Classical liberalism

Classical liberalism is a political ideology that developed in the nineteenth century in England, Western Europe, and the Americas. It is committed to the ideal of limited government and liberty of individuals including freedom of religion, speech, press, assembly, and free markets. Notable individuals who have contributed to classical liberalism include Jean-Baptiste Say, Thomas Malthus, and David Ricardo. There was a revival of interest in classical liberalism in the twentieth century led by Ludwig von Mises, Friedrich Hayek and other economists.

Government, as explained by Adam Smith had only three functions: protection against foreign invaders, protection of citizens from wrongs committed against them by other citizens, and building and maintaining public institutions and public works that the private sector could not profitably provide. Classical liberals extended protection of the country to protection of overseas markets through armed intervention. Protection of individuals against wrongs normally meant protection of private property and enforcement of contracts, and the suppression of trade unions and the Chartist movement. Public works included a stable currency, standard weights and measures and support of roads, canals, harbors, railways, and postal and other communications services.

Classical liberalism places a particular emphasis on the sovereignty of the individual, with private property rights being seen as essential to individual liberty. This forms the philosophical basis for laissez-faire public policy. The ideology of the original classical liberals argued against direct democracy "for there is nothing in the bare idea of majority rule to show that majorities will always respect the rights of property or maintain rule of law." For example, James Madison argued for a constitutional republic with protections for individual liberty, over a pure democracy, reasoning that in a pure democracy, a "common passion or interest will, in almost every case, be felt by a majority of the whole...and there is nothing to check the inducements to sacrifice the weaker party...."

Economy Tweets- Individual Freedom

The economy, Frank Knight argued, is a very complex and unstable thing. Programs of government intervention are too simplistic and do not take into account the complexities of a market economy – thus making interventionism even more dangerous. Laissez-faire is recommended, he argued, not because it "works" (for it patently does not) but rather because it holds individual freedom as an absolute good and the alternative may be much worse.

As a result, Knight's position is quite the reverse of the Second Chicago School economists of the 1960s, (i.e. Friedman, Stigler and company). The Second Chicago School tended to argue the positivist line that laissez-faire is desirable because it delivers the goods, and not because it is a good in itself. Indeed, throughout his life, Knight explicitly deplored and attacked many of the assumptions that the Second Chicago School held dear: e.g. the denial of the importance of monopolistic competition, the assumption of consumer sovereignty, stable preferences, efficient outcomes of markets, empirical-intuitive reasoning, interdisciplinary imperialism, etc.

All these items are precisely and directly opposed to virtually every important argument and position of Knight's (Emmett 2009). Indeed, the later Chicago School's declared "positivist" methodology was wryly characterized by Knight as "the emotional pronouncement of value judgements condemning emotion and value judgements which seems to [me] a symptom of a defective sense of humor" (Knight, 1940). However, we must grant that Knight's theories of capital (Knight viewed all factors as capital to a greater or lesser degree) and his "public choice" view of political behavior could be said to have persisted in at least some quarters of the modern Chicago School.