thorn in his side and it turned him to thinking about whether this new regime was really much different from the previous one. (There was also a monopoly granted to the Merchant Adventurers company in foreign trade.)

Now, what the Levellers demanded was—this is a statement of theirs, that “It shall not be in their power,”—shall not be in Parliament’s power, not just the King’s power—"to continue or make any Laws to abridge or hinder any person or persons from trading or merchandising into any place beyond the Seas where any of this Nation are free to Trade.” The Levellers favored the abolition of foreign trade monopolies. They favored the abolition of tithes of any religion whatsoever. There should be no coerced support of religion. They were the first to present a comprehensive program, including the abolition of government monopolies, the total separation of religion and the state, freedom of the press, lower taxes, and a democratic reform of the franchise. They also believed that it was kind of mean of the English to try to exterminate the Irish.

They were given the name “Levellers” by their enemies who accused them of advocating an egalitarian leveling of all economic and social distinctions, which is patently untrue. As a matter of fact, the Canadian C.B. MacPherson, maintained that the Levellers were a typical product of bourgeois liberalism and in fact, favored restricting the franchis—extending the franchise, but restricting it to those who paid taxes. So that paupers could not vote and domestic servants could not vote because they were considered too much under the influence of others, so that on the left, the Levellers are accused of being too bourgeois and pro-private property.

It’s odd that Russell Kirk accepted the interpretation of the Levellers as egalitarians and grouped them together with the Diggers who were in fact a communist sect at the time. Gerrard Winstanley and the Diggers—those were the communists of this turbulent period and Russell Kirk neglected to make that slight distinction. The Levellers were important on two theoretical counts. First, they opposed the infringement on individual rights that came now not from the king, but from Parliament. Second, they disconnected the ideas of liberty and right from the ancient metrics of historical privilege that characterized them in the Middle Ages. They did, from time-to-time, talk about the “Norman yoke.” That is a reference to how Anglo-Saxon Britain had enjoyed basic freedom and then the Normans came over and imposed a centralized oppressive government. They did talk in that way.

The Levellers are a transitionary group. However, they went beyond that and as one Leveller manifesto famously put it, Magna Carta itself is “but a beggarly thing.” That is, we have to go beyond Magna Carta which lists certain rights, to universal natural rights. Richard Overton, one of the main Leveller pamphleteers, put it in a very good quotation.

This is what Overton said: “To every individual in nature is given an individual property by nature, not to be invaded or usurped by any: for every one as he is himself, so he has a self property…”—property in your own self—"else he could not be himself, and on this, no second may presume or deprive of, without manifest violation and affront to the very principles of nature…”—making it kind of metaphysical—”and of the Rules of equity and justice between man and man; mine and thine…”—that is, private property—"cannot be, except this be; No man hath power over my rights and liberties, and I over no man’s.”

This is a kind of pre-echo of Herbert Spencer’s law of equal freedom. And you can see we’re now in a different intellectual world from having recourse to ancient documents and promises of kings and pledges and so on. This is the world of abstract natural rights. Now, although they were defeated, the Levellers left an important legacy of radical liberal thought among the English-speaking people.

They were defeated. Charles II returned and Cromwell died and Charles II returned in the Restoration. The Levellers tried to influence things through the new model army, that is, through actual gaining influence over the military personnel, but Cromwell and his people were able to thwart that. So they never got very far. However, they left this legacy. Murray Rothbard calls them “the world’s first self-consciously libertarian mass movement.” And he refers to Locke and his patron the Earl of Shaftesbury, as working out a “neo-Leveller” synthesis.

One of the Levellers was named Richard Rumbold and he famously said, “None comes into this world with a saddle upon his back, nor any booted and spurred to ride him.” And that was later quoted by Thomas Jefferson—it was a premise of Jefferson’s. The idea extends from Jefferson and Tom Paine in the American Revolution, to Richard Price, and Joseph Priestly at the time of the French Revolution. It extends through the Jeffersonian and Jacksonian traditions in America, the anti-Corn Law movement in Britain, and many other classical liberal and libertarian movements can be traced back to the Levellers.

The Importance of John Locke

Now, a name that everybody knows in the history of classical liberalism is that of John Locke. Locke is a great fountainhead of liberal thought in the English speaking world. His ideas were crucial in the American colonies, especially as spread through the writings of Thomas Gordon and John Trenchard. And with Locke, we have the conception of society as ruled before the establishment of government. Imagining government out of the picture, what would we have? Well, not a Hobbesian state of war, of all against all, but a state of being ruled by the law of nature and the fundamental idea of the law of nature being the right of each individual to his property. Property, if you read Locke carefully enough—or at least a little more carefully than some professors do—is a term that Locke gives not simply to material goods. It is the collective term he uses for the individual’s right to life, liberty, and estates. In agreement with Overton, Locke says you belong to yourself. Governments are established for no other purpose than to secure these rights better than they can be secured in a state of nature. When instead the government becomes a violator of the rights of the people, the contract is broken and the people’s right of resistance comes into operation.

This is very familiar to us, right? This is a certain part of the key conception in the first part of the Declaration of Independence. Jefferson said in writing the Declaration of Independence, he didn’t consult any other works. Well, he didn’t have to because he knew Locke by heart, on these points anyway. This Lockean view of what government is and how it’s related to protection of the rights of the individual and what those rights are, became standard for quite a while among English speaking people and I would say on some level, is still standard among the American people on some level.

It is now known through the work of Peter Laslett that Locke had developed these ideas long before the Glorious Revolution of 1688 which threw out James II and brought in William and Mary. What has come out of the work of Richard Ashcraft now is a better understanding of Locke as a radical. It turns out that Locke was deeply dissatisfied with the Glorious Revolution, the idol of so many weak writers afterwards. In a letter to a close friend he criticized the new government for busying itself with “small matters” when "now they have an opportunity offered to find remedies and set up a constitution, that may be lasting, for the security of civil rights and the liberty and property of all the subjects of the nation."

Well, there was, in other words, this more radical Locke that has been buried for quite a while.

A main consideration and a main thing to keep in mind in discussing the history of liberalism—unlike the way so many people do, especially philosophers do—is that liberalism was not simply a colloquy among talking heads, among philosophers, over the centuries. I started this series of talks by discussing the miracle of Europe and the institutional arrangements that came into existence. Liberalism is an ideology; it’s an intellectual product. However, it developed over time, came into existence and developed over time, in close interaction with social reality. People saw society as it operated around them; they reflected on it. They distilled their ideas. That is, they went to a higher stage than what they saw prevalent in the society of their time, but it was a matter of a constant interaction. One of the best historians of Anglo-American liberalism, although she certainly is not a great fan of the free market, is Joyce Appleby, of UCLA. Appleby wrote of England in the seventeenth century, it was then that people discovered

the underlying regularity of free market activity . . . and in so doing they had come upon a possibility and a reality. The reality was that individuals making decisions about their own persons and property were the determiners of price in the market. The possibility was that the economic rationalism of market participants could supply the order to the economy formerly secured through authority.

That is the mercantilist economy. She also wrote about America and the Jeffersonian tradition in America. This is of America in the later eighteenth century. She says,

In the eighteenth century, two features of the market economy fascinated contemporaries: the reliance upon individual initiative and the absence of authoritarian direction. . . . A century and a quarter of economic development had dramatically enhanced public opinion about voluntary human actions, and society was the word that emerged to represent the uncoerced relations of people living under the same authority. . . . It is this vision which animated the Jeffersonians. (emphasis in original)

And this is easily illustrated by many authorities, a famous statement by Thomas Paine that society under every condition is a good. The state, our government, on the other hand, is at best, a necessary evil. This contrast is between society, the realm of individual, voluntary interaction and the state, which is the realm of coercion. Appleby says since England was far away and there was no standing army and coercive policies were very hard to put into effect, pretty much a de facto laissez-faire society had come into existence in America. People saw that it worked, worked real fine, reflected on that and then, as I say, raised the reflection to a higher level in the works, for instance, of Jefferson or Tom Paine.

Eighteenth-Century Continental Liberals

So, the role of exemplary experiments in the development of liberalism in Europe was crucial. As Holland was the example to Europe, especially to England, so England became the example to Europe, especially to France and to Germany. Later, the example of America, the colonies and then the republic, exerted a strong influence on Germany, France, and elsewhere in Europe. Poland, to take one example at random: the final attempted reforms of King Stanislaw Poniatowski and the Constitution of 1791 were effected by American ideas through Phillip Mazzei, the friend of Jefferson. Other examples could be given. Gradually, observation and deduction distilled and refined the basic concept of liberal social theory which I mentioned at the beginning of my talk. “Laissez-faire,” the idea that by and large, civil society runs itself, was put in precisely these terms by the French: laissez-faire et laissez-passer, le monde va de lui même. Laissez-faire, laissez-passer: the world goes by itself.

One of the prime advocates of this doctrine was “the Great Turgot”: Anne Robert Jacques Turgot. This use of “great” is unusual and historical discourse. Usually historians reserve the term “great” for mass murderers, or people who murder, maim and blind their brothers so that nobody else should have a claim to the throne. These are people who enserfed whole classes of the population as Catherine the Great helped do in Russia, and so on; or people who unleashed world wars, in eighteenth-century terms, as Frederick the Great did in Prussia. But Turgot was an actual benefactor of the people and is sometimes at least, called “the Great.”

In his chapter on Turgot in his History of Economic Thought, Rothbard considers Turgot to be a dazzling economist. I think that the chapter begins something along these lines: at a chess tournament—Murray loved chess—they give prizes for the most brilliant play, not necessary the most successful or most smashing; but stylistically brilliant, really chic, you might say. And Murray thought that Turgot was such an economist in what he did with his short book on economic theory, which appeared considerably before Adam Smith.

Turgot was one of the philosophes. He was not a militant anti-Catholic or atheist as some of the others were. He was the mentor of the Marquis de Condorcet, who was very highly thought of among the philosophes. And then, for a very brief while, Louis XVI became king. Turgot was brought in as Finance Minister in order to save the very troubled French monarchy and he brought in some reforms, very needed reforms, was planning on doing away with the corvée —forced labor—for instance. Turgot was doing away with the guilds, and was planning other reforms such as toleration of the Protestants and regional representative institutions. But he was done in, in very clear public-choice terms, by the cabal of the court, headed by Marie Antoinette. Without Turgot’s reforms, probably the last chance of the Bourbon monarchy was gone and Louis XVI and his wife were going to be paying for that in a few years’ time.

Nonetheless, he was remembered very fondly by lovers of freedom in France, To give an example of how social thought and liberal thought was being advanced at the time, this is what Turgot wrote:

Thus our policy should surrender itself to the course of nature, and the course of commerce, which is no less necessary and no less irresistible than the course of nature, without seeking to direct this course. For, in order to guide it without disturbing it, and without injuring ourselves, it would be necessary for us to be able to follow all the changes in the needs, the interests, and the industry of mankind. It would be necessary to know these in such detail as would be physically impossible to obtain … [E]ven if we had for all these particulars the mass of knowledge which is impossible to gather, the result would only be to let things go precisely as they would have gone by themselves, by the simple action of the self-interest of man, enlivened and held in check by a free competition.

Those of you who are familiar with the history of the Austrian school, I think can see that this rings a bell. This is Mises, and then Hayek’s, amplification of the theory of the role of knowledge and society, and why central planning is ultimately impossible and futile. The decentralized, even tacit, knowledge of the economy that exists everywhere, and scattered, cannot be brought together, and the central planners are doomed from the start. Here we have that central idea as expressed by Turgot.

Adam Smith and the Scottish Enlightenment

Now, in the eighteenth century, there was of course the French Enlightenment, much of which can be considered dubious, I’m going to be talking about Rosseau later on. There was also, however, something that has gotten more attention recently and that is the Scottish Enlightenment—well “recently,” in the past 30 years or so, the chief figures of which were Adam Smith, David Hume, Adam Ferguson. There were others as well.

Hayek was very fond of the Scottish school, loved Adam Smith in particular. Murray was not nearly so fond. In regards to Adam Smith, Murray could never really take some intellectual figure and say “well, this is where I disagree with the man and he has a right to his own opinion.” Murray had to totally smash him. And he does this in regard to Adam Smith, and thinks of him as a retrogression from what the Spanish scholastics, let alone French economists like Turgot, had accomplished.

There’s a debate whether Adam Smith believed in the labor theory of value, but certainly he gives enough reason in Wealth of Nations to support the labor theory of value. But you know, in criticizing Smith, it’s not that Murray was going in some crazy direction all by himself. Joseph Schumpeter pretty much says the same thing. People who attacked Rothbard—some of the reviewers attacked Murray for being too critical of Smith—should look up Schumpeter. What I would say is this. Leaving aside Smith as an original economist and contributor to the development of economic theory, Smith’s influence—the influence of his implied and sometimes-made-explicit social policy and political policy—was for the good.

This was the impact that he had on the continent. To take one example of a view that Smith expressed,

Little else is a requisite to carry a state to a highest degree of opulence from the lowest barbarism, but peace, easy taxes and tolerable administration of justice, that is the rule of law, peace, low taxes and the rule of law, all the rest being brought about by the natural course of things.

That was, in fact, quoted by the Australian economist E.L Jones I mentioned in the last lecture in his book on the European miracle. That is the position of these European miracle institutional approach type economists, that what we have to explain is the lack of economic progress in many places. That’s explained by the state acting, among other things, in its traditional role as predator on society. If, instead of that, we had what Smith recommended, that is, peace, easy taxes and the rule of law, then you would find some economic development, at least, everywhere. This general view and this idea of the invisible hand, which lends itself to the laissez-faire idea, did help in a positive direction in the decades after. An example of this, an example of the power of ideas, is a man who wrote the first biography of Adam Smith, his own student Dugald Stewart. Stewart occupied the Chair of Moral Philosophy at the University of Edinburgh for 25 years until 1810. He taught that a great part of the order which, “we are apt to ascribe to legislative sagacity is the natural result of the selfish pursuits of individuals.” These are practically the same words used by Tom Paine. Much of the order we find in society comes from individuals pursuing their own self-interest.

For 25 years, Stewart taught at the University of Edinburgh. Among his students were Francis Jeffrey, the first editor of The Edinburgh Review. The Edinburgh Review was the great review of Whig classical liberal thought in the first half of the nineteenth century in England. Thomas Babington Macauley, for instance, wrote almost all of his essays for The Edinburgh Review. Also among Stewart’s students were Henry Brougham, the famous Whig member of Parliament; Henry Reeve, who was the first translator of de Tocqueville’s Democracy in America; Sydney Smith was a great Anglican clergyman, liberal politician and liberal polemicist, and favored Catholic emancipation and other liberal reforms. There’s a great quotation that Murray Rothbard liked from Sydney Smith—who was kind of a wit—about all of the unfortunate deplorable consequences of England involving itself in everybody’s troubles throughout the world. He was an isolationist as well, and Smith wrote an aristocratic friend of his:

I am sorry for the Spaniards — I am sorry for the Greeks; I deplore the fate of the Jews; the people of the Sandwich Islands are groaning under the most detestable tyranny; Baghdad is oppressed; I do not like the present state of the Delta; Tibet is not comfortable. Am I to fight for all these people? The world is bursting with sin and sorrow. Am I to be champion of the Decalogue, and to be eternally raising fleets and armies to make all men good and happy? We have just done saving Europe, and I am afraid that the consequence will be, that we shall cut each other's throats. No war, dear Lady Grey! — No eloquence; but apathy, selfishness, common sense, arithmetic!

Among the other students of Stewart was a man named James Mill, Lord Palmerston—not that he was such a great liberal—and Lord John Russell. Palmerston and Russell were the two most influential Whig politicians of the middle nineteenth century and these people all had studied under Stewart. It was not necessarily that they learned all of liberal philosophy from him, but they were influenced in some cases to a large degree, in some cases to a somewhat lesser degree.

The French Revolution and Its Effects on Liberalism

Then comes the French Revolution. In discussing the history of liberalism, there are a number of distorting factors. One is to consider the French Revolution, even fundamentally, a liberal revolution. Yes, in the end, there were some liberal reforms made. Religious toleration, for instance, and equality of classes before the law. But these were reforms that were in the cards. These were reforms that the French monarchy was edging towards—it was not going to happen in two years.

On the other hand, what did the French Revolution do? It brought in 25 years of war that only ended at Waterloo, so it put back reform in many respects. You have to ask yourself whether the quickening of the pace of reform, of the necessary and liberal reforms, was worth what they had to go through.

We further see the lack of liberalism among the revolutionaries in the fact the French revolutionaries’ Declaration of the Rights of Man and of the Citizen is in no way as unequivocal as the American Bill of Rights. The French declaration says, for instance, there shall be freedom of thought, even for religion, “within the limits of the law.” They never got to the American point which was that Congress shall make no law regarding the establishment of a religion or prohibiting the free exercise thereof. Now of course, this didn’t mean separation of church and state within the American states, but it meant that the federal government could do nothing along these lines. And then, to my mind, you didn’t need the Fourteenth Amendment and incorporation of the Fourteenth Amendment toward using the Bill of Rights against states.

What would have happened along the lines of ordinary federalism? That is, if people of a certain denomination were discriminated against or taxed in a certain state? There’d be a tendency to move somewhere else. The states that continued such discrimination—or establishment of a religion to some degree or another—would suffer for it, economically and otherwise. Eventually—I don’t know how long, but in a few decades—the state in question would abolish its favoritism among denominations.

This is, in fact, what happened even before the period of the time of the incorporation of the Bill of Rights through the Fourteenth Amendment. The states in virtually every case, even before the Civil War, had abolished any kind of religious superiority among denominations such as the Episcopal Church which had at first been privileged in Virginia. The Congregationalists had been privileged in Massachusetts. That did fade away, even without a central government forcing the states to do it.

In France, we could have had these reforms eventually—and peaceful organic reforms are always superior to revolution and subsequent war unless we’re talking about extreme cases.

The French Revolution led to a series of disasters, one after the other. The inflation of the assignat paper money brought about price controls and other measures. The confiscation of the Church land, which not only shook the principal of private ownership of land, but it also presented the problem of what to do about the Church now. How is the Church to be supported? That brought the state into the question. The French state, from then on, as in most European countries, continued to support the Church afterwards. It wasn’t just the Catholic Church, but other denominations, as well.

They did not learn the American principle of “there shall be no law, shall make no law establishing a religion.” That would have been total separation leaving religion, among many other things, to society rather than monopolizing the religious realm by the state.

The French Revolution—having been lived through and experienced and witnessed—led to changes in liberalism itself. The liberals by and large had welcomed certain of the early reforms and the so-called first phase of the Revolution. But there had also been the emergence of unexpected—of unheard of—violations of individual liberty. There was, for example, the Reign of Terror of ’93-’94, which was claimed to be warranted by popular sovereignty.

And then there was the reign of Napoleon whose actions were confirmed by democratic plebiscites and who brought centralization of government power to new heights. This was an important innovation of Napoleon’s followed then by his nephew, Napoleon III and also by the dictators of the twentieth century: that they have their actions confirmed, okayed, in a pseudo-democratic way, by having plebiscites.

Two things the liberals learned. First, that democracy, the alleged rule by the people, may in fact represent the rule of a determined minority that aims to control society. Second, the liberals were infused with what has been called “state hatred.” Before this, the liberals—many of them—had felt that the state was essentially a neutral device that could be utilized in favorable conditions to bring about many valuable reforms in society. After the revolution, many liberals now saw the state as a locus of constant threats to freedom and as a self-interested enemy—a standing enemy—and perpetual enemy of civil society.

Earlier on, someone like Turgot—certainly someone like Voltaire—thought and said, “how do you bring about these necessary reforms towards individual freedom in society?” The idea was “well, you whisper in the ear of the king and the king now has all the power that’s necessary and he will bring about the reforms so the society can be improved in this way.” Afterwards, many liberals understood that whoever controlled the state apparatus—whether they said that they were legitimized by democratic majorities as revolutionary governments did, or if they claimed, like Napoleon, to be legitimized by plebiscite once in a while—could use the state to seriously damage civil society. Thus, the state had to be looked on with suspicion.

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Mill played a crucial, but inflated, role in liberalism. Rothbard did not like Mill much. Mill was a disaster on economic freedom and international issues. Mill rejected that workers and capitalists shared interests. Mill was anti-capitalist.

Mill’s On Liberty addresses the nature and limits of legitimate power by society over individuals. Mill’s relationship with Harriet Taylor, a married woman, twisted his own mores. Mill’s liberalism had little regard for the past. John Maynard Keynes also contributed to liberalism meaning almost anything including Nazism. Keynes felt his system was more adapted to socialism and Stalinism.

But the hallmark of liberalism is that society can run itself with voluntary agreements based upon private property rights.

French liberalism involved the idea of class conflict which led to totalitarianism. This doctrine is generally associated with Marxism, but predated Marx. The French made all government offices open to all citizens. That was the essence of the French Revolution. Two main conflicting classes are producers and plunderers.

The British tradition of liberalism, as F.A. Hayek espoused, leaves out the tradition of natural rights.

Transcript: Lecture 3 of 10 from Ralph Raico's History: The Struggle for Liberty.

[This transcript is edited for clarity and readability. The Q and A at the end of the lecture has been omitted. Annotations have been added by Ryan McMaken.]

John Stuart Mill played a crucial role in the transition from the older liberalism—the laissez-faire liberalism—to the new liberalism, a type of democratic socialism.

Now, it is, to my mind, a disservice when a typical college course that deals with the history of political thought does this: as an example of eighteenth-century liberalism they’ll maybe have Adam Smith. As an example of nineteenth-century liberalism, they will have John Stuart Mill. They’ll present it as John Stuart Mill versus Karl Marx or Friedrich List, and use the idea that Mill is the exemplary liberal of the nineteenth century. One reason that he’s very attractive to people is that he had a very good writing style. There’s no doubt about that. And his writing style is superficially very logical and rational. But, there are very serious problems with Mill from an authentic liberal point of view that I’ll be pointing out. Much of the confusion prevailing in the whole problem of defining and understanding liberalism can be traced to Mill.

To my mind, he occupies a vastly inflated position in the conception of liberalism entertained by English-speaking people. This is an example of Anglo-centrism, you might say. It is a scandal how few American social-scientific university professors cannot easily read even modern European languages like French and German. I happen to know this is a fact in connection, for instance, with the Stanford University history department, although they have great scholars. On the other hand, there is this lack of having access to works of continental writers that have not been already translated.

