What is Classical Liberalism?

Foundations of Classical Liberal Economics

The political and economic philosophies of the Enlightenment period gave rise in the 19th century to classical liberalism. Ideas that developed during the enlightenment then gave rise to new ideas, which came to be known as “classical liberalism”. Classical liberalism promotes securing the freedom of individuals by limiting the government’s power.

People who believe in classical liberalism, that believe that is the way economies should best be run, would promote securing individual’s freedom and limiting the government’s power. They think individuals should be able to do what they want in the economy and it will regulate on its own. They don’t think the government should have a hand in the economy, or the government should have very little hand in how the economy runs, but that primarily it should be run by individuals.

Adam Smith summarized the classical liberal view of economics in his book “The Wealth of Nations”. He was someone who really helped promote classical liberalism. Smith invokes the idea of the invisible hand to suggest that markets, if left alone, would regulate themselves. If the government didn’t interfere in the markets, then the economy would regulate itself.

These markets would regulate themselves as if there was an invisible hand doing all the work. It would just happen without there actually being any kind of government intervention or government rules to apply to the economy. Smith also endorsed the changes brought on by the Industrial Revolution. You’ll remember the industrial revolution was whenever factories became a big thing.

People started working in assembly lines and making textiles. That was a big thing during that time. Really, any kind of manufacturing in an assembly line setting in a factory was very common during the Industrial Revolution. A lot of that built up. Lots of people flocked in from rural areas, sold their farms, and moved to cities, because they felt like that would give them a greater chance to move up in society.

The Industrial Revolution brought on lots of changes with how society was run and how the economy was running. He endorsed those changes as part of the natural evolution of the capitalist economy. Basically, this was something that would happen naturally without any government intervention if people were left to just have their own freedom to trade or sell things as they wanted to.

Adam Smith was a big promoter of classical liberalism in the 19th century. Another person who was associated with classical liberalism was Thomas Malthus. Thomas declared that the world was in danger of becoming overpopulated, and overpopulated would mean that there weren’t enough resources to take care of everyone who was living here. There wasn’t enough food, there weren’t enough supplies to make clothing, there weren’t enough places to live.

He declared that the world was in danger of becoming overpopulated and that the natural solution would be for the poor to die of disease and starvation. Naturally, if there was no intervention, the poor people would die, because they would get sick, they would be in housing that wasn’t as good as upper classes, they would be eating not as well as upper classes, so they would have bad nutrition, they would be living in not very good settings that might not be very sanitary.

Disease would be able to pick up people a lot more quickly, because they weren’t healthy to begin with. Then, the poor would live a lot closer together, which means that the disease would spread. Disease would kill off some of the poor, and then starvation, not having enough food in general, let alone foods that were healthier for you or that were more preferred, and that the upper middle classes had better access to.

The natural solution without any government intervention would be that the poor would die of disease and starvation, and that would prevent the problem of overpopulation. Malthus also supported the industrial revolution. Like Adam Smith, he did support those changes and he suggested that the plight of the poor was actually in the best interest of humanity.

Basically, the poor dying off due to disease and starvation was in the best interest of humanity, because it would keep the Earth from becoming overpopulated. Then, the people who were still here, humanity as a whole, would have more resources to split among themselves. There were going to be people who come back and argue this and say that you know humanity isn’t really that great at all if it’s letting people die because they can’t get enough food, or enough shelter or clothing whenever there’s plenty of it to go around.

Malthus was a little bit more extreme and not as sensitive to people, the individuals as a whole, but he was a supporter of classical liberalism. Adam Smith just supported that markets would regulate themselves as if there was an invisible hand doing the regulating without any government intervention.

If the people were left to regulate things and to sell things within the market as they wanted to, then the markets would self regulate. The main goals of classical liberalism is to promote securing the freedom of individuals. You want individuals to have their freedom, and you do that by limiting the government’s power, especially involving economics.