The Rise, Decline, and Reemergence of Classical Liberalism
by Amy H. Sturgis
© The LockeSmith Institute, 1994
No part of this article may be reproduced in any manner without the written permission of THE LOCKESMITH INSTITUTE, except for brief quotations used in reviews or critical essays/articles.
The acceptance of the growth of government during the late 19th and early to mid-20th centuries produced the economic reactions of the Austrian and Chicago Schools and the individualist ideology of Objectivism. As the 20th century progressed, it became clear that government was an inefficient force to meet the changing needs of an increasingly global culture and economy. As with the growing Europe in the mercantilist era that embraced the first classical liberals, communication and travel allowed citizens of different nations to know what they are missing without free trade and human rights. The persistence of those who endured through this time saw their assertions vindicated; collectivism, communism, Keynesianism, and militarism have been discredited on many fronts. Slowly attention has returned to those ideas so quickly abandoned in the panics of the last century.
Three years after 1943's simultaneous publication of the works of Rand, Lane, and Paterson, the Foundation for Economic Education was founded as a haven for classical liberal economists. Soon after, the Volker Fund adopted the classical liberal cause, financing such individuals as Mises at New York University and Hayek at the University of Chicago. A "directory project" sought out thinkers to connect with different programs and offer a "publisher of last resort" ( Critical Review 1). Through these channels an international network of classical liberals formed which would serve for decades. The prominence of journalists like Henry Hazlitt and Isabel Paterson and the creation of foundations and publications such as Cato, Reason, Liberty, The Institute for Humane Studies, etc. helped to maintain the momentum of this return from "re-barbarization." The next generation of Austrians and Chicagoans began to enjoy increased acceptance and even international accolades. Others entered the tradition for the first time, responding to the new situations created by a rapidly advancing technological world increasingly free of totalitarianism.
The Public Choice School (1959-present)
Although Anthony Downs of the Brookings Institution planted the seeds of public choice theory with his 1950s work An Economic Theory of Democracy, the true parents of the school are James Buchanan (1919-present) and Gordon Tullock (1922-present). Their story began when Buchanan secured a five-year Volker grant to establish the Thomas Jefferson Center for Studies in Political Economy; his search for a post-doctoral fellow to work with the center ended with Tullock. By 1959, the pair had published The Calculus of Consent in which they analyzed "constitutional choice" and the problem of "nonmarket coordination" (Dorn 59). They then created the Center for the Study of Public Choice at the Virginia Polytechnic Institute in 1969, where the journal Papers in Non-Market Decision-Making became The Journal of Public Choice. Both men continued to publish and in 1982 the Center relocated to George Mason University in Fairfax, Virginia. In 1986, James Buchanan received the Nobel Prize in Economics for his work with public choice theory.
Public choice theory is an approach to analyzing public policy based on the acceptance of the motivation of self-interest and the understanding of politics as exchange. In short, the theorists assert that politicians, lobbyists, bureaucrats, and others involved in policymaking act with the same self-interest as private persons. If public servants do not act from selflessness and benevolence, privatization may be a more logical path to pursue than is first recognized. Even if a single policymaker wanted to act for the public good, public choice theory denies that a public interest exists apart from multiple individual interests. Another focus of the school is preventing the majority from limiting choice. The constitutional question becomes how to "channel individual self-interest so as to achieve social coordination" (Dorn 59). This is the same challenge faced by Madison in framing the United States Constitution, mirroring his decision to pit interest against interest to keep the government and the majority from infringing upon personal liberties. The link between the Madisonian model and public choice theory is strong, as David R. Henderson notes in 1987:
...the authors [Buchanan and Tullock]... defend a constitutional democracy with checks and balances, much like the one we started within this country. Their book [Calculus] is really a modern day version of The Federalist Papers, informed by a much more sophisticated knowledge of economics (40).Today the school continues to grow, branching into new areas of public policy, adapting the classical liberal values of personal choice and individual responsibility to new problems. For example, one of the most recent areas in which the school has applied economic tools to political issues is free market environmentalism.
Robert Nozick (1938-present)
Born in Brooklyn in 1938, Robert Nozick was appointed to Harvard in 1965. His 1974 Anarchy, State and Utopia has sent shock-waves throughout the liberal and non-liberal communities. In part his work answered the thesis of John Rawl's A Theory of Justice (1971), which outlines his concept of a just society. Rawls defends a kind of mixed economy socialism, as social policies/rules chosen behind a "veil of ignorance." Behind this veil policymakers act as if they are ignorant of their status in the community as they create policy, so that puniary goods are distributed fairly across race, gender, and economic lines in a manner that always benefits the "least advantaged group" (Sampson 185, Merquior 139).
Nozick criticizes the redistribution inherent in Rawls' proposals, defending each person's claim to his own using the natural rights argument of Locke. In fact, he begins in a state of nature like Locke, then asks whether there should be a state at all. In the end he argues for a "minarchist" state, a minimalist government for protection only. He argues completely from individual consent-based morality, noting the effectiveness of Smith's "Invisible Hand" of the market but not pausing to elaborate on economics. The state therefore cannot tax, for example, for that is analogous to forced labor (Nozick 169).
Notably, Nozick ends by "reclaiming for the liberal tradition the utopian vision which virtually all liberals (except Hayek) had rejected as uncongenial to the pluralism demanded by the liberal ideal" (Gray 41). Nozick asserts that the minimal state provides the framework for a meta-utopia in which individuals might join together to form communities of free entry and exit, competing for members. Within these smaller associations, members might choose to contract away certain rights in favor of receiving particular services; the communities which would emerge might not be ideally liberal. With the option of exit ever-present, however, each association must remain true to its contract and accountable to its members.
Nozick pioneered the exodus of other minimalists into public view such as John Hospers, chairman of the University of Southern California Philosophy Department and 1972 National Libertarian Party Presidential Candidate, and Tibor Machan, philosophy professor and author. Perhaps they shall compose the next major movement in the history of the tradition. Nozick's other works include The Examined Life: Philosophical Meditations and The Nature of Rationality. Nozick explains the minimalist logic by noting:
...[the minarchist state] allows us, individually or with whom we choose, to choose our life and to realize our ends and our conception of ourselves, insofar as we can, aided by the voluntary cooperation of other individuals possessing the same dignity. How dare [Nozick's emphasis] any state or group of individuals do more. Or less (Nozick 334).