James Buchanan, when he undertook his study of public finance, learned Italian—which I think must be a very rare accomplishment among American economists—in order to read the rich treasury of economic thought among the Italian economists of the late nineteenth century and early twentieth century. The lack of the ability to access some of the most important continental political figures, leads to ridiculous overemphasis on the British tradition, to my mind.

A man that I’ll be mentioning a number of times, I think from now on, is one of my favorite authors altogether: Benjamin Constant. Constant wrote an enormous amount on political philosophy and other subjects. It was only a few years ago, in the Cambridge “blue” series of political thinkers, that some of his major writings on political philosophy became available in English. George Sabine’s history of political thought doesn’t even mention Constant, although I would be prepared to argue that he was the most important liberal philosopher of the nineteenth century. He was worlds ahead of Mill, as far as I’m concerned, and Mill was a disaster on a number of fronts.

In economics, Mill held that, “The principle of individual liberty is not involved in the doctrine of free trade.” He is using “free trade” in the sense of economic freedom: freedom of trade, not just internationally. But for Mill in On Liberty, in general, the principle of freedom is not involved in economic affairs. In contrast, Milton Friedman quotes a great letter that Benjamin Franklin sent to one of the French physiocrats where Franklin said that he thought that liberty of exchange, liberty of contract, liberty to work, and the liberty of buy and sell, is even more important than any civil liberty; than freedom of expression, for instance, because it deals with the freedoms people need every single day of their lives and the freedom that everyone needs. This is not just the intelligentsia and the publishers, but everyone.

So here we have Mill going in the opposite direction and saying that economic freedom is not really part of the concept of freedom he’s going to be dealing with. Mill provided ammunition for the protectionist arsenal. Richard Cobden, the great free trader of the mid-nineteenth century, complained of one of Mill’s writings, that this has undone any good he might have done in any other respect by providing arguments in favor of protection for infant industries. Mill rejected the liberal notion of the long-run harmony of interests of all social classes, including entrepreneurs and workers, on the grounds that “to say that they have same interest . . . is to say that it is the same thing to a person’s interest whether a sum of money belongs to him or to someone else.”

Following that reasoning, in arguing that anti-capitalism is one of the hallmarks of liberalism, the well-known English political philosopher Alan Ryan invokes none other than John Stuart Mill, who wrote in the middle of the nineteenth century, “The generality of laborers in this and most other countries have as little choice of occupation and freedom of locomotion . . . as they could . . . on any system short of actual slavery.”

This at a time when English and other serfs were migrating in the millions, to towns, cities and even to foreign countries. It has to have been someone like Mill—who spent his life as a philosopher and writer but otherwise made his living as a bureaucrat for the British East India company—not to have noticed what was going on around him. There was this vast migration, when Mill says that it’s virtually impossible for working people to move from one place to another. As I’ll discuss this afternoon, Mill was a disaster in international affairs, where he repudiated the liberal principle of nonintervention.

Mill’s Novel Definition of “Liberty”

Worst of all was Mill’s deformation of the concept of liberty itself. His most famous work On Liberty tends in that direction. Liberty, it seems, according to Mill, is a condition that is threatened not only by physical aggression on the part of the state or other institutions or individuals. Rather, society often poses even worse dangers to individual freedom. For example, Mill believes society threatens liberty with “the tyranny of the prevailing opinion and feeling,” and the tendency “to impose by other ways than civil penalties, [society’s] own ideas and practices as rules of conduct on those who dissent from them.” Society “compel[s] all characters to fashion themselves upon the model of its own.”

This is non-aggressive, non-coercive in the ordinary sense, “tyranny,” according to Mill. This is in On Liberty, the great liberal manifesto, supposedly. A true liberty, according to Mill, requires autonomy because adopting the traditions or customs of other people is simply to engage in “ape-like … imitation." Whereas others see individuals choosing goals laid out for them by what they freely accept as authoritative institutions—this is the real liberal position—Mill perceives the extinction of freedom. In other words, for instance, if you’re a Roman Catholic and accept the authority of the Catholic Church, the Magisterium, you’re not exercising your freedom, you’re engaging in ape-like imitation. The situation is similar for a member of any other church, for that matter. In a striking and preposterous illustration, Mill writes, in On Liberty, “An individual Jesuit is to the utmost degree of abasement, a slave of his order.” One wonders what is supposed to follow from this. Must we form abolitionist associations to emancipate the willing slaves of the Society of Jesus? One wonders also how Mill and his alter-ego, Harriet Taylor, could ever have imagined themselves entitled to legislate on the status of members of the Catholic or Orthodox orders, the status of Orthodox Jews, devout Muslims and of other believers.

His comment on the Jesuits illustrates a facet of Mill too rarely noticed. He was, in the words of Maurice Cowling, “one of the most censorious of nineteenth-century moralists.” Mill constantly passed judgment on the habits, attitudes, preferences and moral standards of great numbers of people of who he knew nothing. As Cowling dryly observes, “Bigotry and prejudice are not necessarily the best descriptions of opinions which [August] Comtean determinism has stigmatized as outdated.”

Now there’s beginning to be a literature on Mill, the authoritarian, Mill the secret duplicitous authoritarian. I mentioned Maurice Cowling, who has a short book on the subject. Joseph Hamburger of Yale published a posthumous work on the subject. Recently Linda Raeder, who teaches at a Florida University, wrote Mill and the Religion of Humanity. The book outlines in detail, not just in On Liberty but in his other works, what Mill’s secret agenda was. But, as I say, in the shorter work by Hamburger, he examines the dark side of John Stuart Mill and Hamburger, like most anybody else, said he long entertained the view that John Stuart Mill was a true believer and an exemplary proponent of individual freedom. But, like Raeder does in more detail, Hamburger examines not only On Liberty, but Mill’s other writings and letters and the personal testimony of his friends. Hamburger’s conclusion is that the freedom of opinion espoused by Mill in On Liberty was largely part of a grand strategy. The strategy was to implement total freedom of opinion in England in order to demolish religious things, especially Christianity and the received mores.

Now, I don’t want to engage in ad hominem arguments—except I will later in the week in regards to people who certainly deserve it like Jean-Jacques Rousseau. But, this I will say, that when an individual has “lifestyle problems,” that’s up to the individual, and it’s a private matter. That’s fine. However, when these problems fuel and provide the basic impetus behind one’s political philosophy, then it becomes a problem. John Stuart Mill had this problem with Harriet Taylor, who was a married woman. I discussed this once with John Gray, who’s not now my favorite guy, but he’s a smart guy, a political philosopher, and knows a lot about Mill and has taught at Oxford and now at the University of London. Gray agreed with me: if Mill had been French at the time, it would not have been this big problem that Mill had an affair with Harriet Taylor. He would not have felt the need to erect this assault on society and its mores into the cornerstone of his political thought.

Someone like Benjamin Constant, for instance, had the mores of the eighteenth century and did that kind of thing, but it’s a different for someone with Constant’s background. Mill, I think, felt pretty agonizingly constrained by his heritage. His father was an atheist, but from a Scottish Calvinist background, through and through. The moral values were still there, so that Mill had to lash out against society, I think, for what basically was his own particular problem. In any case, Hamburger—and Raeder in more detail—showed that in Mill’s view, once Christianity and the mores of English Victorian society were destroyed, then true individuality would be incarnated in the future “Millian man”. Mill uses the term on the model of “Soviet man.” The Millian man dreamt of by Mill and the lady who became his wife, Harriet Taylor, is the exemplar of someone in whom selfishness and greed would be replaced by altruism and the cultivation of the higher faculties.

Now we understand that in economics and international relations, Mill was a problem for people dealing with liberalism, but I think mainly in this area. The fateful linking of liberalism to an adversarial stance, vis-à-vis tradition and social norms, stems from Mill. It has unfortunately become standard. Owen Chadwick is a famous historian of religion and Dixie Professor Emeritus at Cambridge, and this is what he wrote about liberalism:

A liberal was one who wanted more liberty, that is, more freedom from restraint; whether the restraint was exercised by police, or by law, or by social pressure, or by an orthodoxy of opinion which men assailed at their peril. … The liberal thought that men needed far more room to act and think than they were allowed by established laws and conventions in European society.

Note how in this statement no distinction is made between state coercion on the one hand and social pressure, orthodox opinion, and conventions on the other. A famous British historian of political thought is a man named John Dunn. Dunn wrote, "If the central dispositional value of liberals is tolerance, their central political value is perhaps a fundamental antipathy towards authority in any of its forms. … Dispositionally, liberalism has little regard for the past."

So much for Thomas Babington Macauley, Augustin Thierry, W. H. Lecky, Lord Acton, and all the other liberal historians we could mention. Descriptions of Chadwick’s and Dunn’s are much more expressive of the antinomian, lawless, normless mentality of contemporary Western academics and the contemporary Western chattering classes, than of liberalism historically.

Mill’s view tends to erase the rather critical distinction, I would say, between “incurring social disapproval and incurring imprisonment.” It leads to pitting liberalism against innocent, non-coercive traditional values and arrangements, especially religious ones. It also forges an offensive alliance between liberalism and the state—even if contrary to Mill’s intentions—since it is hard to see how one can be sure of uprooting traditional norms, except through the massive use of political power. Contemporary writers connected to the Millian project of enjoining autonomy as the highest possible good, do not shrink from advocating this course, presumably unaware of its totalitarian implications.

Paul Gottfried has illustrated this in his two small books After Liberalism and Multiculturalism and the Politics of Guilt. In this new liberalism, autonomy becomes the guiding star—autonomy understood as the rejection of tradition, the rejection of inherited social norms, the rejection of religion. The people who take this position then feel perfectly free, as you can see everywhere in America today and Western Europe, to use the state, its educational institutions, and its various other institutions to, as much as possible, erase the inherited traditions and values of the past and replace them with Mill’s idea of what is supposed to be autonomy.

The Mill-Keynes Distortion of Liberalism

Now, I want to mention one other famous writer whose point of view has also distorted the meaning of liberalism. This other writer has added to this conceptual mayhem where liberalism can mean virtually anything—anything, of course, except Nazism— and that’s John Maynard Keynes.

Keynes is another troubled individual. You’d think on the face of it that there’d be a prima facie case not to call him a liberal, since the hallmark of liberalism is the idea that society can run itself. That’s how liberalism started: in the rejection of mercantilism and state authoritarianism in every respect in the eighteenth century—or the seventeenth century with the Levellers. Society runs itself; voluntary agreements based on the principle of private property pretty much take care of everything.

Keynes is most famous for rejecting this idea in the core area of classical liberalism, and in economics. Keynes maintained that an unregulated market economy cannot achieve full employment and is subject to regular depressions and business fluctuations very damaging to the masses of people. This is his economic theory which has been exploded many times now. However, beyond that, he was also a social philosopher and, I think as with Mill, first of all, the fact that he’s in the British tradition, gives him a head start in the minds of many people. But Keynes also benefits from his style and tone, which is generally very calm, rational, civil in expression, and reserved. This appeals to people. But, I would submit to you that tone and style should not be definitive of what a true, authentic liberal is. That measure should be based more on the content of the person’s thought.

One thing that’s odd about Keynes is his sympathy for totalitarian experiments in the 1920s and 1930s. Oh sure, on his visits to the Soviet Union in the 1920s he didn’t like the suppression of thought and of dissenters. This was very typical, again, of his kind of liberalism—the emphasis on the problems encountered by the intelligentsia. These were the people who liked to talk and think and publish their views. There were other people who suffered in the Soviet Union and suffered much more massively.

I don’t know if you’ve ever noticed, but very often people began complaining about Stalinism at the time of the purge trials. The purge trials were directed against the leaders of the Communist party, Stalin’s rivals. The masses of people who’d been oppressed and killed by the millions, the peasants and small business people and working people? The intellectuals seemed to take that in stride: “well, that’s kind of the price for building up socialism.” But when an intellectual like Leon Trotsky is put on trial and condemned to death in absentia, the intellectuals get very excited and John Dewey sets up an international commission to investigate the case of Leon Trotsky.

What about the case of “Ivan Smirnoff”—or whoever—and his family and his kids that have died of starvation in some Ukrainian village? That wasn’t too much of a problem for many of these so-called liberals.

Keynes, in his visits to the Soviet Union, was critical of this aspect. On the other hand, he made very strange statements about the Soviet leadership. He claimed we have to at least give credit to the Soviet leaders for extricating the crazy love of money—which is a hallmark of our own civilization and the worst moral failing of our civilization. In Keynes’s mind, in the Soviet Union, the communist cadres worked for the sake of the community. Here Keynes was in prefect harmony with his good friend Beatrice Webb, who said the same thing at the time and remained a good friend of Keynes. She was one of his best friends up until the time she died in 1943.

There’s a famous essay of his that appeared in The Yale Review in June 1933. It’s also in his collected works, but the collected works does not contain everything he says in that Review article. Keynes praises the “experiments” now going on in Italy, Germany and the Soviet Union. Keynes says he doesn’t agree with everything that they’re doing, and the Nazis especially. They are wild crazy people. On the other hand, Keynes, continues, they at least have the courage to experiment, which is something that nobody in the West is prepared to do. We’re stuck with this old laissez-faire system and the people of the establishment—he meant the Treasury and the British government and the Bank of England—think that laissez-faire is going to save us. Keynes says it won’t, and instead Keynes says he wishes these experimenters well. After all, Keynes says he has experiments of his own—this is almost a quote—that he wants to carry out. Keynes also, by the way, wrote the preface to the 1936 German edition of the General Theory, which is very questionable. He talks about how his system is more adapted to a country like Germany than it is to a country like England or America. By the way, that is not due to any mistranslation, that’s what appears in the English draft.

What I want to mention now is a statement that Keynes makes in a radio broadcast of June of 1936. He reviews books and here he reviews a massive tome that has just come out from Sydney and Beatrice Webb called Soviet Communism: A New Civilisation? Famously, the first edition of that had a question mark after “New Civilisation,” but later editions dropped the question mark. This book of theirs is noted as probably the most notorious and really infamous act of any fellow travelers in the whole sordid history of fellow traveling with Stalinism, during the 1930s and 1940s. Most of the information comes directly from the Soviet sources and the book is an apologia for what Stalin is doing. This is 1936. The book was published in Russian translation in the Soviet Union, as the Webb’s note, very nicely produced with paper and so on. The Soviet authorities welcomed it. So, you would expect then, a liberal like Keynes in his radio review, to attack this book. That’s not what he does. He says, “Soviet Communism is a book which every serious citizen will do well to look into”:

Until recently events in Russia were moving too fast and the gap between paper professions and actual achievements was too wide for a proper account to be possible. But the new system is now sufficiently crystallised to be reviewed. The result is impressive. The Russian innovators have passed, not only from the revolutionary stage, but also from the doctrinaire stage. There is little or nothing left which bears any special relation to Marx and Marxism as distinguished from other systems of socialism. They are engaged in the vast administrative task of making a completely new set of social and economic institutions work smoothly and successfully over a territory so extensive that it covers one sixth of the land surface of the world.

That also, I guess, is supposed to make him a liberal: that he is against any kind of principles and in favor of “constant adjustment to experience”:

The largest scale empiricism and experimentalism which has ever been attempted by disinterested administrators is in operation. Meanwhile the Webbs have enabled us to see the direction in which things appear to be moving and how far they have got. It leaves me with a strong desire and hope that we in this country—in Britain—may discover how to combine an unlimited readiness to experiment with changes in political and economic methods and institutions while preserving traditionalism and a sort of careful conservatism…

That’s very typical of Mill. Try and make sense of that: "unlimited desire to experiment and change things, combined with a careful conservatism…” What is he saying?

Now, it happens that some famous authors like T.S. Eliot and H.L. Mencken, for instance, and a number of others, made unfortunate comments in regard to Jews and sometimes in regard to national socialism in Germany in this period. These comments were unfortunate and mistaken and deplorable, sometimes. However, the whole world resounds with that fact, that all of these authors are somehow guilty of antisemitism and helped along the road to Auschwitz and so on. You never stop hearing about that, if you follow these things as I do.

Why don’t we hear about Keynes’s defense of Stalinism? You may know that the man who’s just finished the third and last volume of his great biography of Keynes, Robert Skidelsky. Lord Skidelsky has been raised to the peerage I think because of this great biography. Well, in the second volume where he should have mentioned this radio talk by Keynes—which can be found in Keynes’ collected works—it’s not there. I wrote Lord Skidelsky and I asked him how come this did not appear. How come it didn’t appear in a major article he wrote on Keynes and the Fabians? Sydney and Beatrice Webb were the leaders of the Fabian Society. Skidelsky wrote back and said, “Well, there are reasons that explain why Keynes wrote this. He was friendly with the Webbs and he wanted to promote their book. He was afraid that some Russian friends of his, who had relatives in the Soviet Union, would feel the repercussions, if he wrote negatively about the Soviet Union. Skidelsky said he’d try to put this in somehow in the third volume. He didn’t put it into his third volume. As far as history goes, Keynes’s defense of Stalin has disappeared. What explains that? This is an outrageous thing for Keynes to have written. By that time, anybody who wanted to know could find out what was happening in the Soviet Union and find out about the Ukrainian terror famine that claimed—we don’t know for sure—six, seven, or eight million people with cannibalism in the villages. People in Keynes’s time could find out about the gulag that had been set up by Lenin. They could find out about the constant executions that were going on so, producing killing fields containing tens of thousands of bodies. Anybody could have found out about this. It was in the anarchist press. It was in the socialist press. It was in the Catholic press. It was in some of the conservative press, also. So he didn’t have to go by the lies of the Webbs to judge what was happening in the Soviet Union. Well, I want to say that this is a very odd thing for a model liberal to have written, not only a model liberal. But, there are anthologies of liberal thought that say, “liberalism from John Locke to John Maynard Keynes,” as if he were the culmination of liberalism.

The Classical Liberal Theory of Class Conflict

Let’s go on from there to a major subject I want to cover now and that is the classical liberal theory of class conflict. The greatest interpreters of this theory were French, so I want to say something about French liberalism to begin with. I mentioned to you that Murray Rothbard in his History of Economic Thought tends to place French economic thought ahead of British economic thought—French and continental in general. As I mentioned to you, Murray’s especially annoyed by Adam Smith and his reputation. Murray said Adam Smith’s "reputation almost blinds the sun." And then this view that Adam Smith was somehow the father of economics, continuing with Malthus, Ricardo, Mill, Marshall, and of course, culminating in Keynes. Rothbard much prefers the continental tradition of Turgot, including Frédéric Bastiat, whom Rothbard considered a very fine economist. There was a very interesting article in The Quarterly Journal of Austrian Economics by Professor Jörg Guido Hülsmann on Bastiat as a precursor of Austrian Economics.

Hayek has not helped the cause along because Hayek wrote a famous essay called “Individualism: True and False.” And here, rather bafflingly, I think, Hayek attempts to distinguish two traditions of individualism. That was a term that he was using at the time for liberalism or classical liberalism. The first is basically a British and empirical line of thought, and according to Hayek, represents genuine liberalism. He believes the second type, in the French and continental tradition, is not liberal really at all. Rather, it is a rationalistic deviation that leads “inevitably,” as he says, to collectivism. This follows, Hayek claims, from the contrasting social theories underlying the two doctrines. Where the British tradition appreciates the truth regarding social institutions, that they originate and develop spontaneously, the French and continental tradition holds them to be products of deliberate human contrivance or design.

Hayek was the head of my dissertation committee in Chicago many years ago. I’ve always had very great respect for him and he was a person who probably was as good a scholar that is learned in the history of thought as he was an economist. But here in this denigration of the continental and French liberal tradition, I really cannot follow him. For one thing, there’s a kind of funny game that he plays because in the British tradition, he lists not only David Hume, Smith and Burke, but also Alexis de Tocqueville and Benjamin Constant, who were not exactly British subjects. And among the French, he mentions the physiocrats, the encyclopedists, Jean-Jacques Rousseau and Henri de Saint-Simon. It’s a peculiar thing, it seems to me, if you’re talking about liberal tradition, to bring in the French encyclopedists who are a bundle of baggage of their own. Some people do consider them liberals, but Denis Diderot and Baron d’Holbach and so on, were hardly liberal in my view. Certainly not Rousseau. Certainly not Henri de Saint-Simon, one of the utopian socialists. So, this is how the French get burdened with the idea of being in some tradition that leads inevitably to totalitarianism.

Hayek goes so far as to speak of the absence of a truly liberal tradition in France. What can you say? It’s obvious that there was an immense liberal tradition in the nineteenth century. He traces of all of these French problems back to Descartes, who Hayek thinks somehow hatched the idea of social engineering and scientism, as Hayek discusses it. But if you want to select somebody, it wouldn’t be Descartes who wrote practically nothing about social theory. I think a much more likely candidate would be the English philosopher Francis Bacon, who thought that in the future, society ought to be recreated on the model of science. Well, more could be said about this, but just want to point out that there are very serious problems with Hayek, if you ever come across his essay on true and false individualism. For one thing, this distinction—individualism or liberalism based upon the idea of spontaneous order created by voluntary interaction, on the one hand, versus the idea of order being created by social engineering—leaves out a very central liberal tradition which is a tradition of natural rights. Natural rights were not the sort of thing that David Hume and Burke and Adam Smith were not really centrally concerned with. Certainly these French people like Rousseau and Saint-Simon were not concerned with it. But there was this whole tradition of natural rights among the French liberals, and the French kept going with it long after the English had given them up.

Turning now to the doctrine of class conflict—which as I say, is best developed by the French—the idea that the classes are in conflict is almost inevitably and invariably associated with Marxism. I don’t know if you know the name Hirschman—Albert O. Hirschman— an economist, you might have come across him. He’s an economist and he has a reputation of being an economist who’s thoroughly familiar with the history of thought, with intellectual currents of the modern period. In one of his books, Hirschman comes across a statement by the famous Italian economist, Vilfredo Pareto, where Pareto talks about class conflict. Hirschman is obviously at a loss when confronted by this because, as he says, it “sounds at first curiously—perhaps consciously—like The Communist Manifesto.” But, as Hirschman says, Pareto distanced himself from Marxism by talking about spoliation. Now, what is obvious from this— what is clear as day from this—is that this celebrated expert in intellectual history has not got the first notion of a classical liberal class conflict theory. The term "spoliation"—spoliazione in Italian—was a term used by innumerable classical liberal writers including Bastiat, for instance, to refer to the exploitation of one part of society by another part of society using the state. This was commonplace in this whole intellectual tradition, and maybe you can understand sometimes why people of our point of view get a little annoyed at their intellectual adversaries for simply not doing their homework; for not acknowledging our own tradition and not acquainting themselves with our own thinkers.

Hirschman is famous for knowing everything about intellectual history and Pareto is a very big name in the history of economic thought. This is what Hirschman was talking about, from the beginning of The Communist Manifesto, 1848: "The history of all hitherto existing society is a history of class struggles. Freeman and slave, patrician and plebeian, lord and serf, yield master and journeyman, in a word, oppressor and oppressed stood in constant opposition to one another."

That was 1848. In 1837, one of the French liberal school, a man named Adolphe Blanqui, who was a protégé of Jean-Baptiste Say, wrote what is probably the first history of economic thought. Blanqui wrote, "In all the revolutions, they have always been but two parties opposing each other, that of the people who wish to live by their own labor and that of those who would live by the labor of others. Patricians and plebians, slaves and freemen, Guelphs and Ghibellines, red roses and white roses, cavaliers and round heads, liberals and serviles are only varieties of the same species."

There’s no doubt that Marx read everything on economics, and read Blanqui’s history of economic thought. Blanqui quickly makes clear, what he understands to be at issue in these social struggles that permeate history: "So, in one country, the fruit of labor is taken from the workman by taxes, under pretense of the welfare of the state; in another, by privileges, declaring labor a royal concession, and making one pay dearly for the right to devote himself to it."

This is done through the guilds, for instance, or government monopolies. Blanqui continues: "The same abuse is reproduced under forms more indirect, but not less oppressive, when, by means of custom-duties, the state shares with the privileged industries the benefits of the taxes imposed on non-privileged classes."

So here we have, in a nutshell, the liberal theory of class conflict, predating the Marxist theory, stated in terms probably nearly copied by Marx at the beginning of The Communist Manifesto. Few mention this, and with very few exceptions such as myself, Joe Stromberg, Hans Hoppe, and now you, are acquainted with. So if you thought that whatever you had to pay to come to this gathering was questionable, now you know it wasn’t because you have this secret knowledge and in fact it’s going to remain secret. It doesn’t matter that we publish these things in publications of the Mises Institute. Hirschman is not going to learn anything from it. Skidelsky didn’t change his mind about mentioning Keynes’ rave review for Soviet Communism: A New Civilisation. Well, we do what we can. By the time that Blanqui wrote in 1837, this idea of classical liberal class conflict theory was commonplace in classical liberal thought.

The State’s Capture of the Middle-Class Bourgeoisie

I want to quote from something that should be known by intellectual historians, and that is from Alexis de Tocqueville’s Recollections. Tocqueville writes about the middle class, which historians tell us came to power in France in 1830, under the bourgeois monarchy of Louis Phillipe. This is supposed to be the period of liberalism in the first part of the nineteenth century in France. Tocqueville says, "[the middle class] entrenched itself in every vacant government job, prodigiously augmented the number of such jobs, and accustomed itself to live almost as much upon the Treasury as upon its own industry."

So, he’s talking about a bourgeoisie or middle class very different from what we understand and what we understood in America in those days—or Britain in those days. This is a middle class that has many similarities to the middle classes in other European countries. They send their sons to university to be university educated in order to get government jobs and never have to work again. Tocqueville says this is a great victory of the so-called liberal bourgeoisie in France. Under Louis Philippe, they expanded government bureaucracy and created jobs for their own kind. If you look up “The Declaration of the Rights of Man and of the Citizen” of the French Revolution and the Constitution of 1791, it doesn’t bear comparison with the American Bill of Rights. There are so many loopholes for government action against individual liberty. But I think that the section that the revolutionaries felt most strongly about, that really was heartfelt, was this: the part where they say all government offices shall be open to all citizens regardless of what class they come from, whether nobility or commoner, and should have equal access to all the awards and positions and functions that the government has to offer.

There were some French liberals of our sort—authentic liberals—in the later part of the century. I’ll mention, in fact, some of these French class conflict theorists, who described what they viewed as the essence of the French Revolution: it was the commoner’s—the Third Estate’s— revolt against the aristocracy because the aristocracy and the French monarchy had limited access to government positions and civilian and military bureaucracies in the church, and so on. The Third Estate was kept out of those and had to crush the power of the privileged orders in order to get those jobs. That’s a possible and fruitful interpretation of the revolution, I believe.

Now, I want to direct your attention to some authors of the very early part of the century, right after the overthrow of Napoleon under the Bourbon restoration. A group of then-young liberals founded a journal, which happened to be called Le Censeur Européen and began publishing their views. Their views were a synthesis of some somewhat earlier French thinkers like Constant, Destutt de Tracy, and Jean-Baptiste Say. In this journal, which just lasted for a few years, they outlined a philosophy of history that includes, embedded in it, a theory of class conflict. They gave the best, clearest interpretation of this classical liberal view that I’m aware of.

Jean-Baptiste Say was a very important influence. Let me mention who these men were at Le Censeur. There was Charles Dunoyer and Charles Comte, who was no relation to August Comte. (August Comte was one of the founders of sociology and a deeply evil man.) The group also included Augustin Thierry. Thierry became the most famous, he was a well-known historian in the nineteenth century. Say was the father-in-law of Charles Comte. Also, everybody met each other socially in the salons of the time, so there was a close interconnection.

Now, according to Say, the different ways of producing all consist of taking a product in one state and putting it into another in which it has more utility and value. (Meanwhile, Malthus and Ricardo are talking about the labor theory of value.) According to Say, all members of society who contribute to the creation of values are deemed productive, but Say awards a pride of place to the entrepreneur, which is one of his major contributions. Murray Rothbard talks about that in his History of Economic Thought. This is in contrast to Smith, for instance, who had no place there for the entrepreneur. Smith talks about the “capitalist” instead. Say understands the contribution of the entrepreneur to dynamic free enterprise, and to the free-market economy that he believes is coming into existence. In other words, we have the opposite of the pessimism of the English school.

However, there are flies in the ointment. Say says and talks about the value of personal interest in fueling the economy, "[b]ut personal interest is no longer a safe criterion, if individual interests are not left to counteract and control each other. If one individual, or one class, can call in the aid of authority, to ward off the effects of competition, it acquires a privilege and at the cost of the whole community..."

This is the origin of class conflict, the state entering into market relations. Say continues:

[An individual or class] can then make sure of profits not altogether due to the productive services rendered, but composed in part of an actual tax upon consumers for its own private profit. … The legislative body has great difficulty in resisting the importunate demands of this kind of privileges; the applicants are the producers that are to benefit thereby, who can represent, with much plausibility, that their own gains are a gain to the industrious classes, and to the nation at large, their workmen and themselves being members of the industrious classes and of the nation.

This is an important point about the private producers “who can represent, with much plausibility, that their own gains are a gain to the industrious classes, and to the nation at large.” In other words, ordinarily, if we’re talking about manufacturers or merchants, businesspeople in general, well, they’re the good guys. They help society along. The product is utility for society. And that leads us to sort of misdirect our attention from the fact that they’re the ones who are now coming asking for government privileges. In other words, Say was saying that if it were the members of the Catholic church, or if it were noblemen, or if it was state functionaries who came and asked for special privileges, right away we could see that they’re suspect and they are people who are trying to live now at the expense of others.

It’s more difficult to see in the case of businessmen, which helps us to understand how it was possible for a noted author to write a book about American businesses as “the most persecuted minority.” Rothbard responded to this claim, talking about the history of American business and the unfortunate connection between big business and government.

The Italian Industrialist School

Now, these authors that I’m talking about invented a philosophy they called industrialism. In any given society according to them, a sharp distinction may be drawn between those who live by plunder—and they don’t hesitate to use the word—and those who live by production.

The first are characterized in several ways: the plunderers. They are the idle, the devouring, the hornets. The second are, among other things, the industrious, the bees. Those who attempt to live without producing are the savages. The producers are the civilized men, no matter what the appearance might be. Cultural evolution has been such that whole societies may be designated as primarily plundering and idle, or as productive and industrious. They follow or they prefigure Adolphe Blanqui in this: the history of hitherto existing society is a history of the struggles between the plundering and the producing classes. They have the view of Benjamin Constant that the ancients, the Greeks and the Romans, for all their achievements, were basically societies that were founded on war and on constant war making, which included of course, imperialism and plunder of other societies.

These scholars were also concerned with the German invasions, the invasions of the Franks, and then in England, the Invasion of the Normans and the creation of feudalism. Now, I would say that they had a somewhat one-sided view of feudalism, but nonetheless, this followed their typology. The feudalism represented "a kind of subordination that subjected the laboring men to the idle and devouring men, and which gave to the latter the means of existing without producing anything or living nobly."

They’re talking mainly about the robber barons particularly, the rapacious nobility that eventually succeed the equally rapacious kings. I’m summarizing hundreds and hundreds of pages that are written along these lines, and I’m quoting kind of promiscuously from Constant and Comte. Comte speaks of the plunderers whose “thefts with violence, alterations of the coinage, bankruptcies, confiscations, hindrances to industry” are the common stuff of the history of France. He continues: "When the lords were the stronger, they viewed as belonging to them, everything they could lay hold of. As soon as the kings were on top and defeated the nobility, they thought and acted in the same way."

With the growth of the wealth of the commoners, and of the towns, additional riches became available for expropriation by the parasitic classes. These writers are particularly severe on the royal manipulation of money and legal tender laws. In modern times, the main types of the idle classes have been the professional soldiers, the clerics of the state established religion, the nobles, and the bourgeois who were ennobled—that is, those who left the status of bourgeois in order to become nobles and government officials.

These authors had a lot to say about war and peace. In fact, the journal’s motto—on every issue printed in the top was the phrase, paix et liberte—"peace and freedom.”

One of the main categories of plunderers and exploiters of the present day, according to the Censeur Européen group, were state functionaries. In fact, I could even cite an article for you on them as Precursors of the School of Public Choice. For them, and for Europeans during the early nineteenth century—this is before the War of the Southern Secession and everything that followed that—America was a promised land. They cite the virtual nonexistence of any kind of federal bureaucracy in the United States compared to France. With the number of bureaucrats they had in France, Americans could have staffed thirty United States federal governments. Yet, at the time, the United States was rapidly approaching the population of France.

Marx and Liberal Class Theory

Let’s go back to Professor Hirschman and his kind, who said class conflict sounded like Marxism. Well, Marxism sometimes sounds like liberal class conflict theory. There are in fact two theories of social conflict in Marxism. One is the one everybody knows about, that is the present day, of the bourgeoisie expropriating surplus value from the proletariat and therefore being its natural enemy. There’s another Marxist conflict theory. This is from Marx’s description of France in the third quarter of the nineteenth century. It’s a longish quote, but I’ll try to shorten it:

The executive power, the French state, with its enormous bureaucracy and military organization, with its ingenious state machinery embracing white strata with a host of officials numbering a half a million besides an army of another half a million, this appalling parasitic body which enmeshes the body of French society like a net and chokes all of its pores, sprang up in the days of the absolute monarchy. … The [Legitimist] Monarchy and the July Monarchy added nothing to it but a greater division of labor, increasing at the same rate as the division of labor inside the bourgeois society created new groups of interests, and therefore new material for the state administration.

This is Karl Marx: "Every common interest [that is, every common interest of society apart from the state] was immediately severed from the society, countered by a higher, general interest, snatched from the activities of society’s members themselves and made an object of government activity."

Now I submit to you that that sounds very much like classical liberalism in its opposition to the state and state action with the rest of society. Marx is not talking about capitalists and workers here. He’s talking about the rest of society which was willing to see to these various tasks and do what had to be done while the state bureaucracy snatches it away from them. Marx continues: "All revolutions perfected this machine instead of smashing it. The parties that contended in turn for domination regarded the possession of this huge state edifice as the principal spoils of the victor."

Marx is often very shrewd, especially when he dealt with concrete historical episodes and not his general economic theory. This, you could say, was the secret history of revolution in the nineteenth century and afterwards: the attempt of one group to seize state power and everything that went with it—all the jobs, especially—from another group.

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Gustave de Molinari became the grand old man of classical liberalism, crediting Pareto. Molinari understood that the main issue in the Civil War was the tariff, not slavery. In Italy economists founded free market economics, crediting Bastiat.

In America, John Taylor saw society becoming feudalistic with exploiting classes. Government needed to be separated from banking systems. Thomas Jefferson’s values were held most high. William Graham Sumner talked about plutocrats – wealthy persons who used the state. There was the liberal idea of class conflict. Production led to peace, whereas militarism led to war and destruction. War is the health of the state, said Bourne.

The pro-peace position was led by the Manchester School, particularly by Richard Cobden. They led the free trade movement. Their aim was harmony and peace among nations.

The tax-eating rather than the tax-paying classes favored war. Cobden emphasized trade not politics. Bastiat proposed getting rid of the French army. The American Open Door policy with China was free trade imperialism. Unilateral free trade works. Trade agreements don’t. Just do away with tariffs.

War making was often based upon incorrect information. Kosovo and Iraq are examples of disinformation stampeding us into war. The liberal anti-war tradition was against imperialism. The US went down the road of empire as did Spain. Constant war, large standing armies, crushing debt, and destructive levels of taxation are all with us now.

Herbert Spencer believed that warfare was only suitable to man’s primitive stage, not his advanced stage after industrialization. However, some liberals, like de Tocqueville, did support war under certain conditions.

Transcript: Lecture 4 of 10 from Ralph Raico’s History: The Struggle for Liberty.

[This transcript is edited for clarity and readability. The Q and A at the end of the lecture has been omitted. Annotations have been added by Ryan McMaken.]

The French contribution to class-conflict theory remained pretty much the same after the Industrialist school. There wasn’t much amplification or enrichment in a theoretical way, I would say. Nonetheless, the French school typically adhered to the analysis that I gave you in the last hour and added certain other historical examples.

Gustave de Molinari became, after a while, the grand old man of French liberal economics. He lasted for a long, long time, and became the editor of the Journal Des Economiste for some decades at the end of the nineteenth century and into the twentieth century. Molinari provides, in a way, an additional historical example with how he connected class conflict theory with the American Civil War. His interpretation is basically the interpretation you can read in Charles Adams, in his book on the Civil War. It is also found to a degree in Tom DiLorenzo’s book : namely, that the main issue was the tariff. The tariff had been the issue on which secession had practically already occurred in the 1830s, in connection with South Carolina. It was not the issue of slavery and this was, according to Molinari, foremost in the minds both of the Southern leaders and of the Northern Republicans.

So, that the American Civil War then fit into this category of class conflict, the predatory class being the Northern Republicans, who wanted protectionism and the preyed upon class being the Southern planters, but in general, Molinari used this analysis all over the place. Through this lens he analyzed the success of the French regimes, not only of Louis Philippe, but the Revolution of 1848, Napoleon III, and the Third Republic.

Now let’s turn our attention to Italy, for a moment. If you know something about James Buchanan’s public choice theory, he gives great credit to the Italian economists for steering him in this direction, giving him the tools of basic analysis. One Italian economist he doesn’t mention is the man who more or less founded Italian free market economics in the nineteenth century, Francesco Ferrara. Ferrara’s book was taught for many decades at the University of Turin. Murray Rothbard has in his History of Economic Thought, a few pages on Ferrara , but Ferrara’s main interest for us is that he acted as the editor of an enormous series of works by foreign economists. He translated these into Italian with huge introductions, about their lives, their contributions and so on, so he was in a way, a very helpful, great historian of economic thought. And Ferrara gives full credit for his point of view—which again is a liberal class-conflict point of view in the way I outlined last time—to Bastiat. So, what we have then is the French school by Bastiat influencing the Italian Ferrara. From Molinari, we have the influence of Vilfredo Pareto. Now, Pareto will be a name to people who have studied economics here. “Pareto optimality” is still a concept that’s used. Now, in economics, he was more of the Lausanne school of Walras, and not an Austrian-School economist. But in his social theory, he was very much a libertarian.

Again, Rothbard has some pages on Pareto in his History of Economic Thought. Pareto openly referred to Molinari as his "maître" and master, and you can see the traces of Molinari’s economic theory in general, especially this class conflict analysis in Pareto. Pareto is simply the most well known of a whole school of Italian economists. They were the best Italian economists of the time—the late nineteenth century and early twentieth century. Schumpeter says that by this time Italian economists were the equal of any in the world. Very prominent is a man named Antonio de Viti de Marco, whom Jim Buchanan quotes and Maffeo Pantaleoni, whom I don’t think he does quote. However, reading Jim Buchanan on these people and then reading the authors themselves, I don’t think he does justice to the radicalness of their position. Again and again, they excoriate the Italian state of being nothing but a collection of predators, of crooks, of gangsters, of people who in one way or another were stealing money from the productive citizens, working people, small business people, of the peasants of the south and so on. The predators channeled money and privileges to favored clientele, which included not only businessmen who got protection through tariffs—contractors of all kinds—but also unionized workers. In general, it was the North with the industrialists and their protective tariffs paying off the unionized workers as well to gain their support. They were preying on the productive citizens of the rest of the country and especially in the agricultural sector, which was still the main industry in Italy.

These people are well worth looking into.

The analysis continued afterwards with a man who is famous really, I have to tell you, although maybe you’re not familiar with his name: Luigi Einaudi. He was a free-market economist who was the first President of the Italian Republic after World War II and probably the most famous free market liberal thinker in Europe at that time.

The Jeffersonians

Now, this class-conflict analysis had other traditions besides that of the French and—through the French—of the Italians. In the United States, for instance, some Jeffersonians and Jacksonians also grappled in detail with the question of class in the politically relevant sense and came to conclusions very much reminiscent of the industrialist school. John Taylor of Caroline, William Leggett, and John C. Calhoun, were key observers and critics of the social groups whom they believed were utilizing political power in order to exploit the rest of society, the producers. John Taylor was outraged by what he saw as the betrayal of the principles of the American Revolution by a new aristocracy based on “separate legal interests.” Taylor was homing in on the idea that these conflicting classes were created by government privilege: the bankers’ privilege to issue paper money as legal tender, the beneficiaries of public improvements, protective tariffs, the “American system,” and the policy of the Whigs in the early nineteenth century. American society, according to John Taylor, had been divided into the privileged and the unprivileged by this substantial revival of the feudal system. (He’s talking now about feudalism in the way that the industrialist writers have.)

Two decades later in the 1830s, the Northern radical, William Leggett, a Northern Democrat, denounced the same exploiting classes. Leggett was a chief spokesman for Jacksonian principles in the North. He denounced in the Jeffersonian manner the bankers and the beneficiaries of government grants for internal improvement. His own position was, as he thought of it, the same as that of the original American Republic: laissez-faire, do not govern too much. The American aristocracy, he thought, naturally favored a strong government including especially control of the banking system. The banking issue was the main issue of that time. Leggett in contrast demanded the absolute separation of government from the banking and credit system.

Leggett was the editorial writer and his pulpit was the New York Evening Post, the oldest paper in America founded by Alexander Hamilton. In those days it was edited by the great American writer and poet William Cullen Bryant. Leggett was their chief editorial writer. He summed up the principles that he was going to be writing according to. They were the principles of Thomas Jefferson, he said. “The sum of a good government is described by that illustrious champion of democracy…”—these are Jacksonians, so he thinks he’s talking in favor of democracy—“is all we aim at.” In Jefferson’s words, “A wise and frugal government, which shall restrain men from injuring one another; shall leave them otherwise free to regulate their own pursuits of industry and improvement; and shall not take from the mouth of labor, the bread it has earned.”

This book is really a goldmine. He wrote very well and there are all kinds of great editorials here by Leggett. He has an editorial denouncing the Governor of New York for proclaiming Thanksgiving. He asks where, in heaven’s name, does this politician come off telling us when we should give Thanksgiving to the Lord and appointing a special day for it that? Why doesn’t government leave it up to us to decide when we want to do something like that? He has an essay here called “The Street of Palaces” and he talks about Genoa, that has a very elegant street commonly called the street of palaces with the houses of the great and influential nobles of the past. Leggett says, “Is this condition of things confined to Genoa or to the European countries? Is there no parallel in our own country? Have we not in this very city [New York] our street of palaces adorned with structures as superb as those of Genoa, have we not too our privileged orders, our scrip nobility?” Do you understand scrip, that is a paper put out by a different authority without any backing in precious metals to act as money. By “scrip nobility” he means the banks that were given the right in New York state to issue paper money without the backing of precious metals. “Aristocrats clothed with special immunities, controlled indirectly, but certainly the political power of the state, who monopolize the most copious sources of pecuniary profit and wring the very crust from the hard hand of toil. Have we not ensured like the wretched serfs of Europe, our lordly masters? If any man doubts that these questions should be answered, let him walk through Wall Street, a street of palaces.”

You can see in what sense he was a radical, in what sense he was a Democrat, but his ire was directed against those influential, wealthy—often wealthy—people who used the state in order to gain their assets. This is very typical of the whole liberal tradition going back to the Levellers. They were obviously not classical liberals who were believers in socialism or egalitarianism or the leveling of fortunes. On the other hand, they were very suspicious of people with large fortunes because those people are the sort who tended to have connections with the government. They tended to act hand in glove with the government, getting favors from the government and afterwards. I’ll mention in a little while, one of the last and greatest of the American classical liberals, William Graham Sumner who talked about the “plutocrats.” Maybe you’ve heard that term, plutocrat. It’s commonly used to mean any wealthy person. It comes from the god Pluto who, as the god of the underworld, was supposed to be the god of treasures and buried wealth and so on. So, nowadays “plutocracy” means ruled by wealthy people, but he used plutocrat in very sharp distinction to capitalist, for instance. A plutocrat was, in fact, some wealthy person who used the state in order to defend his position on the market. A plutocrat didn’t dare to risk himself on the open market, but used the state instead. Leggett is a very good example of this anti-plutocrat tradition in America.

Marx and Soviet Class Conflict

Finally, what I want to say in contrasting the Marxist and classical liberal ideas of class conflict, it seems obvious to me that the classical liberal idea of class conflict is enormously superior. In fact, it is no contest between the liberal theory and the Marxist theory, in explaining Marxist regimes. Marxists and communists in general had a very hard time trying to explain what kind of society and regime existed, for instance, in the Soviet Union. It wasn’t a capitalist regime anymore. It wasn’t an exploitative regime of the bourgeoisie because they had gotten rid of the bourgeoisie. The communists had chased the bourgeoisie out or executed them. And all of your property was taken over by the state in the name of the people. What sort of regime is that? What class is involved there? If class conflict exists, according to the Marxist views, because of differential access to the means of production, well, there’s no capitalists on one side to claim the means of production anymore. There’s no struggle over the means of production anymore. What you have are the means of production allegedly owned by society at large. And this was the position of the Soviet regime: we’re a classless society. We don’t have class exploitation anymore.”

In fact, the problem was obvious to everyone from the word go, every alleged Marxist regime in the world was an exploitative regime with a ruling class that came to be known as the nomenklatura. So, how to explain that? Well, you have the liberal idea of class conflict that is there is a certain group of people who gain control of the state apparatus and exploit the rest of society. This was the “new class,” as it was sometimes called. Have you read Animal Farm, maybe? This was the pigs. This was the nomenklatura, the people in charge, the people whose names were in a certain book of influential people. The liberal idea can explain also Marxist regimes in a way that the Marxist idea of class conflict cannot. And in general, it is much more useful than any alternative and maybe it’s time that some of our scholars discovered that there was such a thing as the liberal idea of class conflict.

War and Peace

One area of class conflict that was especially pointed out by the classical liberals was the area of war and peace and international relations. I mentioned to you last time that the motto on the front page of the Censeur Européen in every issue was, “peace and freedom.” A pro-peace position was central to the industrialist point of view—just to take this one liberal group—and their attack on militarism and standing armies was savage and relentless. This is a typical passage repeated many times, for instance by Dunoyer. He’s being sarcastic, really, savagely sarcastic here. Remember he talked about how production and exchange is at the center of social life, so that we have to honor and respect the people who engage in production. He raises the question: “What is the production of the standing armies of Europe? It is consisted in massacres, rapes, pillages, conflagrations, vices and crimes, the deprivation, ruin and enslavement of the peoples. The standing armies have been the shame and the scourge of civilization” The industrialists, including also Jean-Baptiste Say, attacked British imperialism, the arrogance of British imperialism, which Say said, has turned production and commerce itself into an attack on civilization. They were for various reasons, not particularly anglophile.

Now, you’ve heard many times the phrase that “war is the health of the state,” and this comes from the Left anarchist Randolph Bourne in the course of the First World War. Murray Rothbard was the one who introduced this phrase and concept into libertarian thinking. Murray always stressed the idea that war is the health of the state because that is what history has demonstrated. I’m sure that next week, those of you who have the privilege of listening to Robert Higgs, will find him amplifying on that to a great extent. It's one of his major fields. So, the idea of war being a special problem to society, the preservation of peace became a major aim of liberalism.

In Mises’ book on liberalism, he has in the beginning the different sections listed: property, freedom and—among the early ones—peace as one of the aims of the liberals. As Mises says, “Not war, but peace is the father of all things,” contrary to what the Greek philosopher Heraclitus maintained. Mises says, “Peace is always better than war.” Extolling peace has characterized the classical liberal movement from the eighteenth century at least from Turgot on through the nineteenth century to even Gladstone who wasn’t, frankly, that much of a liberal. His slogan in mid-Victorian Britain was, “peace, retrenchment, and reform.”

Now, in anglophone countries, the greatest single factor leading to the identification of classical liberalism with a pro-peace position is the work of the Manchester School and its leaders, Richard Cobden and John Bright. Here we have another couple of my personal heroes, especially Cobden. Richard Cobden and John Bright: there is a great literature on these men. A number of their works are still in print and certainly many of their works are in libraries. Best known for their advocacy of free trade, they were the leaders of the free-trade movement that led to the repeal of the corn laws in 1847. These men held that unhampered freedom of commerce among nations is the surest road to an even higher goal than the material wellbeing of the people, world peace.

Classical liberals are often attacked for being mean-minded and venal materialists. It’s very clear that businessmen as they were, and interested in profits as they were—John Bright was proud of being a successful mill owner—the liberals of the Manchester School had a higher aim which was to bring about harmony and peace among the nations.

The most fundamental reason for opposition to war—and its concomitants, imperialism and militarism—was stated succinctly by John Bright in one of his speeches during the Crimean War. That was a watershed war in the Crimea from 1854 to 1856. This is what Bright said: “What is war? I believe that half the people that talk about war have not the slightest idea of what it is. In a short sentence it may be summed up to be a combination and concentration of all the horrors, atrocities, crimes and sufferings of which human nature on this globe is capable.”

So when you see some of the people nowadays, some of the writers nowadays, talking so glibly about war, you should keep that in mind. They don’t. Yet, those of us who believe in laissez-faire and pure capitalism—we’re supposed to be the heartless ones. Meanwhile, they don’t really give a damn about—and I think even their remorse over the death of American mercenaries is pretty much half-hearted—the victims of American war waging. The Pentagon itself says, “we don’t keep these figures.” Take the Iraqi war with its thousands of the civilians dead. Even the Associated Press counted 3,200-something, but 3,200 was only people who died in hospitals, not people who were buried under rubble or died on the road. This total was from only about half the hospitals in Iraq, the largest ones. So, it’s very probably true that five to six—maybe 10,000—civilians died and that does not include the ones who were maimed, mutilated like that kid, Ali, with his arms gone.

Bright was a Quaker. He was not a pacifist, but he was a Quaker. He was also a human being, unlike the people who call themselves conservatives nowadays, who really could not care less and gloat about how we have the power to do that kind of thing. Someone who had this point of view—that it was fine to kill people in this way—I believe would have even come under suspicion in the SS, as most likely a potentially dangerous sadist. They wanted people who were just disciplined and killed when they were given the order and didn’t get any special kick out of it.

Let’s go back to the Manchester School. They believed that the interests of the great majority in all countries was peace and that both specific wars and long-term patterns of belligerency on the part of governments could be explained by and large by reference to the interests of particular groups within the governing circles. These groups were more or less what Bright was fond of calling, “the tax-eating”—rather than the “tax-paying”—classes. This was the old liberal view that you could find in Kant and Condorcet and Paine, the Industrialists, and many others: that it was the classes associated with the old order who fomented war. The classes of the producers would tend to want to avoid war. In mid-nineteenth-century England, these tax-eating classes that favored war, were in their view, the aristocracy with its ramified sinecures in the army, navy, the foreign office in colonial bureaucracy, the established Church of England, and to a lesser degree, certain capitalist groups wishing to spread foreign trade with the backing of English military and political power as with the opium wars against China.

Besides pressing for free trade, which would tend to make war an increasingly self-defeating proposition, the Manchester liberals considered their duty to attack and expose the particular wars into which England was always drifting or threatening to drift. I’m concentrating on this Manchester school because they adumbrate many of the traits of future classical liberal writers down to the libertarian writers today, in their critique of war and the forces behind it. Cobden said “It would seem as if there were some unseen power behind the Government, always able, unless held in check by an agitation in the country, to help itself to a portion of the national savings, limited only by the taxable patience of the public.”

David Hart of the Liberty Fund is going to put online two big volumes of Cobden’s different pamphlets and so on, all concerning foreign policy and international relations. Naturally Cobden made speeches and wrote on many, many different issues, including on this subject. In my view he was the greatest libertarian theorist of international relations who ever lived. In his very first pamphlet, he put on the title page a quotation from George Washington’s farewell address, Washington said, “The great rule of conduct for us in regard to foreign nations is, in extending our commercial relations, to have with them as little political connection as possible.” So, no entanglements, not only entanglements, but hardly any connection, if possible, with foreign governments. Rather, the idea was to let our merchants go all over the world—as in fact they did during our “terrible” isolationist period when America had its “ head in the sand,”—and somehow American merchants were going to China, Europe, Africa, and everywhere. America then became an economic powerhouse in the nineteenth century. Cobden said these words of Washington are the primary cause of the prosperity and happiness of the American people. In his early years before reality set in, he looked forward to the day when “the test of ‘no foreign politics’…” would be applied “to those who offer to become the representatives of free constituencies.” The idea was no foreign politics—just have nothing to do with it. There was a Crimean War, however, and the British public’s wild support of it, that changed Cobden’s mind on that, as to whether that was a reasonable expectation.

Bastiat, meanwhile, went so far as to propose the unilateral disarmament of France. Bastiat asked who’s going to come and invade us? Who’s going to bother to send armies and garrison the country? Bastiat pointed out that France had a large, highly intelligent, and self-disciplined population. He suggested France set an example and get rid of its army.

A concept that’s sometimes used in connection to the peace-and-trade position, by historians, is free trade imperialism. That is, being in favor of free trade and against protectionism, but using the government in order to force other countries to adopt free trade to allow our capital imports and commodity imports. The American open door policy in China is a prime example of free trade imperialism. The American government and American business community at the time, figured that we could outcompete any other country, so what we had to do was make sure that China kept an open door, an equal open door to all foreign countries and we could sell our goods there, outcompeting the British, the Japanese certainly, and others. Now, in order to enforce this open door policy, the American government used diplomacy, economic sanctions against Japan at various times, and finally the threat of war and war itself. It was the American policy towards China and the so-called open door policy, that was the major stumbling block to good relations between the United States and Japan. So, that is something you can call free trade imperialism. Well, whatever you want to say about that, Cobden was no supporter of that at all. He declared, “Affairs of trade, like matters of conscience, changed their very nature if touched by the hand of violence, for as faith forced would no longer be religion, but hypocrisy, so commerce becomes robbery if coerced by warlike armaments.”

Also, it’s important to note—and it is significant—that the Manchester school, as in the example of the repeal of the corn laws, was in favor of unilateral free trade. That is, in this view, you don’t enter into complicated agreements like the North American Free Trade Agreement. What you do is simply abolish your tariffs. You don’t give the impression that by abolishing your tariffs, you’re helping the other side. What you’re doing is you’re helping your own consumers, you’re helping your own public, to just do away with the tariffs and allow your own domestic consumers to buy things more cheaply. If the other side wants to punish its own people by keeping its tariffs? Well, that’s up to them.

Now, in respect to their foreign policy views, the Manchester men have been termed “Little Englanders.” Cobden’s critique of English imperialism in the British Empire was scathing and unrelenting. As he said, for instance, “the peace party… will never rouse the conscience of the people, so long as they allow them to indulge the comforting delusion that they have been a peace-loving nation. We have been the most combative and aggressive community that has existed since the days of the Roman dominion. Since the Revolution of 1688, we have expended more than 15 hundred millions of money…”—pounds, in those days—“…upon wars, not one of which have been upon our own shores or in defense of our hearths and homes.”

He continues: “We have manifested an insatiable love of territorial aggrandizement. In the insolence of our might and without waiting for the assaults of our envious enemies, we have sallied forth in search of conquest or rapine, and carried bloodshed into every quarter of the globe.”

Bright said, “What do you think of the people that have never experienced an invasion since the year 1066 and yet lives in daily fear of a foreign invasion?” Is this some kind of mass delusion? Well, he thought it was forced typically by the government.

By the way, from some statement like that, you might come to the conclusion that he was some kind of self-flagellating masochist or something. He wasn’t. He was enormously healthy and happily married with a happy family life and political career and he loved England. But he loved his own little spot and place in England. He was a regionalist and gloried in the fact that he was an Englishman. What he was against was the policy of the English government and of the English predatory classes that supported that government.

Cobden died in 1865. John Bright survived him by 24 years. The most notable foreign policy issue that arose in this period involving Bright was Prime Minister William Gladstone’s decision to occupy Egypt in 1882. It was a “temporary” occupation that lasted for 75 years. Bright, as a member of the cabinet, resigned in protest. At his advanced age, he could not make Egypt into a crusade, as he had at the time of the Corn Laws or as he tried to in the Crimean War. In private, Bright identified the city of London’s financial interest as the chief force behind expansion and to Egypt, since holders of Egyptian government bonds were fearful of the loss of their capital.

So now, in Brights view, we’ve moved away from the old feudal classes, the nobility, the established church, the state and its functionaries as the fomenters of imperialism and war. Now it’s certain capitalists’ interests. He confided to his friend, Goldwin Smith, a famous historian at the time, that “[i]t is a Stock Jobbers’ war. We shall very likely have more of the same thing. One set of causes of war departs, another crops up in its place.”

John Stuart Mill and Austrian Intervention

It’s an interesting view. We can contrast with the position of the Manchester School, the position of John Stuart Mill. Again, Mill was no principled opponent of foreign intervention. In fact, he thought that foreign intervention was sometimes absolutely needed. The example he took is, if any Millian bothered to think about it, a rather embarrassing example for him.

What he said was this: Europe was filled with nationalist movements that were trying to gain independence from empires. For instance, the Hungarians within the Austrian Empire. He said if a national movement should rise up attempting to gain its independence from some tyrannical government, then we let them fight it out because whether the nationalist movement can survive or not is a good test of whether it’s mature enough to become independent. However, what happened in 1848-1849 in Central Europe was this: the Hungarians were able to defeat the Hapsburgs and maintain a certain independence for a while. But then the Habsburg emperor called in the Russians to help him. The Russian army came across the passes of the Carpathian mountains, as they did in 1956 to crush the revolution, and defeated the Hungarians. Mill says that in that case, when a third party intervenes, England has the obligation to use all of its resources to support the nationalist independent movement. He said those people who are in favor of nonintervention and little England and mind their own business, are selfish. Mill said it was embarrassing for the whole world to see that the English are so selfish and interested in their own national self-interest, their own survival. He didn’t use the term “altruist,” but he said the English should be altruistic about this. So, he would have favored—as he did—the Crimean War to punish the Russians.

When I said that Millians would be embarrassed by his position, what I had in mind was this. The truth of the matter is that yes, the Hungarians led by Lajos Kossuth wanted their independence from the Habsburgs. The way people judge superficially on these matters, Kossuth had well wishers everywhere including Britain and the United States. But, in actuality, what Kossuth insisted on was that Hungarians—that is, the ethnic group, called Magyars not the territory—should control all of the non-German part of the Austrian Empire and that Hungarians should lord over the Slovaks, the Romanians, the Serbs, the Croats and other minority ethnic groups. Do you follow what I’m saying? In other words, what he wanted was a smaller version of what the Habsburgs wanted. The Hapsburgs wanted to control and lord it over different ethnic groups and he wanted his own people the Hungarians, the Magyars, to lord it over these various other groups. That was his actual position. There’s no doubt about that.

John Stuart Mill presumably was one of the best informed people in Europe. He was either not aware of this or didn’t think it was particularly important, maybe thinking that the Hungarians were more advanced than these Slavic people and Romanians and therefore maybe the Hungarians deserved to be in charge. But my point is that here we have somebody who is willing to involve England in a war with Russia in 1849, on the basis of a lack of information and not really understanding what was going on. If he had been able to start a war with the Russians by pressing a button, he would have done it. The Crimean War came a few years after that, but there was no reason to fight the Russians at that time, either.

This is the case very often the case. War making is often based on incorrect information or sometimes deceptive information and disinformation. In the case of the war over Kosovo in 1999, nothing is clearer now than that it involved an insurrection on the part of the Kosovo Albanians against the rule of the Serbians—Kosovo being a province of Serbia. This insurrection, which had been going on for a while, was led by a group called the KLA, the Kosovo Liberation Army which had been labeled a terrorist group by the United States State Department. Well, Milosevic, the leader of Yugoslavia, attacked the KLA rather severely. It was an insurrection, and the Serbian state was brutal and harsh about putting it down. Nonetheless, that was the situation. However, it was nowhere as brutal as the United States government was in putting down the Vietnamese rebellion during the Vietnam War. The Serbians never used napalm and never destroyed villages en masse and so on. The US government and the media, however, began a campaign saying that genocide was going on in Kosovo, and that the Serbs were committing genocide. Maybe you’re too young to remember. Maybe like most Americans, you think it’s ancient history anyway, so why bother?

One of the chief spokespeople in this media campaign was Christiane Amanpour who should really be put on trial—the way the US does it or the Israelis do it, and just be shot in the streets—for having fomented this war. Those of us of a certain age followed it in detail. They talked about genocide and heard that this is the worst example of ethnic cleansing in Europe since the Second World War. Eli Wiesel said it was genocide, and that it was comparable to the Holocaust. I heard with my own ears Senator Joseph Lieberman say, this is genocide. Amanpour said that 100,000 Kosovo Albanians of military age are missing. These people simply retell the stories, the atrocity stories, put out by the KLA. The media interviews refugees who say that there were hundreds killed with thousands missing, and so on.

The war is now over, however, and the US and NATO have control of Kosovo, just as they have control of Iraq now. They go wherever they can looking for bodies, yet altogether they found 2,100 unidentified dead. Unidentified, that is, in that was not clear whether they were Albanians or Serbs. It is not clear if they were Albanian civilians or if they had been fighters and died in some firefight. The disinformation about this alleged genocide was disinformation spread by the US government, by other NATO governments, and by Western media. This was a disinformation that stampeded an American public into supporting this war in Kosovo.

Antiwar Liberalism in the Late Nineteenth Century

Now, to continue with the liberal anti-war tradition. This is what I mentioned the other day from Sydney Smith. Remember I mentioned that Sydney Smith had studied under Dugald Stewart, who was a disciple of Adam Smith, and in this way imbibed his liberal ideas in the early nineteenth century. In 1823, he wrote to a friend,

For God’s sake, do not drag me into another war! I’m worn down, and worn out, with crusading and defending Europe, and protecting mankind. I must think a little of myself. I am sorry for the Spaniards — I am sorry for the Greeks; I deplore the fate of the Jews; the people of the Sandwich Islands are groaning under the most detestable tyranny; Baghdad is oppressed; I do not like the present state of the Delta; Tibet is not comfortable. Am I to fight for all these people? The world is bursting with sin and sorrow. Am I to be champion of the Decalogue, and to be eternally raising fleets and armies to make all men good and happy?

This was a liberal who thought not. Now, in the United States, classical liberals were first mobilized against imperialism at the time of the Spanish American War and the following war against the Philippine insurrection. (You know it’s always called the Philippine “insurrection,’ although by what right the United States acquired the Philippines as a colony and became the legitimate power against which these Filipinos were now engaged in “insurrection” is unclear.) The Anti-imperialist League was led by Edward Atkinson, E.L. Godkin of The Nation—at the time the flagship the classical liberal publication—and Karl Schurz. These men were American versions of the Little Englanders.

There is a very famous essay by a man I just mentioned a little while ago, William Graham Sumner, titled “The Conquest of the United States by Spain.” Sumner was a Professor of Sociology at Yale, the leading classical liberal of his time, a defender of the gold standard, free trade, against coercive unionism, against spending, and the author of the famous essay “The Forgotten Man.” The forgotten man really would be an example of the productive individual who becomes prey of the predators and interestingly enough, this was in the 1880s. He said the forgotten man is a person who does what he’s supposed to do, is where he’s supposed to be, contributes to society and then becomes the victim of the do-gooder who takes from the forgotten man to give to the “underprivileged.” Sumner says the forgotten man—who, by the way, is very often a woman who may be a widow or a single woman who does what she’s supposed to do, works hard, and is frugal—doesn’t ask anything from anyone else and yet becomes a victim of government coercive charity.

This is just one example. Sumner did a lot of polemical writing of this kind besides his work in sociology which he was very famous for. Now, in this essay, a speech first, called “The Conquest of the United States by Spain,” Sumner startles people, by the title itself. The United States had just smashed Spain—the way we just smashed Iraq. Sumner says, yes, militarily speaking the United States is victorious. But in fact, Spain was victorious in the field of ideas because what is happening is that the United States is going down the road that the Spaniards pioneered, the road of empire. In this way, America was turning its back on its own philosophy that had been the signature of the American people, the philosophy of the Founding Fathers. Instead America was now opting for the grandeur of empire. Sumner notes that the Spaniards did achieve greatness through their empire, through great conquests, great wars, and great victories. But that came with a price and the price was constant war, large standing armies, heavy taxation, inflation, debt, and crushing taxes.

Remember that I quoted from the Spanish late Scholastics in an earlier lecture about how the level of taxation was destroying the substratum of the villagers and towns of Castile. This way of empire brought Spain to where it was in Sumner’s day—the hollow shell of a country that the United States could so easily crush. Sumner concluded we’re on that road now, and we can expect eventual defeat in a similar manner because this is in the nature of things and nature is Darwinian. Sumner ends using some language similar to Herbert Spencer: nature is not forgiving. Do A and that causes B, and all your wishes or your tears aren’t going to make any difference. So, he warned about this and he said really what I would say myself. He said we seem to have decided on this road to empire.

By the way, Sumner noted it was only a small cabal of people who decided on the war. He said the American people have been convinced, and decided on the war, and undertaken this road to empire. In this way Americans put an end to the old republic. He continued saying he didn’t think “my own little essay” is going to make any difference, so why was he doing it? He said he was doing it because the idea of the American republic really was quite an idea at the beginning. It really was quite a vision, that the government would only take care of guaranteeing the rights to life, liberty, and the pursuit of happiness of the people and everything else would be left to civil society and to the voluntary interaction of people. Sumner says it is worth maybe paying a final tribute to it as it’s about to vanish into history.

Herbert Spencer on Imperialism

Now, it turns out we could get into an interesting discussion on that, that there were some classical liberals who thought that war could be useful and people have a much better claim to be classical liberals than John Stuart Mill does. Before I get into that, let me mention another late nineteenth-century and early twentieth century liberal who is famous to you probably: Herbert Spencer. Spencer, of course, was a Darwinian. He was the originator of the phrase, “the struggle for existence” and also “survival of the fittest.” So, Darwinism is a central view of his, but what Spencer believed was that warfare was suitable only to mankind’s primitive stage. The Western world, however, had long since left the stage of militancy and entered the stage of industrialism. He uses the phrase “industrialism” also. War in the contemporary world was retrograde and destructive of all higher values. Early in his career, back in 1848, Spencer maintained, as the Manchester School did, that wars were caused by the uncurbed ambition of the aristocracy.

Much as Schumpeter afterwards was to say in a famous essay of his on imperialism, Spencer argued that war was linked to the feudal spirit. Spencer also argued against state-sponsored overseas colonization as burdensome to the domestic taxpayers and oppressive of the native inhabitants—that is, in the areas overseas where these British colonists were being resettled. Spencer said colonists had no right to be protected by the government or society they abandoned. Spencer found none of England’s recent wars, including the Opium War then being waged in 1843 against China, to be necessary.

At this earlier, more anarchistic period of his career, Spencer even suggested the defense of the country against invasion might be provided independently of the state. In Social Statics, Spencer has a famous chapter on the right to ignore the state, and comes very close to anarchism. (He left that chapter out in the later editions.) Through the following decade, Spencer opposed wars, meaning the colonial wars in which England was involved. At the end of his life—he died in 1903—he was outraged by the Boer War—the British attack on the Dutch farmers of the Transvaal and the Orange Free State. The pretext for hostilities was the refusal of the Transvaal government to extend voting rights to the Outlanders, who were mainly British immigrants who flocked to the little state to exploit the goldmines discovered there. In other words, in the mind of the British government, they were waging war against the Boers for the sake of bringing them democracy.

In an essay titled “Patriotism,” sort of ironically, Spencer confesses that he had cherished a love of England because of its long history of fostering free institutions. But his love of country could not survive the desolating war against the Boers, concocted by the arch conspirators like Cecil Rhodes and—again—the frenzied support of the English public, who supported also the Crimean War. Spencer said, “I am called unpatriotic—well, I am content to be so called.” Spencer had evidently grown so embittered that he openly stated his indifference to the deaths of British soldiers engaging in imperialist adventures. At the time he wrote this, by the way, the latest imperialist war happened to be in Afghanistan. He wrote “[w]hen men hire themselves out, to shoot other men to order, asking nothing about the justice of their cause, I don’t care if they are shot themselves." To the objection that his position amounted to a suicidal pacifism, Spencer replied,

Not so fast, is the reply. For one war an army would remain just as available as now—a war of national defense. In such a war every soldier would be conscious of the justice of his cause. He would not be engaged in dealing death among men about whose doings, good or ill, he knew nothing, but among men who are manifest aggressors against himself and his compatriots. Only aggressive war would be negatived, not defensive war.

So, this was just about the last word of one of the most famous liberals of the nineteenth century, Herbert Spencer.

This brings up an interesting theorical point: some liberals of this period have favored war under certain conditions, and this goes back to the eighteenth century. Among writers, we could mention Wilhelm von Humboldt. Even in The Limits of State Action, he says that there is some good that could be said for war. Humboldt did not actually support war, but he thought war did develop certain elements of the personality which tend to be stunted by modern society. That’s a kind of minor concession.

The French Revolutionary Wars and Spreading “Freedom” by Force

Much more important is what Alexis de Tocqueville says about war and imperialism and that’s a major reason I did not consider de Tocqueville to be a hardcore authentic classical liberal. Another reason is that he didn’t care very much about economics. He didn’t know very much about economics. His views had to do with politics. He made some very important points about the dangers of centralization of power and so on, but he was not any supporter of the factory system and the Industrial Revolution. As an aristocrat who lived off the rents of his land, I guess he saw no particular reason to have factories and industrialization. So on that basis, he’s more middle-of-the-road, or more of a Whig, I would say, than a real authentic liberal.

Especially on the question of war and imperialism, de Tocqueville favored the creation of a new French colony in Algeria that had started in 1829, and he supported the British in India. He thought it was a magnificent occasion for advancing civilization. Here we have a more significant and theoretically interesting case, going back to the late eighteenth century. In the course of the French Revolution, France comes to wage war against almost all the rest of Europe. The group at this time in the French revolutionary complex that is considered liberal—in the sense of favoring a free society, free enterprise and so on—are the Girondins and their close ally, Condorcet. Condorcet has a real claim to be an important classical liberal thinker, the main disciple of Turgot. At first, the Girondins and Condorcet had the position that the French Revolution—which they thought expanded freedom—was threatened by the reactionary powers of Europe. However, when the French Revolutionary armies began to throw back the invading armies of the Prussians and the Austrians, the Girondins and Condorcet came to the conclusion that with the new freedom-loving principles of the French Revolution to lead them forward, the French Revolutionary Army should now undertake the liberation of Europe. The new idea was not simply to defend France and its revolution against attacks, but now bring the blessings of the French Revolution or the new liberal order to everyone else.

So what you have here is a first example, in a way, of another strain—I don’t think it’s really the major strain and I don’t think it’s the most authentic strain—of classical liberalism. That is, the idea that you have now a free country that is also a powerful country and it should use its power to spread freedom everywhere. This position was accepted also by a man who was in Paris at the time, a friend of Condorcet, Thomas Paine. You know Paine’s work in the American Revolution and Paine associated himself with the Girondins. In fact, Jacobins arrested Paine and if the Reign of Terror continued, they probably would have guillotined him.

As the French Revolutionary armies, as they said, “liberated” Belgium, Holland, Switzerland, the Left Bank of the Rhine River, and then Northern Italy and so on, Paine became very enthusiastic and said that this is the beginning now of a federation of free states and supported the revolutionary armies. Now this was also the position that, as I say, from which you can draw a line to certain liberals. These were not very good liberals, but they were people who were considered liberals like Palmerston in England in the nineteenth century. Later, this becomes Wilsonianism—the doctrine that we have a duty and therefore a right as a powerful and free country to use our power to support and extend our values to the unfree world. This is an argument which is used nowadays and is in very sharp contrast to the authentic liberal position of nonintervention for which I’ll give some theoretical/analytical reasons in my next lecture.

View Details

It was thought that the ultimate antidote to war was universal democracy. It was not. Spencer defined liberal democracy as an individual free to control the product of his own efforts on the market. Welfare societies could not rationally be termed democracies.

Globalism perverts the Constitution. Meddling activism has unintended consequences like centralizing the power of the Presidency. Intervention creates blowback.

The effects of the Industrial Revolution are a major issue in Classical Liberalism. From 1750 to 1850 industrialization got slowly underway in Britain. Division of labor and urbanization were considered a catastrophe. It was thought that only labor unions could improve conditions of the working people. This myth created a standing presumption that laissez-faire ruins countries and requires state intervention to protect present victims of capitalism.

An optimist school made gradual headway against these pessimists. They gathered objective data and applied better economic theory. Wages, availability of foodstuffs, and length of life were finally considered in contrast to initial horror stories. In fact, the standard of living improved for most workers. Industrialization allowed tens of millions of people to survive as their populations exploded. The Industrial Revolution was not the problem; it was the solution.

Transcript: Lecture 5 of 10 from Ralph Raico’s History: The Struggle for Liberty.

[This transcript is edited for clarity and readability. The Q and A at the end of the lecture has been omitted. Annotations have been added by Ryan McMaken.]

This morning what I’ll be doing is finishing up some important and contemporary points about the question of war and peace among classical liberals and libertarians. I’ll then discuss a major issue in the whole history of classical liberalism, the effects of the Industrial Revolution.

The Democratic Peace

The point of contemporary interest is an issue that is often referred to as the question of the democratic peace. There are a number of theoreticians that have proposed this and it has drawn some criticism as well. This is a kind of neo-Wilsonian position and it maintains basically that the antidote—the ultimate antidote to war—is universal democracy. The major propositions in regard to international relations that it sets forth can be put in the words of a writer who perhaps you’re familiar with: R.J. Rummel. R.J. Rummel is most famous for his book, Death by Government which is a compendium of the number of people killed by various governments in recent decades in the twentieth century. The book would seem to be useful, but I would urge you to be very careful in using his statistics. In some cases, it uses dependable sources. But, with the most important cases of death by government—that is, the Soviet Union—he comes up with a figure of deaths resulting from the policies of the Soviet regime of 61 million people, which is totally preposterous. Nobody except him believes that and people who have been critics for a very long time of the Soviet Union have settled on a figure of about 20 million people under Lenin and Stalin, and due to all causes. So, I’m saying that Rummel, somebody who is here in his own field of expertise, has to be treated with a certain amount of care.

But he’s come into the debate on the question of the democratic piece and we might as well quote him as well as anybody else. These are the basic propositions of this school of thought. One: democracies don’t make war on each other. Two: democracies limit bilateral violence. And three: democracies are the least warlike of states.

Rummel uses the phrase “liberal democracy,” which he equates with the free society—something that is questionable on a number of grounds—and to Hayek’s notion of spontaneous order. Liberal democracy, according to Rummel, is “a free market writ large: of the economy, society and politics within an overarching legal framework of civil liberties and political rights.”

According to Rummel, such polities are conducive to compromise and tolerance and are naturally attracted to each other because of their domestic similarities, thus reducing the possibility of violence between them.

It is claimed that a vast body of data, from the time of the city-states of ancient Greece to the present, confirms these claims. The policy implications are clear and indeed have been adopted by the US government, President Bush himself has said something along the lines of “democracies don’t make war on democracies.” By universalizing democracies, according to Rummel and the other people of this school, we can expect an end to war. The theory of the democratic peace has of course been subject to a great deal of criticism, for example, in articles by Christopher Layne and especially Ted Carpenter of the Cato Institute. Christopher Layne argues that the realist view of international affairs much better explains the lack of armed conflict among democratic nations; that is, the power relations that have existed, for instance, in the Cold War because of fear of the Soviet Union, makes it unlikely that other democracies would have entered into any kind of hostile relationship with the United States.

Definitions of which countries qualify as democracies appear to be particularly troublesome. In order to extend the range of data over 2,500 years, back to “democratic”—according to Rummel—democratic classical Athens, he states that the definition of democracy employed in that case was loosened to include the criterion of at least two-thirds of the males having equal rights. However, this just doesn’t work. Even in classical Athens—leaving aside other Greek city-states and leaving aside women—the majority of the population consisted of persons without political rights, such as slaves and foreigners. The number of actual citizens entitled to vote was quite small compared to the population of Athens.

Cases in which democracies appear to have gone to war against each other are dealt with by denying the name “democracy” to one of the parties in the conflict. Thus, the Boer Republics were not democracies, according to this point of view, despite their being so viewed by Britain and the rest of the world. Nobody at that time thought that if you denied votes to illiterate tribal blacks, you were somehow infringing on democracy. So, we have the Boer War in which Britain and presumably another democracy at that time—the Boer Republic—went to war. In the US Civil War, the Confederate States of America also does not qualify as a democracy because only white males could vote and the president was not directly elected. Here Rummel seems to have forgotten that it was also the case in the Republic founded in 1789. The president wasn’t directly elected, but was elected by a complicated system involving the electoral college, which in those days was not a pure formality. Imperial Germany—that is, the German Reich founded by Bismarck in 1871—was not democratic, according to this view, despite the fact that it had universal manhood suffrage, which Britain did not achieve until decades after that. Because there was no ministerial responsibility to the Reichstag, and the army was not under Reichstag control, Rummel says, “in foreign policy Germany was autocratic without a democratic leash…” It is in particular historical cases such as this that Rummel and the other theorists—who were political scientists and not historians—show an astonishing ignorance.

The crisis of July 1914: not only was the British public and Parliament in the dark, regarding the secret commitments to France, that brought England into the war, but it transpired that even the cabinet itself was unaware of their true content. That is, the fact that England had obligations that the French were prepared to call in, and insisted on calling in, was not known even to the British Parliament or the cabinet itself. This is when John Morley, the last of the great English liberals, resigned from the Asquith government in protest. The idea that the foreign policy of any of the great powers at the time, including the United States, labored under a “democratic leash” is absurd.

Another example that some of these people use, which shows an appalling ignorance, is how Italy got into the First World War. What they want to say is that Italy was a liberal government, so it reneged on its obligations to Germany and Austria and sided with the liberal countries of England and France. That’s not how Italy got into the war. Italy was not a democracy at the time. About 10% of the adult males could vote because of literacy and property qualifications. It was a backdoor, backstairs intrigue that got Italy into the war, once the Italian regime was promised colonial spoils after the war. Leaving that aside, I imagine these kinds of details seem a bit arcane to most people, and somewhat obscure. But the fact is that this is a historical argument: do democracies ever make war on other democracies? Is democracy historically a restraining influence on war making? The people who take that position including Rummel, are simply wrong on the history.

Democratic England declared war on Democratic Finland in 1941, to take another small example, as part of Churchill’s desire to appease Stalin.

A striking example is Rummel’s treatment of the Israeli attack on the American spy ship the USS Liberty during the Arab-Israeli War of 1967. I don’t know if you know about that, but there are websites devoted to this problem sustained by some of the remaining survivors of that attack. The attack by the Israelis, which resulted in the death of 34 American sailors and the wounding of 171 others, appears to have been deliberate, by all the evidence. Ordinarily, such an attack would result in a state of war. In this case it did not because among other reasons, President Lyndon Johnson’s position was, according to a US Navy Admiral, “that he didn’t care if the ship sunk, he would not embarrass his allies.” In any case, Rummel takes the assault as having been intended by Israelis, and he doesn’t think that it was an accident or a matter of misidentifying the ship. Rummel’s strange grounds for leaving such an act of warfare out of consideration are that Israel was only partially free, owing to its heavily socialized economy.

How Free Are Today’s “Liberal” Democracies?

Do you see how definitions here are being “massaged,” as Carpenter says? Rummel seems not to realize what bringing socialized economic elements does to his rosy-eyed view of the liberal democracies in the present world and his equation of democracy and freedom.

We go back to Herbert Spencer—more than a century ago now—who at the end of his life, lived to see people talking so blithely about democracy and how that legitimates anything the government does. This is what Spencer said: “’Free!’ thinks the Englishman. ‘How can I be other than free, if by my vote I share in electing a representative who helps to determine the national transactions, at home and foreign?’”

But this is what Spencer replies to that position: “Delivering a ballot-paper he identifies with the possession of those unrestrained activities which liberty implies…” This is the case nowadays very often, isn’t it? One reason why the government controls public service announcements and insists that everybody has an obligation to vote is so the public equates voting with the most basic freedom of all. But Spencer says, despite the fact that an individual can deliver this paper ballot once every two years or four years or whatever, what is much more important is “the threatened penalty that every day reminds him that his children must be stamped with the state pattern, not as he wills it, but as others will.” Spencer is saying that much more important than this 100-millionth of a vote, for instance, that Americans have in a presidential election every four years, is the fact that they’re under the thumb of the system of public education, enforced compulsory attendance, state subsidies, state dictation of content, and the content of your kids’ minds. That’s a lot more important than this mystified, reified idealized paper ballot.

Spencer wrote that “[t]he essential question for the citizen is what part of his work goes to the power which rules over him and what part remains available for satisfying his own wants.” What I’m getting at is this: what is this thing, liberal democracy? Spencer gives it a good rule of thumb. An individual is free to the degree that he can control the product of his own labor, the product of his own efforts on the free market. What do we see among these so-called liberal democracies in the world today? What is the pattern of liberal democracy that the United States intends to impose wherever it goes—if it even gets that far and is successful at it? In all likelihood, Spencer would have scoffed at the notion that welfare democracies—that regularly tax away 50 percent or 60 percent of the citizens’ income—can rationally be termed “free societies.” Sure, people have the right to produce and distribute pornography to their heart’s content. I’m not saying that to feud with it, as it’s a personal matter, but I don’t think that that freedom is as important as the freedom to keep what you yourself have earned and to use it for your own purposes and the purposes of your family.

Anti-Democratic Elements within the American State

Rummel concedes that even within democracies, there are agencies such as the CIA that are virtually totalitarian subsystems under no popular control whatsoever. This he does to forestall the criticism that the United States in recent decades has plotted assassinations and brought into being armed insurrections with states with which we are not at war. The US has actually overthrown or helped overthrow democratically elected regimes in Guatemala, Iran, and Chile, for instance. These actions are hardly compatible with the tolerance and respect for others that democracy in Rummel’s account is supposed to foster. Rummel’s reply is that the solution to this problem—the existence of these subsystems of totalitarian control within a democratic system—is “more sunshine and greater democratic control.”

That seems fatuous to me. As if it were at all likely to occur: bringing the CIA, the NSA, and all the other intelligence agencies under democratic control, particularly as the United States. These agencies undertake to involve themselves in the internal affairs of countries all over the world in an attempt to transform them into democracies. How many people in America even know that the CIA plotted a number of times to assassinate Fidel Castro? The only question is whether it bothered to inform John Kennedy about if it or kept him in the dark so that he could invoke deniability if it ever was made public. The CIA tried a number of times—with the usual brilliance and invariable success—to poison Castro’s cigars. They tried to have some kind of depilatory agent introduced so he would lose his beard which was allegedly a patriarchal status symbol important to his people.

It’s not surprising that Castro invited Soviet missiles, especially after the Bay of Pigs invasion of Cuba. This is how the CIA operates and the idea that somehow sunshine can be brought into the activities of the CIA is absurd. One aspect of the question that seems to have been overlooked by the democratic peace advocates is this. Let us suppose that all countries could be turned overnight, or in a short amount of time, into well-established democracies meeting the criteria that are used by these theorists: enjoying civil liberties, the rule of law, property rights, etc. Then, leaving other considerations aside, the notion of universal perpetual democratic peace might have a certain superficial plausibility unless that a world of well-established democracies eventuates into a world government.

Short of a nuclear holocaust, a world government is the worst thing that could happen to our race. A universal government with tax harmonization throughout the world; redistribution from America, Europe and Canada to the majority of the world’s population in India, China, Bangladesh, Indonesia, and so on; a world bank where central bankers can inflate to their heart’s content.

Aside from world government, supposing that we still have independent democratic states, well, maybe there could be universal democratic peace. However, the process of universalizing democracy and turning democracy throughout the world into a reality—the crusade to do so— would be a long, drawn-out affair entailing a multitude of unintended consequences. The power and authority of the US government would be enhanced, inevitably, as we see it’s being advanced even in this current war on terrorism. The cost to American taxpayers would increase. How much of the free society would remain is problematical.

Classical Liberalism against Foreign Interventionism

Now I think I’ll end here on some general considerations, drawn from the history of classical liberal thinkers, back to Richard Cobden, William Graham Sumner, and Murray Rothbard, who wrote a lot on this question and others. So, these I propose as general objections to interventionism in foreign affairs.

In the case of the United States—today, by far, the most significant case, since this country is the only existing superpower and a would-be a world hegemon—a number of theoretical considerations would seem to weigh heavily against the policy of interventionism from a libertarian standpoint.

First, there is no reason to suppose that our political leaders are any more competent in international affairs than they are in domestic affairs. You think they’ve made a mess of the economy, that they’ve made a mess of American society? Why suppose that they’re going to be any more competent in the international arena? The process by which our leaders are selected is practically guaranteed to assure general incompetence and ignorance. Foreign interventions will often be triggered by purely partisan political considerations—that is, immediate advantage to the politician or his party. Political leaders know that public opinion polls almost invariably register a shot in the arm, as they say, to the president’s popularity when an overseas imbroglio comes about.

Second, the central insight popularized by the school of public choice is highly relevant in the field of foreign affairs. The decision to intervene is subject, like all political decisions, to the influence of pressure groups who represent constituencies with their own axes to grind. Meanwhile, the interests of the public at large are lost in the process of determining policy.

It cannot be emphasized strongly enough that the American people are “rationally ignorant,”—as the phrase goes among public choice theorists—in foreign affairs. Their knowledge of foreign countries, of their histories, of their problems, even their approximate locations on the map, even the continent in which they are located, is limited, shall we say. It’s been the subject of well-earned ridicule. An interventionist foreign policy will tend, therefore, to be determined by relatively small groups and cliques, with a private interest that is financial and sentimental, in foreign entanglements. Such groups that have influenced US policy abroad include particular capitalist circles, eager to socialize the cost of doing business in foreign countries. Nowadays that includes the oil companies, obviously, and various American ethnic groups with strong emotional attachments to foreign states and political movements. And I don’t just mean the Zionists. There are also the Cuban-American constituency in the crucial state of Florida that keeps pressure on the Republican party to continue this economic blockade of Cuba that’s been going on for over 40 years. The blockade has not toppled Castro, but has just given Castro and the communists an excuse for the failure of the communist economy in Cuba. Castro can blame it on the Americans and the American embargo. Now, across the board, liberal, conservative and centrist political voices say it’s time to end this stupid embargo. It hasn’t done what it was supposed to do, so why has the embargo not ended? To a large extent this is because of the political influence of this constituency in Florida that feels immensely strongly about it.

Third, even supposing that an activist foreign policy were formulated by competent leaders—fat chance!—who never exploited it for personal political advantage and who were invulnerable to pressures from special interests, the world is still such a complicated place that there will likely be negative unintended consequences from American interventions. The classic example is World War I, where US involvement led to total Entente victory. This total victory for England and France at the Paris Peace Conference, which produced the vindictive Treaty of Versailles, set the stage for World War II.

A further point. Following the reasoning of William Graham Sumner: the globalist policy perverts the American constitutional system , concentrating power in the presidency in the executive branch—in groups like the CIA which are totally impervious to public scrutiny—rather than in Congress. The globalist policy also concentrates power in Washington, instead of in the states and localities. Inevitably, if you have an activist foreign policy, that’s where the power is going to be channeled. It’s going to be channeled to the executive branch because that’s the branch that carries out foreign policy.

The fact that this channels power to Washington rather than the states and communities means more political power is situated in the places furthest from public oversight. It means political activities are centered in the area of policy most distant from the interests and concerns of the people at large.

Speaking of democracy, I think that you’ll find it a common phenomenon that people get most excited—you see it on your local TV news—about whether a traffic light is going to be put up at the corner or not. The people turn out to discuss this, they debate about it, they pressure their councilmen about it, and they know something about it. They have some deep personal interest in it. When it comes to bombing this country or that country, or threatening to bomb this country or that country, or engaging in acts of war—an undeclared war against one country or another— the American people will simply go along with their leaders. After all, the thinking goes that their leaders know much more than they do and they’re certainly impartial and not self-interested in what they’re doing. We’re back to Spencer’s point on democratic voting: we voted for them, these leaders, and they are our leaders. It’s part of the whole democratic myth.

Democracy Does Not Mean Freedom

Finally, focusing on foreign affairs diverts attention from the need to reform at home. Right centrists or center-right people like Rummel may be satisfied that the United States is a free country. Other are not so easily satisfied.

The problems we face in our own country—including numerous threats to freedom—are well documented today by writers like James Bovard, Paul Craig Roberts, and Paul Gottfried.

Gottfried has examined the systematic international campaign on the part of elites in America and Canada and in European countries to destroy the traditional culture of those societies and replace it by what Left intellectuals would much prefer. This includes feminism. This includes attacks on everything the elites consider to be racism.

The most recent example: some high school kids decided to have, besides a regular high school prom, a high school prom for whites and they were not just attacked by their own school officials and by the politicians in the area. This became a national issue. Columnists from The Washington Post and The New York Times and so on attacked these kids. I don’t think any of them mentioned that everywhere in America there are black-only high school proms. And everywhere in America there are black dormitories, there are areas in which blacks prefer to associate with their own kind, but the fact that whites did this becomes an issue and this is the kind of thing that Gottfried is talking about. He’s not defending slavery or racism in any real rational sense. What he’s attacking is a campaign against pseudo-racism, that is, as Paul Craig Roberts says, this means any kind of equal treatment for whites.

Another threat we face is the threat to free speech. Speech codes have gone a lot further in Europe than in America, but through international agreements, and in the future, they may come to the United States also.

Nor is it just speech codes. Some people say we have to somehow control the internet because there’s so much garbage and filth there. Well, I would tend probably to agree with something like that latter part, but what I would suggest is that the first attempt to control the internet, for whatever reason, will inevitably lead to political censorship of the internet. It will mean censorship of anybody considered right wing or “extreme right wing” or any group considered a “hate group.”

They’ll use the usual communist salami tactics. First they’ll start with the most “extreme,” and I can redo this famous thing about the Nazis: first, they’ll come for the fascists, then they’ll come for the extreme conservatives, and anybody who denies their left-liberal egalitarian worldview. So, we have to be worried about any attempt to censor the internet, which is at this point, really, just about all we have in the way of freedom of expression.

These are the kind of problems that Jim Bovard and Paul Craig Roberts deal with. Is the United States a free country—we’re so far ahead, we’re so great, we’re so much the city on the hill— that we can choose right now to simply impose our version of democracy on the rest of the world?

Democracy that is to be imposed on other countries is not going to mean what Thomas Jefferson thought it meant. This democracy will mean introducing into Muslim societies the methods of Planned Parenthood and “reproduction rights” for women, including birth control and abortion. Only Catholic publications have taken note of this aspect of what “democracy” actually entails. I don’t want to deny that there’s a case to be made for a woman’s rights in general. However, this democracy will mean only democracy in the sense preferred by American and Western European elites.

Is America really so perfect that we don’t have to worry about what’s going on here and we can start worrying about the rest of the world? Libertarians wonder to what degree a country can be said to be free if close to 40% of the citizens’ income is confiscated by different levels of political authority year in, year out.

I will finally end with a relevant quotation from Richard Cobden along these lines. Cobden said, “The “true secret” of despots … is to employ one nation in cutting the throats of another, so that neither may have time to reform the abuses in their own domestic government.”

In other words, the strategy is to direct the attention of the people to foreign enemies and ramshackle regimes such as the Saddam Hussein regime, which according to Tony Blair, was in a position to launch attacks on Britain within 45-minutes’ notice.

In the book 1984, the book’s hero Winston Smith has a job operating a “memory hole” at the Ministry of Truth. Whenever the party line changes, what he has to do is go back and search out the newspapers where the party had taken a different position from what the party had said earlier. This is important in foreign policy in 1984 because the party’s alliances with foreign countries shift, and it’s important for the regime to convince people that the current enemy has always been the enemy and the current enemy is a country of cannibals and savages. But, in the past, the party was allies with the country that is now the enemy. That means Smith has to go and get the old newspapers and destroy the articles where the party was allied with the country the party now claims is the eternal enemy.

Nowadays, though, the government doesn’t need memory holes. What actually was the case, you can find anywhere on the internet, you can find in major newspapers. The true facts will be in the newspapers in your library, and they’re right on your computer. You can find that the government lied about this, that the government leaders lied about that. But it turns out Orwell was wrong. Orwell thought that somehow people would care if it turned out that they could read in the newspaper that the government had lied. So, Orwell thought all that old information had to be destroyed. We know now that the information doesn’t have to be blocked out. Even though the information is still there, the people don’t care, for the most part.

Cobden’s view is that instead of diverting attention to nonexistent, puffed-up enemies, what we should do is pay attention to reforming our own domestic society. He meant the England of his time, and I would suggest we pay attention to reforming the America of our time.

Why History Is So Important

Well, that’s what I want to say about international affairs and I want to start now to discuss another quite important issue and that is in general, the issue of the Industrial Revolution. Now, there’s a book I suggest to you that has been in print since it was published by the University of Chicago Press. It was edited by Hayek with contributions by a number of different authors and the book is, Capitalism and the Historians. It comes from 1954, so the research is somewhat dated, but I’ll deal with that in a moment.

Actually the most important thing in the book is the introductory essay by Hayek, “History in Politics.” Here, Hayek has one of his best essays. It really shows Hayek at his best, his wisdom, his careful statement of issues and careful presentation of his own answers. He says that when we think about it, there’s a very close connection between people’s view of history and their political views. Now, if you’re an economist or a philosopher, if that’s your field, you might feel that this is rather unfair. You might feel that really those are the disciplines which people should study in order to come to conclusions about what’s best for us individually and what’s best for society. However, for better or worse, that’s not the way it’s done and if you think about it, I think that maybe even in your own case for the most part, that your political views have been very strongly influenced—and in many ways determined—by what you think history has shown.

See if this sounds familiar to you: there was a time in America, starting in the last decades of the nineteenth century, that America was under a regime of laissez-faire. Under this regime of laissez-faire, there grew up a class of robber barons who got together and eventually cartelized and monopolized the America economy. Then, thank God—who does look over the United States of America!—we had the Progressive movement, the Sherman Antitrust Law and Progressive leaders like Teddy Roosevelt. These Progressives put an end to this terrible regime of laissez-faire and in that way salvaged the American economy through government intervention. Do you agree that such a view exists? Have you ever heard such an interpretation as that?

That’s one interpretation. Here’s another one. In the 1920s, somehow, we got laissez-faire back and laissez-faire went haywire. People started speculating like crazy on the stock market. There’s a tremendous irrational boom and it ended in the Great Depression, which was thankfully dealt with by the super-savior of American history, Franklin Roosevelt. Roosevelt came in with his New Deal and through government intervention in many different respects, and saved the American economy. Does that sound familiar, this interpretation?

Here’s another one, more in connection with international affairs. In World War I, we had a man as president who was virtually a saint, and who agonized with spiritual issues. Finally, against his will and every inclination, he was forced to bring about a declaration of war against Germany and get us into the First World War. This saint, Woodrow Wilson, harbored a dream and a vision for a League of Nations. God smiled on the United States again, and we were on the winning side in that war and President Wilson went to Paris, to the peace conference in order to bring about his dream and his vision. It was finally agreed to by his other allies—that was part of the Treaty of Versailles with Germany—that a League of Nations should be set up to put an end to war. This sainted spiritually tormented man, returns to America and tries to get the Senate of the United States to agree to this treaty. The Senate of the United States at that time was controlled by a group of men that history knows—or that you at least know, or that I at least know—as “isolationists.” (Isn’t that the term that’s used? Not “noninterventionist” or “people who believed in US neutrality,” but “isolationists.”) So, they turned down the Treaty of Versailles and in this way broke the heart of this sainted American president and kept America out of the League of Nations so that the inevitable result was Hitler, the Second World War and everything that came about from that.

Doesn’t that teach us something? Isn’t this one of the lessons of history? We should follow our sainted and inspired leaders and especially engage in cooperative efforts of collective security through international organizations, such as the United Nations. Does that sound like a very familiar interpretation of history?

Others could be cited. In all of these cases—the case of the so-called robber barons, the case of the Great Depression, the case of the League of Nations—I would suggest that most people who have any views or impressions or ideas at all about the pertinent political issues, take their views from these interpretations. This is what determines their views.

They say: “We tried laissez-faire in the past. It led to monopolies and trusts; it led to the Great Depression. We tried a system of minding our own business and on neutrality for the United States. It led to the rejection of the League of Nations and it led to Hitler and everything else.”

Hayek doesn’t give these examples, but these would be examples confirming his view, I think, that history is a major determinant of the views that people have about politics.

The Industrial-Revolution Myth

Now, why Hayek was into this is that he’s introducing his book, Capitalism and the Historians and he talks about the supreme myth that has been used against capitalism and that is the myth of what happened during the Industrial Revolution. That’s what I want to talk about in the time that remains.

We now know that the industrial revolution occurred, even in England, at a much slower pace than originally supposed. It was over a span of time of probably close to a century—let’s say from 1750 to 1850—that industrialization got underway in Britain. But, nonetheless, the main outlines remain the same. It was a question of the introduction of the factory system, where the production of a particular good now took place in different stages, but all under one roof and with the application now of the steam engine and specialized machinery to every step of the process of production. The division of labor was intensified in this way. The world market expanded, urbanization took place and these various aspects constitute what’s known as the Industrial Revolution.

For a long time a myth prevailed, the myth that Hayek refers to. It was thought that the Industrial Revolution represented a catastrophe for the working classes of Britain. And Britain was a test case of the results of the Industrial Revolution. Everybody agreed to that. The Industrial Revolution eventually spreads to other countries and so on, but historians and scholars want to focus on Britain, see what happened there, and whether it was a bad or a good thing. The first idea was that it was a catastrophe. The new factories, it was claimed, ushered in a nightmare world of slave-like conditions for working men, that were even worse for women and worst of all, for children. Cruel poverty, filthy slums, rampant pollution, and a host of other social evils, were the end result of giving free reign to the heartless regime of laissez-faire. As the story goes, only in the last years of the nineteenth century with the introduction of effective factory laws and other government measures and above all, with the rise of labor unions, did the condition of working people start gradually to improve.

How Britain and France Spread the Anti-Laissez-Faire Narrative to the Developing World

The lesson taught by this presumed historical example—repeated endlessly in popular literature, from clerical and political pulpits, in schoolrooms, and university lectures—was clear and decisive. The university lecture halls are of particular interest here because of what happens in the first decades of the twentieth century.

In Britain and France especially—but also in other Western European countries that had colonial empires—the elites from the colonies are often brought to the home country in order to undergo advanced education there and in this way the rulers of each empire hope to meld the native populations of the colonies more to the home country’s ways of thinking. After the Second World War, leaders of places like Ghana, Indonesia, and Vietnam—many of whom later became communist revolutionaries—had studied at British and French universities. They had learned these alleged lessons of the Industrial Revolution and they were determined that yes, they would industrialize their countries, but they wouldn’t industrialize their countries through awful laissez-faire. In their minds, they thought “look at what Laissez-faire had done to Britain and other countries that had had to endure it during their industrial revolutions!” That all came out of the intellectual and academic arena. In the political arena, meanwhile, this myth about the industrial revolution created a standing presumption in favor of state intervention to protect the present-day victims of capitalist exploitation.

However, things began to change in the 1920s when what has been called the “optimist school” among historians of industrialization made gradual and then more rapid progress against what are called “the pessimists” in the higher levels of scholarship. This change was based on the steady accumulation of more objective, less politically contaminated data. The change included the refinement of statistical techniques and the application of better economic theory. The earlier view had largely been based on the “blue books” collected by parliament and the House of Commons’s commissions on the condition of working people in the mid-nineteenth century and after that. These are called blue books and what was behind these commissions is of interest and importance.

Liberalism in Britain

In England following the Napoleonic Wars of 1815, Parliament was still “unreformed.” There are heavy tariffs to the advantage of the land-owning nobility. They control all public offices. The Church of England bases its income largely on tithes extorted from nonbelievers, from Presbyterians and Baptists and Quakers and others. In other words, you have a parasitic established church and many other elements of conservative control and domination of English society.

At this time, there’s a powerful liberal movement in England that threatens the domination of the older establishment. The liberals threaten also, for instance, the slaves owned by the absentee plantation owners—mainly English noblemen— and the slaves in Jamaica and other places. The liberals want to do away with slavery. So, they want a general reform of British society and they’re making a lot of noise and they’re agitating public opinion.

Now, the Tories and the defenders of the establishment and the status quo come back with a counterattack. They say, “you liberals, you great lovers of the oppressed, don’t you have your own oppressed? Aren’t you yourselves slave owners in a sense? What about the workers in your factories? Why don’t we go in and investigate what’s happening there?”

Parliamentary commissions are set up with the political aim of exposing the factory system at the base of the economic power of these liberals and these reformers. And, just as when US Congress sets up some committee or subcommittee to investigate sweatshop condition in Chinatown in San Francisco or elsewhere, the investigators bring in people who are ready to tell them the worst horror stories. The commissions don’t generally consider why these people are working in sweatshops in San Francisco when they could be “enjoying” life in Shandong Province.

And then the congressional committee issues its findings. They are compendiums of horror stories: one after another about terrible conditions, people working 16-18 hours, women working, children working, as well. It was on the basis of these collections of the supposed data that the first interpretations and histories of the Industrial Revolution were composed. Friedrich Engels who, of course, was Marx’s collaborator, wrote a book, The Condition of the Working Class in England in 1844. The book is based on these parliamentary commissions. Other people began lecturing and writing about the Industrial Revolution and took the same tack.

In the early twentieth century things began to change because better, more detailed, and more comprehensive data begins to be collected on wages, on available foodstuffs, on longevity, length of life, and so on. Once this other data became available, people don’t have to depend on, what we might call “contaminated data.” Now we can go to the sort of data that historians can debate—more objective facts. Moreover, new probing questions were asked—the sort of things that didn’t occur to earlier writers opening novel perspectives. You had a different and contrasting interpretation of the Industrial Revolution beginning with J.H. Clapham, an older historian of the 20s and 30s. But we especially see the change in the 40s and 50s. T.S. Ashton, for example, was represented in Hayek’s collection, Capitalism and Historians. More recently, there is Max Hartwell—who is retired now—at the University of Chicago and Oxford.

Fundamentally what came out of this newer research is this: for most of the working people of Britain, the standard of living did not deteriorate, let alone collapse, as a result of the industrial revolution. Rather, the standard of living improved slowly from around 1780 to 1850, and more rapidly thereafter. This occurred despite powerful factors working in the opposite direction— countervailing factors that tended to depress the standard of living—so that even if it were discovered that actual living standards had fallen, this would not necessarily count against industrialization. It could have been that industrialization permitted people to have a higher standard than they would have otherwise, even though, let’s say, in actuality, living standards fell because of other factors that I’ll talk about.

First, there was the destructionist effects of a whole generation of war with the French Revolutionaries and Napoleon. It was the most expensive war in history to that time—from 1793 when England declared war on Revolutionary France after the execution of the king—to Waterloo in 1815. During that time there was just one year—around 1804—of truce. There was a whole generation of war. All of the wealth and assets that England poured in to this war included all of the ships and the furnishing of men, the artillery, other munitions, and the subsidies given to Britain’s allies on the continent to fight against the French. This immense amount of wealth was, you could say, used for a good purpose, the defeat of Napoleon. Nonetheless, this wealth was not available for productive uses for the general British public. It was wealth that could have gone into increasing the capital stock of England and therefore tending to raise wages, producing more for the British consumers, including working people. This wealth simply disappeared. It was used in the war effort.

Secondly, a sharply regressive system of taxation was used to finance the war and an array of counterproductive government measures and policies further depressed living standards.

How Industrialization Solved the Problem of Overpopulation

Now, finally, I’m going to elaborate on some of these points.

One important related topic is population and population growth. In the middle of the eighteenth century, the population of England was six million. It had never been higher than that and the population of none of these European countries had ever been substantially higher than was the case in the middle of the nineteenth century. There had been some temporary peaks at one time or another, but basically the population in the mid-nineteenth century was the limit of population.

Yet, you see now the population of Europe as a whole from 1800 to 1900 increased from around 180 million to over 500 million. This was an unprecedented population explosion in the history of mankind. It was not limited to Europe, by the way. You found this in other areas, of course, such as Eurasia. The reasons for it are not totally clear. Nonetheless, this is the fact of the matter. So, the question is: what were different societies going to do about this population explosion? How could these new tens of millions of people be fitted into the older mercantilist guild-controlled economy with the older methods of production?

I started off this series of lectures by quoting Mises on the European miracle. Here Mises again puts his finger on the essential point which is that on the eve of industrialization, Europe was faced with this unprecedented population explosion, and the Industrial Revolution was Europe’s and America’s answer to this problem. Ultimately, industrialization was the way that these tens of millions of people were able to survive. So, our friend Ayn Rand says that people should get down on their knees and celebrate the smokestacks of the factories of the Industrial Revolution. That’s a novelist’s way of saying it, maybe, but she is perfectly right.

Ultimately, you understand, I hope, that you don’t actually work a lot harder than your grandfather and your grandparents, or your great grandparents and the people before them worked. You might think that you’re like some draft animal and work so hard. But, it’s not really the case, and the reason that you enjoy a higher standard of living has to do with the accumulation of capital and the workings of the capitalist system. That’s what people began to acknowledge to a small degree, then a little bit more. In any case, it’s what people began to experience during industrialization.

These population figures are about the best we can get, the best I’ve been able to find, and they’re interesting in their own right.

The population of France in 1750 must have been about 20 million. Notice that France always historically—up until the nineteenth century—always had a much higher population than England did. In fact, up until around the time of the French Revolution and also the Russian participation in the partition of Poland, France had the largest population of any country in Europe. This is one reason why France was the standard military power of Europe for so long. But then the English population begins to explode and overtake the population of France.

France, of all the great countries, is the only one whose population remains quite steady. What social reasons are behind that—having to do with the inheritance of land or early introduction of birth control procedures—I don’t think is clear. Meanwhile, the population of Italy was increasing enormously, despite the fact that millions upon millions of Italians immigrated. Italians formed, for instance, the largest ethnic group—biological, not linguistic—in Argentina. As we know, many Italians have come to America and enriched our American culture almost infinitely.

Unlike in England and France and Germany, overpopulation remained a steady problem for the Italians because in southern Italy, industrialization has never taken place. That is, the region south of Rome: Naples, Calabria, Sicily and so on. In the south they have this endemic unemployment, which has been going on for so long, along with many other social problems.

At the same time, you see very significant growth in population in Germany. So, by the end of the century there are 36 million, more or less, French and 50 million Germans. There are even more inhabitants of Austria-Hungary. In Ireland, in the middle of the century—closer to 1840 than 1850—the population would be six and a half million people, which is more than it’s ever had since. That’s many more than it’s ever had since because three-and-a-half million emigrated afterwards because of the Irish famine. The vast immigration of the Irish—the diaspora of the Irish—was partly due to the terrible death rate, although these people didn’t die generally from starvation. They died from the diseases caused by malnutrition. You could also talk about Russia or Poland, and the rest of Europe would be parallel. The question is: “what’s to be done with all these new people?” You can read about the answer in Rosenberg’s and Birdzell’s book How the West Grew Rich. As they say, the Industrial Revolution was not the problem, it was the solution.

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In the face of overwhelming evidence of the prosperity of capitalism, Marxists were forced to rephrase their arguments from material provisions to quality of life. Robert Nozick, a brilliant philosopher of liberty, became a libertarian. Anarchy, State, and Utopia, his main book, dominates debate in political philosophy.

Why were intellectuals so hostile toward the market place and private property? Only state interventionism was seen as virtuous. Hayek saw that intellectuals had egalitarian biases, but felt they meant well. They just had scientistic prejudice. Schumpeter remarked that Hayek was polite to a fault.

Schumpeter held that the key to intellectual hostility was the education and literacy that the capitalist wealth machine made possible – the freedom to nibble at the foundations of the capitalist society. This analysis is in his most popular book Capitalism, Socialism, and Democracy.

Mises was not polite to a fault. His focus on this issue cites work about money making having been stigmatized. Western culture has had contempt for money making, commerce, merchants and business people. Entrepreneurs and capitalists themselves are swayed by the moral outlook which damns their activity.

Transcript: Lecture 6 of 10 from Ralph Raico's History: The Struggle for Liberty.

[This transcript is edited for clarity and readability. The Q and A at the end of the lecture has been omitted. Annotations have been added by Ryan McMaken.]

I’d like to say a few more things in regard to the Industrial Revolution, considering that it is such an important topic. Rosenberg and Birdzell sum up the historical and statistical evidence as follows: “By now, it is quite clear that the new factories and towns were a large part of the solution to Europe’s problem of employing a rising population outside of agriculture; they were not part of the problem.” The assessment of the rise of industrial capitalism as an unprecedented revolution in economic growth is supported by much of the recent work of economic historians. This is especially the case with cliometricians—that is, historians who use sophisticated mathematical methods—although there are disputes over particular sets of statistics and the appropriate analyses.

It’s interesting that Marxist historians like Eric Hobsbawm and E.P. Thompson have been reduced to a rearguard defense of the older conventional wisdom, mainly by shifting the grounds of the debate from material standards of living to the “quality of life.” You can take, for an example, the position of E.P. Thompson and his celebrated work, The Making of the English Working Class. In approaching the old question of living standards—this was a standard question that was supposed to be the decisive question—living standards served as the criterion of the success or disastrous failure of the Industrial Revolution, Thompson states: “It is quite possible for statistical averages and human experiences to run in opposite directions.”

Uh-oh, what’s he up to now? He continues: “A per capita increase in quantitative factors may take place at the same time as a great qualitative disturbance in the people’s way of life … [p]eople may consume more goods and become less happy or less free at the same time.” When you read Thompson, you find the decisive concession that he is about to make. He concedes: “Over the period 1790-1840, there was a slight improvement in average material standards.” By the way, it’s also suggestive that one selects the year of 1840 rather than 1850, since big changes occur in that decade. But, he says, “By 1840, most people were ‘better off’…than their forerunners had been fifty years before, but they had suffered and continue to suffer the slight improvement as a catastrophic experience.”

Note there are scare quotes around “better off.” The most that can be produced in regard to this last statement—that they continue to suffer this slight improvement in material standards of living as a catastrophic experience—tends to be totally anecdotal. It is safe to say that the old “immiseration thesis”—as it was called, and as the celebrated Fabian husband and wife team of J.L. and Barbara Hammond put it, “the Industrial Revolution fell like a war or a plague” on the working people of England—is dead. Thus, for instance, to take an example at random, the University of Wisconsin historian Theodore Hamerow—a scholar clearly unsympathetic to the market economy—grants that there was no general immiseration in the early stages of the Industrial Revolution either in Britain or on the continent. For the later stages, he says “[n]ever before had there been such a substantial growth in the income of the labor force in such a short period of time.” Hamerow even quotes the East German communist economic historian, Kuczynski: “Even Jurgen Kuczynski … concedes that the income of the working class improved rapidly after the early stages of economic rationalization.”

I want to mention one thing in particular before I forget and that is the question of the labor of women and women in factories. Women of course, as we all know, have never really done very much work in the history of the human race. All they did was raise the kids and take care of the house, do all the gardening for fruits and vegetables, take care of the chickens and pigs, bring the water from the well, and a number of other really similarly very minor tasks. It was the men who went out and hunted for mammoths and other wild beasts and had a really great time as a kind of “guy thing,” dragging chunks of the mammoth back home as the wife kept with her trivial chores of taking care of the kids and everything else about the family and the household. The guys would sit around and say things like “did you see the way I killed that mammoth… you killed the mammoth? No, I killed the mammoth.” And things went on like that. So, women really have not counted very much in regards to labor of the human race through history. It was really just the Industrial Revolution that drove them to labor. Before that, they used to have a lot of hobbies—macramé and ceramics and so on, and learning enough Italian to read opera libretti, and that kind of thing.

Well, obviously that’s a big fantasy. Women—except for the higher classes and the elite—have always worked, have always worked their fingers to the bone, and within the context of the patriarchal family. What the Industrial Revolution did for the first time was allow women an independent source of income. They didn’t have to go from their father’s house immediately into the house of their husband and then for the rest of their lives, remain under the thumb of their husband regardless of how he chose to behave and conduct himself for the years to come. Women could go out and work in a factory and that was experienced as an enormous liberation by women. To take the example of America, there were the textile factories of New England, the cigarette factories of the Carolinas and Virginia, and so on. Afterwards, when the telephone came in, there were hundreds of thousands of female telephone operators. This was a liberation from the psychological cage that very often the husband-dominated family was. She was bringing in her own income, so she had a certain place in the family for that reason. Or if it came to that, "to hell with the louse," and she could go out and make a living on her own. We see this in third-world countries as well. The factory system and the other accoutrements of industrial capitalism were a liberation for women. This explains why legislation to limit the work of women and exclude women from certain occupations, or limit the hours women could work and so on, were pushed not by women’s groups, but by the male-dominated labor unions. It was to do away with the increasing competition that women presented to male union labor.

Changing Scholarship on the Industrial Revolution

The stage of the debate on the Industrial Revolution that has been reached is clear in this statement from a totally mainstream British historian named E.J. Evans. Evans wrote a textbook on England in this period which was critical of the Industrial Revolution, in certain respects, on quality-of-life grounds. What Evans says is this: In judging the Industrial Revolution, “it is relevant to mention a counterfactual point…” a hypothetical point. “What would have happened to Britain’s teeming population had industrial growth not rescued it from a Malthusian poverty trap? It is difficult to see how a ‘check’ on an even more catastrophic scale than the Irish famine of 1845-47 could have been avoided, and to this not inconsiderable extent the Industrial Revolution brought the benefit of permitting a much larger population to survive and, in the long term, thrive.”

Evans means “check” in the sense that Malthus used the term. That is, when the population reaches a certain level, outgrowing the means of subsistence, then nature provides certain checks. As Evans says, the Irish famine was such a check. And now, he says, hypothetically there could have been a check on the British population on an even more catastrophic level than the Irish famine. How could that have been avoided without the Industrial Revolution?

T.S. Ashton, one of the major so-called “optimist” historians that I mentioned before, puts it this way. If you want to see an area or territory that has undergone a population explosion without industrialization, then go to Calcutta or go to famine-torn Ireland. There were none of these terrible smokestacks. None of this terrible pollution. None of this awful dreadful industrialization. None of the Satanic mills. So, we see what happened there.

The “democratization of consumption,” a term that was used by some historians, was a key feature of the modern capitalist revolution. This has been analyzed especially by an historian named Neil McKendrick, of Cambridge University. McKendrick arranges himself solidly on the side of the optimists. He emphasizes the benefits that ordinary people derived from the Industrial Revolution and the accompanying revolution in consumption. He contrasts the new world that capitalism made with the older world of poverty. After all, what was it that these factories were producing? They were not producing silk and linen fabrics for the elite. They were producing wool, and especially cotton. They were producing cheap ceramics and pottery, cheap cutlery, and cheap everything for consumption by the masses.

Now one crucial claim on the pessimist side was that the Industrial Revolution represented a deterioration. But, precapitalist stages have been increasingly shorn of their Garden of Eden myths, Kendrick believes. This is seen in the kind of social history fostered by the Annales group of French scholars—a group of French historians connected with the journal called Annales. The Annales school and their trademark was to investigate deeper levels of social history, to get a sense of the fabric of life, of the people of the time rather than great historical or military political events.

One of the most famous of them was Fernand Braudel, who wrote this about France: “The poor in the towns and countryside lived in almost complete deprivation…. the average man’s income was so low that even a poor man’s diet absorbed 60-80 per cent of that income … in good times. … In pre-industrial Europe, the purchase of a garment, or the cloth for a garment, remained a luxury common people could only afford a few times in their lives.” McKendrick points out that “Even the clothes of plague victims were eagerly sought by their relatives; and … we learn of the low expectation of life, the high infant mortality” and the chronic sickness and very few comforts. That a major revisionist effort is involved in the work of McKendrick and other more recent historians is clear. Among the targets of attack are historians themselves who for generations so assiduously portrayed businessmen as exploiters and parasites. As McKendrick states: “When Napoleon dismissed England as a nation of shopkeepers, he little knew how eager English historians would be to try to live down the jibe, and to efface from the record of historical significance the efforts of those busy, inventive profit-seeking men of business” whose activities had helped bring the new world of plenty into existence.

What I presented here is a quite different view from the one that had been instilled in all of us. I mentioned earlier the idea that the Middle Ages are simply dark ages to many, and no matter how many facts to the contrary—and obvious realities that were contrary—one brings up, it is very hard to erase that idea from the mind. Similarly, for the masses, it would be hard to imagine how much effort by the economic historians and other scholars would be necessary to get rid of the ideas so deeply embedded in their minds about the Industrial Revolution. These ideas were created by Dickens and other authors—and movies and everything else people were taught in public school—saying the Industrial Revolution was a catastrophe.

Unfortunately, I don’t know whether that will ever change. In this connection, I’ll mention that back in 1830, there was a debate on the Industrial Revolution—a kind of an interesting polemic between two authors. One was Robert Southey, who was the Poet Laureate of England at the time and Southey wrote a book called The Colloquies of Thomas More. He imagined in his book that the great statesman and saint and scholar had come back to England during the early nineteenth century and looked around. The book described how horrified the sixteenth-century man would be to see what industrialization had done. It was just something to cry over, how awful England—merry old England—had become.

Southey goes on and on about this and he’s answered by a great famous historian, the classical liberal historian of the nineteenth century named Thomas Babington Macaulay. Macaulay was one of a series of British historians who presented historical accounts with an underlying classical-liberal lesson and theme. He was a classical liberal. He wasn’t a total libertarian, and that’s fine, but he certainly believed in private property, the rule of law, civil liberties, and so on. He was the most popular historian of his time. He was a brilliant historian. He was a brilliant man. He had a photographic memory, which is pretty useful for a historian. One time he was traveling over to Ireland and somehow his books had been left behind. The journey was going to be some hours long, so he simply sat down on a deck chair and closed his eyes and repeated Milton’s Paradise Lost to himself.

As a child even, he showed promise. As a very young child, since he hadn’t spoken very much at all, people thought that he was somewhat retarded. When he was around four years old, his aunt happened to spill tea on his foot while she was pouring tea for the family and they were very worried about “little Tommy” and his aunt said, “How are you, how do you feel?” He said, “Madam, the pain which at first was very great, is now much abated.”

Macaulay’s most famous book is The History of England. The History of England is in a number of volumes even for the short period of time that it deals with. His essays, which are more manageable, range all around the place. He was a master of many, many languages. He loved literature as much as he loved history, and wrote reviews on many different topics. Really, he had a masterful style, as far as I’m concerned.

So, he decided to enter the lists against Southey on behalf of the new England—of the Industrial Revolution. If you don’t get a chance to read his other essays, you might read this one. Macaulay begins by talking about Southey’s background. Southey started as a Jacobin, as a supporter of the worst excesses of the French Revolution. Now, he’d become a total reactionary, not only against the Industrial Revolution, but also against civil liberties, in favor of the total power of the Church of England, and on. So, Macaulay says, “Southey has passed from one extreme of political opinion to another.”

(By the way, when I read this, you might think to yourself of the neoconservatives, beginning as proteges of Trotsky, many of them, and winding up now as American hyper-imperialists.)

Macauley writes “Southey has passed from one extreme of political opinion to another, as Satan in Milton went round the globe contriving constantly to ‘ride with darkness.’” You can get the astronomical image there. So we see, Southey has in store for him a real hatchet job. He attacks Southey for being a reactionary, but a funny kind of reactionary because this Tory is verging on modern socialism.

Southey carries his hatred of the free market to the point of demanding total government control— better the government than these profit-seeking greedy businessmen:

He conceives that the business of the magistrate is, not merely to see that the persons and property of the people are secure from attack, but that he ought to be a jack-of-all trades, architect, engineer, schoolmaster, merchant, theologian, a Lady, Bountiful in every parish, a Paul Pry in every house, spying, eaves-dropping, relieving, admonishing, spending our money for us, and choosing our opinions for us. His principle is, if we understand it rightly, that no man can do anything so well for himself as his rulers, be they who they may, can do it for him, and that a government approaches nearer and nearer to perfection, in proportion as it interferes more and more with the habits and notions of individuals.

You see that there’s a not very fine or clear line between hyper-conservatism and socialism. Indeed, in the early decades of the nineteenth century, socialists and conservatives combined against the new liberal society and capitalism.

This is an example of Macaulay’s flashy style, I think: he says that Southey and his ilk think that the working people of England are so bad off, yet “It will scarcely be maintained that the lazzaroni who sleep under the porticoes of Naples or the beggars who besiege the convents of Spain, are in a happier situation than the English commonality.”

Again, he’s contrasting what the Industrial Revolution is doing for common working people in England with the old static society that’s not able to spark economic growth in, for instance, Spain or Naples. Much along the same lines, and he ends on this note: “History is full of the signs of this natural progress of society” in the absence of obstacles set up against it. “We see in almost every part of the annals of mankind how the industry of individuals struggling up against wars, taxes, famines, conflagrations, mischievous prohibitions, and more mischievous protections, creates faster than governments can squander, and repairs whatever invaders can destroy.”

We see how in these historical works, there’s much of this that’s simply history and not just the presentation of his political principles. Within these historical works of the most famous and popular historian of his time, we see embedded the classical liberal philosophy that then is imbibed and absorbed by the people who read him. He points out something that I had mentioned before. “Yes,” he says, “things are very distressful in England. What would you expect? Thanks to the Napoleonic wars England has had “a war, compared with which all other wars sink into insignificance; taxation such as the most heavily taxed people of former times could not have conceived; a debt larger than all the public debts that ever existed in the world added together; the food of the people studiously rendered dear…”—a reference to the Corn Laws—“…the currency imprudently debased…”—that is, going off the gold standard—“…and then imprudently restored.” Yet, there has been progress because of the efforts of the people.

With Macaulay I wanted to make you—as I did before through Cobden and Bright—to an extent, familiar with some of these actors in the history of classical liberalism.

Capitalism and the Intellectuals

Now, I want to turn my attention to another topic and that is the role of the intellectuals in society. It’s what has sometimes been called the problem of the intellectuals and the marketplace.

Most of you probably are familiar with the name of Robert Nozick. Nozick became a libertarian which was a big plus for us. He was a Harvard professor and known as a hotshot and universally admitted as one of the brightest young philosophers of his time. Throughout his brief career—he died unfortunately too young—he was regarded as a very important philosopher. Nozick was a brilliant philosopher. His best known work is Anarchy, State and Utopia, which was a turning point because, for the first time, conventional academic philosophers had to deal with free-market and libertarian arguments. There’s a lot of original stuff in the book. On the other hand, there’s a lot of stuff in Anarchy, State, and Utopia—which won all kinds of prizes— that will be familiar to any one of us. However, for academic philosophers, it came as a revelation; his demolition of Marxist theory, the labor theory of value, and the idea that workers are always at the mercy of their employers, and on and on. Nozick deals with these and philosophers were amazed, saying “wow, we thought it was a lot more simple than that.”

In one of his essays, Nozick writes of an experience he often had when he came to reply to criticism of laissez-faire capitalism. Bob said that after he refuted some particular charge that laissez-faire leads to monopoly—or to systematic overproduction, or to pollution, or whatever— he would answer that charge, but then the other person drops the point and quickly leaps to another. But what about child labor? What about racism? What about advertising that brainwashes people into buying things they don’t need?

Bob writes that “[p]oint after point is given up. … What is not given up, though, is the opposition to capitalism” He concluded that the particular arguments are not important; the particular charges that are brought up are not important since “there is an underlying animus against capitalism.” I think that many of us will find this experience very familiar. That is, you answer one point and they immediately go to another point and once that’s answered, to another point. Why? Well, because Bob says there’s an animus against capitalism. This is relevant to the question of the intellectuals in the marketplace because the people that Bob is talking about—the people he habitually would come into contact with—would be other intellectuals.

Another example of this is given by Ronald Coase, Nobel Laureate in economics. He relates an incident highly revealing of the state of mind of opinion molders in America. It concerns the natural gas shortage of the 1960s. An economist at the University of Chicago, Edmund Kitch, had written a study demonstrating the part that short-sighted federal regulation played in the shortage of natural gas. He was presenting his findings in a public lecture in Washington in 1971. This is what Coase wrote about it:

Much of the audience consisted of Washington journalists, members of the staff and Congressional committees and others with similar jobs. They displayed little interest in the findings of the study, but a great deal of interest in discovering who had financed the study. Many seem to have been convinced that the Law and Economic Program at the University of Chicago had been bought by the gas industry. A large part of the audience seemed to live in a simple world in which anyone who thought prices should rise under certain circumstances, was pro-industry and anyone who wanted prices to be reduced was pro-consumer. I could have explained that the essential of Kitch’s argument had been put forward earlier by Adam Smith, but most of the audience would have assumed that Adam Smith was someone else in the pay of the American Gas Association.

In this episode we see a microcosm of the world habitually inhabited by antimarket intellectuals. Continued flourishing of this class remains an enduring puzzle and problem with classical liberals and libertarians.

Now, I don’t propose to solve this problem and give you the ultimate solution this afternoon, but I will suggest the various theories that have been put forward, and try to sift them for the ones that seem to be most plausible.

At the 1951 meeting of the Mont Pelerin Society at Beauvallon, a distinguished panel of scholars discussed the treatment of capitalism by the historians. The papers and some others were later published in that book, that I mentioned to you, edited by Hayek. In one paper, Bertrand de Jouvenel, a distinguished French political philosopher, described one of the most striking characteristics of modern intellectuals: their animosity towards the marketplace. Why should this be? The reason cannot lie, as de Jouvenel argued, in the puritanical disdain for social arrangements that satisfied the hedonistic demand of selfish individuals. After all, modern welfare democracy is also such an arrangement and is not subject to the antagonism of the intellectuals. De Jouvenel claimed, somewhat surprisingly, that the intellectual’s hostility to the businessman presents no mystery as the two have by function wholly different standards. The businessman’s motto is the customer is always right and the intellectual’s task is to preserve the highest standards of his field, even against the weight of popular opinion. But, I don’t find this very convincing. For instance, in democratic welfare states, politicians and bureaucrats also are supposed to serve the public rather than to struggle to preserve standards of excellence. Yet, the intellectual’s enemy is not typically directed against democracy, the welfare state, or its leaders and functionaries.

Twenty-one years later, in 1972, there was another panel on the intellectuals in the marketplace. The Mont Pelerin Society kept dealing with the question again and again for obvious reasons and R. M. Hartwell, the historian of the Industrial Revolution, spoke on “History and Ideology.” Hartwell had occasion to remark on the widely held aversion to the economic and political system which provided the institutional framework for modern economic growth. As a historian, he naturally stressed the crucial role of historical myths, concocted and circulated by academic historians in nursing this version. Hartwell’s lecture is particularly noteworthy for drawing attention to the systematic character of the anti-capitalist onslaught as experienced by the typical educated citizen of a Western democracy. Consider whether this at all reflects your own educational experience. He notes history “is only one element in a battery of self-reinforcing prejudice” against private property and the market economy. In literature, economics, philosophies, sociology and other subjects, the student is continually subjected to data and interpretations that converge on a single point: the viciousness of private enterprise and the virtuousness of state intervention and state-supported labor unionism. Hartwell observed “what schools and universities propagate in formal education, many other institutions reinforce”—particularly the churches, creative arts, the mass media.

Some years later, I presented a paper on the same topic at the Mont Pelerin Society and I noted to them the fact that we were coming back to the same old topic, the same old question. That doesn't argue for the futility of doing so, but shows, rather, the central importance of the question. Most of the people there had lived long enough to understand the truth of Joseph Schumpeter’s assertion that “capitalism stands its trial before judges who have the sentence of death in their pockets.” The only thing that changes, Schumpeter wrote, are the particulars. The ever-changing indictment is presented over and over and over again by the intellectuals.

Schumpeter notes that in earlier times, intellectuals indicted capitalism for the immiseration of the proletariat, inevitable depressions, and the disappearance of the middle classes. A little later, the indictment extended to imperialism and the inevitable wars among the imperialists or so-called capitalist powers.

In more recent decades, the indictment again changed, as earlier accusations became too blatantly untenable. Capitalism was charged with being unable to compete with socialist societies and technological projects. Believe it or not, that was the rage as I entered grad school around 1960. There had just been Sputnik. Statistics showed that in the Soviet Union, they were producing three or four times as many engineers a year as we were, and also the capital investment was just enormous. Nobody cared whether the capital was going to be used efficiently or not. But, the inputs were enormous. So, it was inevitable that they were going to, as Khrushchev said, catch up with us and easily surpass us. So, we were told capitalism could not compete with socialism. Capitalism was accused of promoting automation, leading to catastrophic permanent unemployment in the 1960s. Capitalism was accused of both creating the consumer society in its piggish affluence, and of proving incapable of extending such piggishness to the underclass. Capitalism with charged with neocolonialism, with oppressing women, racial minorities, and even sexual minorities. Capitalism was charged with spawning a meretricious popular culture, and now as we know, with destroying the earth itself.

George Stigler, a famous University of Chicago professor who was no ideologue or fanatic in any sense, remarked about his time: “A constant stream of new criticism—such as the problem of homeless families—is being invented, discovered, and heavily advertised.” These are a presentation of the state of affairs, of the facts. Could there be any doubt about this?

But the question remains, what is at the root of this ever-changing never-ending indictment? What accounts for the intellectual unremitting hostility to the market economy? Well, people on our side have tried to give a number of answers to this question. Hayek was acutely concerned with our problem, since he too was firmly convinced of the importance of the intellectuals.

However, Hayek’s view of the intellectuals is flatteringly benign. Their ideas, he says, are determined by and large by honest convictions and good intentions. He has an essay called “The Intellectuals and Socialism,” one of his famous essays, and worth reading. He does mention in passing the intellectual’s egalitarian bias. However, his analysis is basically in terms of their scientism. I don’t know if Hayek invented this term. I have a feeling he did. In any case, he certainly used it, and it means the inappropriate application of the methods of natural science to social-scientific affairs. So he thinks that the intellectuals are basically against the market economy because they had this scientistic prejudice. Actually, he talks about scientism in one of his books that I consider one of his best books, called The Counter-Revolution of Science, an older book of his.

In Hayek’s view, the chief influence on the intellectuals has been the example of the natural sciences and their applications. Basically his idea is this: as man has come to understand and control the forces of nature, intellectuals have grown infatuated with the idea that an analogous mastery of social forces could produce similar benefits to mankind. Intellectuals are under the sway of such beliefs—that "deliberate control of conscious organization is also in social affairs always superior to the results of spontaneous processes which are not directed by a human mind." Hayek even makes the following astonishing statement: “That, with the application of engineering techniques, the direction of all forms of human activity according to a single coherent plan, should prove to be as successful in society as it has been in innumerable engineering tasks is too plausible a conclusion not to seduce most of those who are elated by the achievements of natural science. It must indeed be admitted both that it would require powerful arguments to counter the strong presumption in favor of such a conclusion and that these arguments have not been adequately stated.”

Hayek is saying that it’s natural to have such a strong presumption in favor of a conscious overall planning of society by a few people according to scientific principles. Hayek continues and says the scientistic argument “will not lose its force until it has been conclusively shown why what has proved so imminently successful in producing advances in so many fields, should have limits to its usefulness and become positively harmful if extended beyond those limits.”

I hope you’re able to follow that in general. For me, it is exceedingly difficult to understand Hayek’s reasoning here. He appears to be saying that because the natural sciences have made great advances, and because innumerable particular engineering projects have succeeded, it is quite understandable that many intellectuals should conclude that the direction of all forms of human activity according to a single plan, will be similarly successful. In the first place, the advances of the natural sciences were not brought about in accordance with an overall central plan. They were rather the product of many separate decentralized but coordinated researchers, coordinated through informal mechanisms. These efforts were produced analogously in some respects to the market process, but there wasn’t any central planning in connection with the successes of science to begin with, which is Hayek’s premise. Second, from the fact that many particular engineering projects have succeeded, it does not follow that a single vast engineering project, one subsuming or particular project, is likely to succeed. Nor does it seem likely that most people would find such a claim plausible.

Why, then, is it natural or logical or easily comprehensible that intellectuals should reason from the triumphs of decentralized scientific research and of individual engineering projects, to the success of a plan by a supreme authority undertaking to direct all forms of human activity?

Joseph Schumpeter reviewed Hayek’s book, The Road to Serfdom, when it came out and I think it’s appropriate here to cite Schumpeter. He remarked that “Hayek was polite to a fault” towards his opponents in that he hardly ever attributed to them “anything beyond intellectual error.” But, Schumpeter declares, “not all the points that must be made can be made without speaking more plainly.” Schumpeter here implies an important distinction. Civility in debate, including the formal presumption of good faith on the part of one’s adversaries, is always in order. That’s always called for. But there’s also a place for the attempt to explain the attitudes, for instance, of anti-market intellectuals. In this endeavor, it may be suggested, “politeness” is not precisely what is most called for. As regards to positivist intellectuals who argued from the successes of natural science to the need for central planning, it may well be that this false inference was no simple intellectual error, but it was facilitated by their prejudices and resentments, and perhaps their own will to power. (Another term for scientism would be positivism, not in the strict philosophical sense of logical positivism, but in a sense I’ll explain in an upcoming lecture where I discuss the Saint-Simonians.)

In any case, Hayek, as I told you before, was the head of my dissertation committee and a perfect gentleman. Maybe when he talked about these issues and these problems, he was too much of a gentleman. For example, he dedicated The Road to Serfdom to “socialists of all parties.” That would be like Ayn Rand dedicating Atlas Shrugged to “thugs of all descriptions.” It really strikes me as a little off, and to tell you truthfully, I’ve never heard of anybody ever convinced by Hayek’s arguments. I know that some people—some socialists, Trotskyists, for instance—were convinced by Mises’s arguments. Mises was very hard hitting and not too polite in his attitude towards his opponents. Well, that’s the way Hayek was. But that isn’t a reason to make statements that are very strange.

This is what he says about intellectuals: “Orthodoxy of any kind, any pretense that a system of ideas is final and must be unquestionably accepted as a whole, is the one view which of necessity antagonizes all intellectuals, whatever their views on particular issues.”

This is an amazing statement. This is a statement Hayek makes about a category of persons that in the twentieth century was notorious for including thousands upon thousands of prominent intellectuals and apologists for Soviet Communism in all countries. Yet Hayek claims that they opposed any form of orthodoxy, that they had to be convinced in a perfectly logical way.

This, is it seems to me, is indeed politeness to a fault. Hayek seemed to think that all intellectuals were sort of like Bertrand Russell or somewhat like himself. Yet there were tens of thousands of intellectuals who supported Stalinism. There were thousands of intellectuals who supported fascism and National Socialism. A man who was one of the great American poets of the twentieth century, Ezra Pound, happened to be in Italy during the war. He delivered radio broadcasts on behalf of Mussolini and he considered himself a friend and a supporter of Mussolini. And there would be many other examples of something like that. So, what Hayek is talking about, I don’t know. I think that that treating intellectuals with kid gloves is not the way to go.

Well, now we come to Schumpeter and his own theory of the intellectual proletariat. In chiding Hayek, as I quoted above, Schumpeter suggested that he might have learned a useful lesson from Marx. Now what this involves is this: Schumpeter had a lifelong engagement with Marxism, mainly as a critic, but he had some similarities with Marx as well. Like Marx, he offered a highly pessimistic prognosis for the capitalist system, although for different reasons. While Schumpeter holds that the intellectuals will play a key role in capitalism’s demise, he in no way relies on the scenario set forth in The Communist Manifesto.

In the Marxist scenario, as announced by Marx and Engels, as the final revolution approaches, a section of the bourgeois ideologists will go over to the side of the proletariat. These will be the ideologists, as they say, who have worked their way up to a theoretical understanding of the historical movement as a whole. Note this is not that the people are going to go over from the middle class where they were born, to the communist movement. It’s not because they understand that communism is just or that it will bring about a better society. It is that they understand the theoretical movement. See what’s involved there? That’s a kind of Hegelianism. They understand how history is inevitably evolving. To be on the other side, to go against the current of history is to be absurd, like somebody trying to fly by jumping off a building and waving his arms. When they see the trend of historical movement, on penalty of being absurd and insane, they support the proletarian cause. But this is not out of any idea that communism is more just or superior.

This above scenario is what Marx and Engels would claim will happen in their laughably self-serving description. But that would not appeal to a skeptic like Schumpeter. Instead, Schumpeter’s “Marxism,” if you want to call it that, consisted in examining capitalism as a system with certain necessarily attendant sociological traits, and exposing the class interests of the intellectuals within that system. Schumpeter says, compared to previous social orders, capitalism is especially vulnerable to attack: “unlike any other type of society, capitalism inevitably and by virtue of the very logic of its civilization creates, educates, and subsidizes a vested interest in social unrest.”

In particular, capitalism brings forth and nurtures a class of secular intellectuals. This is not the sort of intellectuals who existed in most other societies connected with religion. These are secular intellectuals who wield a power of the spoken and the written word. The capitalist wealth machine makes possible cheap books, pamphlets, newspapers—or today: radio, television, and the internet—for the ever widening public that reads them and subsidizes education and literacy.

The freedom of speech and of the press enshrined in liberal constitutions—that is capitalist freedoms—entails also, in Schumpeter’s words, “freedom to nibble at the foundations of capitalist society.” This is analysis contained in a few pages of his famous book, Capitalism, Socialism, and Democracy. Within a liberal order, there is this constant gnawing away that is promoted by the critical rationalism inherent in capitalist society. Moreover, when we contrast earlier regimes, the capitalist state finds it difficult to suppress dissident intellectuals. Such a procedure would conflict with a general principle of the rule of law and the limits to the police power, that are dear to the bourgeoisie itself.

The key to the hostility of intellectuals to capitalism, in Schumpeter’s view, is the expansion of education, particularly higher education. This creates in capitalist countries—and we’ve seen this in developing countries also—a situation in which an enormous portion of the youth of the country go on not only through high school, but now through college and university, as well. The aim of the British Labour government is to get every young person into college or university and that has been more than halfway reached in the United States.

One of the results of that, of course, is the dumbing down of higher education. You can’t have the whole young population in college and universities, and expect colleges and universities to be the same thing that they’ve been before.

In many cases, there’s this enormous increase in students attending higher education institutions. This creates unemployment or underemployment among the university-schooled classes of people. Many of them become psychically unemployable in manual occupations without necessarily acquiring employability in say, professional work. That is, it is beneath them now to work as auto mechanics or in pizza parlors and they’re not really very good as lawyers, although that’s what they’re going to try to get into. Many of them will get into teaching in the public schools and a large proportion of my own students are future public school teachers and high school teachers also. And, just as the worst people in med school, according to their grades and so on, become psychiatrists, the worst people in colleges, according to their grades and so on, become teachers. And this is not to say that there are not good teachers, obviously, but we’re talking in terms of averages.

The point is, as Schumpeter indicates, that they just feel that they’re too good to do the sort of thing which in previous generations, people in their position would have done. The tenuous social position of these intellectuals breeds discontent and resentment, which are often rationalized as objective social criticism.

This is what Schumpeter writes. This emotional malaise “will much more realistically account for hostility to the capitalist order than could the theory—itself a rationalization in the psychological sense—according to which the intellectual righteous indignation about the wrongs of capitalism, simply represents a logical inference from outrageous facts…”

Remember, Nozick and Stigler talked about this underlying animus, regardless of what particular accusations are raised and answered. Schumpeter says, ignore those. Content yourself with the good answers that you’ve given to those accusations and then look to see what’s behind them. Why this constant production of attacks on capitalism? A major merit of Schumpeter’s argument is that it elucidates an abiding feature of the sociology of radicalism and revolution: the hunt for government jobs, which I talk about in connection with the industrialist group and their analysis. The interconnection between overeducation, a widening reservoir of unemployable intellectuals, the pressure for bureaucratic positions, and political turmoil, was a commonplace among European observers of the nineteenth century.

Later revolutionary movements, whether of the right or the left, can be understood, to a large extent, as the ideologically camouflaged raid on the great state employment agency. This would be the case in the nineteenth century.

From this perspective, we obtain a deeper understanding of the claim that the welfare state saved capitalism. Maybe you’ve heard that, but what the welfare state has actually accomplished is to furnish a never-ending source of state jobs that are mainly middle-class products of what is still referred to as a university education, without, as in the nineteenth century, requiring a revolutionary assault. There are the jobs in the EPA, and endless social work of one kind or another, and all the other aspects of the welfare state. Well, these are jobs now, and those who are university educated but can’t find jobs in the private sector, now have a source of income.

While there’s doubtless a good deal of truth in Schumpeter’s identification of the systemic surplus of intellectuals as a source of anticapitalism, it also presents certain difficulties, the most important of which is this: it is not so much the unemployed intellectuals who are the problem, but the ones who are employed. Intellectuals unable to find suitable jobs may well provide a receptive subculture—let’s say in Greenwich Village, as well as occasional cannon fodder for revolutionary movements—among communist anarchists in the late nineteenth century and some third-world countries today. In Germany after the First World War, artists and writers frozen out of the avant-garde culture of Weimar were prominent among the early National Socialists.

But, Schumpeter’s thesis does not hold for many other cases, probably the historically most significant ones. Emile Zola and Anatole France, Gerhard Huffman and Berthold Brecht, H.G. Wells and Bernard Shaw, John Dewey and Upton Sinclair were scarcely unemployable in the intellectual world. Today there are the stars of the mass news media in all advanced countries, and one could mention newspersons in America who earn two million dollars a year or more— such being the savage inequalities of capitalism. These people are typically nibblers at the system of private enterprise. Just listen to the tone of their voice when they have to deal with issues of this kind, note the news stories that they emphasize and put at the top about big business and its terrible misdeeds. This goes on day after day, hour after hour, day after day, year after year, and the question is rather why so many successful and highly influential intellectuals become carping critics of the free economy.

Well, let’s turn our attention to Ludwig von Mises. If Schumpeter declined to be polite to a fault when it came to antimarket intellectuals, what are we going to say about Hayek’s mentor, Ludwig von Mises? Mises frequently probed the basis of the anticapitalistic mentality. He has a book by that title. That’s not his best. Often, he emphasizes invidious personal motivation, resentment, and bitter envy as a source of this mentality. He also notes the replacement of the society of status—the older society of status—by a society of contract. A society of status is where whatever you did in life was pretty much determined by the position you were born into. A society of contract is one in which whatever you do in life is to a very large extent dependent on your own efforts. The replacement of one society by another aggravated feelings of failure and inferiority among those who did not succeed. With a quality of opportunity in all careers open to talent, lack of financial success became a judgement upon the individual. This is a burden that some attempt to shift by scapegoating the social system. Intellectuals, according to Mises, share this weakness perhaps in an accentuated form. On occasion, Mises goes so far as to trace the psychological roots of anti-liberalism to a mental pathology. The scapegoating of the social system by those unable to cope with the reality of their relative failure in life, as Mises claims, is a mental disorder which psychiatry has so far neglected to classify. Engaging in a bit of volunteer psychiatric nosology himself, he ventures to label this condition the “Fourier Complex” after the early French socialist, Charles Fourier. Psychiatrists, as far as I’m aware of have not been eager to accept Mises’ volunteer work.

Although Mises’ focus on envy and resentment is the best known of his attempts to explain this anti-capitalist mentality, I submit that there is a second and different approach of his that may be more fruitful.

In an early essay entitled “The Psychological Roots of the Resistance to Economics,” Mises launches a radical attack on the strand of traditional Western morality that has stigmatized money making. Citing a famous work by the Roman Cicero as an exemplary text, Mises identifies the contempt for money making as deeply ingrained in Western culture. This, he says, is the source of the hostility against capitalists, against trade, and against speculation, which he thinks dominates our whole public life, politics, and the written word. This contempt, nurtured and sustained through the centuries and the change of regimes, is the natural outgrowth of class morality.

Mises, as you can imagine, given his views, is very distressed by this contempt for money making, for commerce, for merchants, and for businesspeople that permeated our civilization and our culture. This is one reason that he had such enormous respect for Ayn Rand’s Atlas Shrugged when it was published. Now this cluster of values, he said, is the natural outgrowth of a particular class morality, specifically the morality of the classes that are sheltered from the market by the circumstance that they live from taxes. They don’t have to worry about the market. They don’t have to care about speculation or making a profit. In our own day, it is a morality generated, as he says, by priests, bureaucrats, professors and army officers, who look with loathing and scorn on entrepreneurs, capitalists and speculators. Insight into the prevalence of this antimarket ethic helps explain, as Mises’ other envy-based approach does not, the antimarket attitudes often found among the economically successful, even in the private sector. Mises says, “No one escapes the power of the dominant ideology.” Thus, “entrepreneurs and capitalists themselves are swayed by the moral outlook that damns their activity.” It’s not a rare occurrence that even successful businessmen who made the money—but very especially his sons and daughters—turn against the capitalist system. This is, as Mises explains, “because of the dominant ideology that they are exposed to. They suffer from a bad conscience and feelings of inferiority.” As Mises says, “it shows itself, among other things, in the support given to socialist movements by millionaires and their sons and daughters.”

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Germany surrendered conditionally in 1919 under the Treaty of Versailles. Everybody opposed the treaty, but it was forcibly implemented. Revisionism is necessary to combat state propaganda, e.g. the lie in WWII that FDR was surprised by Pearl Harbor.

The welfare state was actually begun by Bismarck in the 1880s. The welfare state that now exists will simply keep expanding in its agenda of rooting out older values and substituting others. As the crisis of the welfare state is approached, only newcomers from the third world can become taxpayers for retired elders. Identities of European peoples will be extinguished.

Constitutions and Bills of Rights will not be the protectors of our liberties. The liberals in classical liberalism had no answers because they still held to the power of the state. The centralized state must be broken down by means such as secession even to the level of the individual.

History shows the struggle for liberty. He who controls the present controls the interpretation of the past.

Lecture 10 of 10 from Ralph Raico's History: The Struggle for Liberty.

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Mises’ book, Liberalism, states that liberalism sufficed to change the face of the earth. The term liberal has since been hijacked by social democrats, so they don’t have to use the tainted word socialism. Raico defines liberalism to be civil society, minus the state, running itself within the bounds of private property.

After the end of the Middle Ages, the Renaissance created the late scholastics – the School of Salamanca. Their legitimate theory of value had nothing to do with labor as it did in England. They saw that buyer and seller are each better off by an exchange, not equal.

The Dutch produced a fairly free society, but not a political philosophy. The French felt the period 1846-1940 to be almost a hundred years of true laissez-faire policy.

During the English Civil War, the Levellers began the history of liberalism by their demands to free John Lilburne from prison. The Leveller cause was effectively crushed in 1649. Their legacy was abstract natural rights. Rothbard called them the world’s first self-consciously libertarian mass movement.

John Locke is a fountainhead of crucial ideas about society being self-ruled with property being the fundamental right to life, liberty, and estates. Government was meant only to protect that right. Such an uncoerced vision animated Jeffersonians. The laissez-faire society worked well.

Adam Smith, David Hume, and Adam Ferguson were chief thinkers of the Scottish Enlightenment. They held that the fundamental importance of human reason should be combined with a rejection of unreasonable authority.

Lecture 2 of 10 from Ralph Raico's History: The Struggle for Liberty.

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Intellectuals are pro-power and anti-market. Great presidents are war presidents who glorify power. The Costs of War and Reassessing the Presidency are recommended books on this topic. The First World War was a turning point which vastly extended state power, and vastly destroyed social power.

Bismark united all of the German tribes into one state to preserve a German peace. The understanding in 1907 linking Great Britain, France and Russia was called the Triple Entente. This alliance in 1914 entered WWI as Allies against the Central Powers Germany and Austria-Hungary. The creation of a German navy put them on a collision course with Great Britain.

Germany’s strategy was to quickly knock France out of the war by sending troops through Belgium. The Archduke is killed in Sarajevo. Austria declares war on Serbia. Austrians could then invade Serbia and do away with it. Germany declares war on Russia and France. France convinces Britain that she must declare war against Germany, although no Britain had any clue about the war or any say about it. Yet, war was greeted with enthusiasm. The intellectuals were rapturous.

German U-boats sank British ships, bringing America into the war. The 1915 sinking of the Lusitania with some Americans aboard was used to justify Wilson’s position against Germany. Wilson had a hidden agenda to create a New World Order. The case of Eugene Debs was an example of how vindictive Wilson was and how individual liberties lost more ground in WWI than during WWII.

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Humans are prone to envy, writes Helmut Schoeck in Envy: A Theory of Social Behavior. Humans try to set up a society in which none is envious of another. George Stigler of the Chicago School saw man as always a utility maximizer.

Robert Higgs disagreed with Stigler’s position. Higgs presents that the kind of person one becomes confirms a self-image. When acting politically, people are often concerned about what might be right or wrong.

Russia was fertile grounds for socialist ideas. European intellectuals had made capitalism an object of horror. The Marxist dream was to be obtained by abolishing private property. One prevailing historical myth has been part of socialist pseudo-history. Did German big business play an essential role in the rise of Hitler? No, finds Henry Ashby Turner, but historians keep repeating this story.

Jean-Jacques Rousseau was not a socialist, but was an enemy of capitalism. His views and his activities were destructive. Rousseau and Voltaire hated each other. Rousseau’s famous book is The Social Contract. It is very different from Locke’s. Rousseau should not be put into the liberal camp. Raico calls Rousseau historical rubbish.

Robespierre was one of the most influential figures of the French Revolution and the Reign of Terror. Surprising to Marx, socialism arose in Paris not in London. The best book on socialism is by Alexander Gray –The Socialist Tradition: Moses to Lenin. Gray was Rothbard’s favorite historian of economic thought.

Lecture 7 of 10 from Ralph Raico's History: The Struggle for Liberty.

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Mill played a crucial, but inflated, role in liberalism. Rothbard did not like Mill much. Mill was a disaster on economic freedom and international issues. Mill rejected that workers and capitalists shared interests. Mill was anti-capitalist.

Mill’s On Liberty addresses the nature and limits of legitimate power by society over individuals. Mill’s relationship with Harriet Taylor, a married woman, twisted his own mores. Mill’s liberalism had little regard for the past. John Maynard Keynes also contributed to liberalism meaning almost anything including Nazism. Keynes felt his system was more adapted to socialism and Stalinism.

But the hallmark of liberalism is that society can run itself with voluntary agreements based upon private property rights.

French liberalism involved the idea of class conflict which led to totalitarianism. This doctrine is generally associated with Marxism, but predated Marx. The French made all government offices open to all citizens. That was the essence of the French Revolution. Two main conflicting classes are producers and plunderers.

The British tradition of liberalism, as Hayek espoused, leaves out the tradition of natural rights.

Lecture 3 of 10 from Ralph Raico's History: The Struggle for Liberty.

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In the face of overwhelming evidence of the prosperity of capitalism, Marxists were forced to rephrase their arguments from material provisions to quality of life. Robert Nozick, a brilliant philosopher of liberty, became a libertarian. Anarchy, State, and Utopia, his main book, dominates debate in political philosophy.

Why were intellectuals so hostile toward the market place and private property? Only state interventionism was seen as virtuous. Hayek saw that intellectuals had egalitarian biases, but felt they meant well. They just had scientistic prejudice. Schumpeter remarked that Hayek was polite to a fault.

Schumpeter held that the key to intellectual hostility was the education and literacy that the capitalist wealth machine made possible – the freedom to nibble at the foundations of the capitalist society. This analysis is in his most popular book Capitalism, Socialism, and Democracy.

Mises was not polite to a fault. His focus on this issue cites work about money making having been stigmatized. Western culture has had contempt for money making, commerce, merchants and business people. Entrepreneurs and capitalists themselves are swayed by the moral outlook which damns their activity.

Lecture 6 of 10 from Ralph Raico's History: The Struggle for Liberty.

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It was thought that the ultimate antidote to war was universal democracy. It was not. Spencer defined liberal democracy as an individual free to control the product of his own efforts on the market. Welfare societies could not rationally be termed democracies.

Globalism perverts the Constitution. Meddling activism has unintended consequences like centralizing the power of the Presidency. Intervention creates blowback.

The effects of the Industrial Revolution are a major issue in Classical Liberalism. From 1750 to 1850 industrialization got slowly underway in Britain. Division of labor and urbanization were considered a catastrophe. It was thought that only labor unions could improve conditions of the working people. This myth created a standing presumption that laissez-faire ruins countries and requires state intervention to protect present victims of capitalism.

An optimist school made gradual headway against these pessimists. They gathered objective data and applied better economic theory. Wages, availability of foodstuffs, and length of life were finally considered in contrast to initial horror stories. In fact, the standard of living improved for most workers. Industrialization allowed tens of millions of people to survive as their populations exploded. The Industrial Revolution was not the problem; it was the solution.

Lecture 5 of 10 from Ralph Raico's History: The Struggle for Liberty.

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Ralph Raico covers classical liberalism’s growth, development and possible future. Liberalism arose in Europe entwined with Christianity. Why Europe? The East lacked the idea of freedom from the state and never established the legal system that could protect wealth. Europe had multiple, decentralized competing powers, not a universal empire.

Europe came into existence in the Middle Ages. The contractual relationship between princes and subjects was similar to the Magna Carta. The Middle Ages [5th to the 15th century] were not dark ages. The sign of a freeman was that he had the right to keep and bear arms.

The powerful, international Church of Rome was the strong institution that acted as a counterweight to secular power. It was the largest property owner in Europe and concerned about taxation.

Lecture 1 of 10 from Ralph Raico's History: The Struggle for Liberty.

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Utopian socialism was a term created by Marx and Lenin to denigrate the enemies of Marx and Lenin. Henri de Saint-Simon’s ideology of the industrial class, opposed to the idling class, inspired and influenced utopian socialism.

Capitalists were seen to be an important component of the industrial class. Saint-Simon did not promote class conflict. Auguste Comte was his disciple. Comte founded sociology and the doctrine of positivism. He is regarded as the first philosopher of science.

Main Currents of Marxist Thought by Kolakowski is an indispensable work about Marxism and Marxism-Leninism. He describes Marxism as the “greatest fantasy of the twentieth century.” Marx was after the human race achieving real human dignity. Man will only achieve control of his own destiny by creating planned societies. There is no invisible hand. Man must be conscious masters of nature. Everything will be planned. That will free mankind.

Trotsky’s book, For Literature and Revolution, claimed that the average human type will rise to the stature of an Aristotle. Lenin first put into place the Stalinist planned society – communism.

Lecture 8 of 10 from Ralph Raico's History: The Struggle for Liberty.

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Gustave de Molinari became the grand old man of classical liberalism, crediting Pareto. Molinari understood that the main issue in the Civil War was the tariff, not slavery. In Italy economists founded free market economics, crediting Bastiat.

In America, John Taylor saw society becoming feudalistic with exploiting classes. Government needed to be separated from banking systems. Thomas Jefferson’s values were held most high. William Graham Sumner talked about plutocrats – wealthy persons who used the state. There was the liberal idea of class conflict. Production led to peace, whereas militarism led to war and destruction. War is the health of the state, said Bourne.

The pro-peace position was led by the Manchester School, particularly by Richard Cobden. They led the free trade movement. Their aim was harmony and peace among nations.

The tax-eating rather than the tax-paying classes favored war. Cobden emphasized trade not politics. Bastiat proposed getting rid of the French army. The American Open Door policy with China was free trade imperialism. Unilateral free trade works. Trade agreements don’t. Just do away with tariffs.

War making was often based upon incorrect information. Kosovo and Iraq are examples of disinformation stampeding us into war. The liberal anti-war tradition was against imperialism. The US went down the road of empire as did Spain. Constant war, large standing armies, crushing debt, and destructive levels of taxation are all with us now.

Herbert Spencer believed that warfare was only suitable to man’s primitive stage, not his advanced stage after industrialization. However, some liberals, like de Tocqueville, did support war under certain conditions.

Lecture 4 of 10 from Ralph Raico's History: The Struggle for Liberty.