American vs Classical Liberalism: Definition, Examples, Thinkers

Liberalism is considered to be an ideology whereby liberty, equality before law and consent of government and equality before the law. This article mainly focuses on Classical Liberalism and Modern Liberalism and how they are different from one another.

Classical Liberalism  

Classical Liberalism is considered to be a political Ideology that propagates the concepts of the free market, civil liberties, and the rule of law along with a focus on the following –

political freedom, limited government, economic freedom, and laissez-faire, cultural Liberalism through the mechanism of limitation of government intervention.

This philosophy of Classical Liberalism can be considered to be a response to the Industrial Revolution and the process of urbanization in the 19th century, in the USA and Europe. Essentially, it preaches the concept of individual liberty and a belief in progress. The entire ideology of Classical Liberalism is based on the ideas of many 18th-century scholars. Some of these scholars include Adam Smith, John Locke, David Ricardo, and so on. Adam Smith’s book “The Wealth of Nations” was of extreme significance in this regard. Classical liberals support Thomas Hobbes’ idea that the purpose of the institution of governments was the minimization of disputes that rise among individuals. He also stated that the best way to encourage workers is to provide financial incentives to them.

Classical liberals were against the idea of welfare states as they considered such states to be a threat to an economy based on the free market.

As per the ideas of Adam Smith, the Classical liberals advocate that the government should not interfere unduly in the progress of individuals in their respective economic self-interests. Classical liberals upheld only 6 functions of the government. They were as follows :

  1. Protection of individual rights and provision of those resources which cannot be offered in a free market;
  2. the government has to defend the nation against any kind of foreign invasion;
  3. development of laws for the protection of citizens, private property, and contract enforcement;
  4. the creation and maintenance of public institutions;
  5.  provision of a system of standardised weights and measures and a stable currency;
  6. construction and maintenance of public roads  communications systems and other such facilities.

Classical Liberalism upheld that instead of granting these, the government had the purpose of protecting fundamental rights of the citizens. The idea of democracy was rejected by Classical liberals, as well.

To sum up, one can say that when it comes to Classical Liberalism, it is usually considered to be a mixture of civil, political, and economic liberties. They propose the least or no intervention of the government. They extended the least support to the intervention of the government in the affairs of individuals.

Modern Liberalism  

In the United States of America, the branch of ideology that prevails in the polity is Modern Liberalism. The ideas that “Modern Liberalism ” encompasses are those of civil liberty and equality. Modern Liberalism also extends support to the aspect of social justice and provision for a regulated market economy. Basically, it developed as a response against the prevailing free-market capitalism, by upholding that this institution causes many individuals to not be free. The tough competition of the market economy led to difficulties in the lives of the peasants and workers. Classical Liberalism failed to transform the society, as was expected. So, as one of the first steps, the Ideology of Modern Liberalism developed, based on the concept of a mixed economy. This can be considered to be the primary feature of the concept of Modern Liberalism.

This Ideology developed in the late 19th and early 20th century. This development is linked with the emergence of socialist movements and values that spread all through Europe and North America during this period. According to Historians and scholars, the rise of Modern Liberalism was a reaction to the situations that were ongoing in societies of Classical Liberalism, during the time of the Industrial Revolution.

One has to keep in mind that though Modern Liberalism includes collectivists or social principles, it essentially covers the aspects of Classical liberal principles, like the concepts of rule of law, individual rights and freedom, a certain level of economic freedom, etc. In other words, while the idea of the welfare state was adopted, the capitalist base was also maintained in Modern Liberalism.

Modern Liberalism gave rise to a new meaning to the phrase ‘absence of restraint’. It, initially, indicated the absence of interference of the state in the areas of industry and commerce. However, for Modern Liberalism,  the non-interference of the state does not lead to all the solutions. The primary objective of public policy has to be the prevalence of equality of opportunity to ensure the development of every person’s potentials.

Modern Liberalism  in the United States of America

During the years of the Great Depression in the US, the federal government intervened in the economy with great intensities in order to help the people belonging to the working class. This led to a significant shift in American politics. In accordance with the policies of Roosevelt, the USA adopted a Welfare state.  The USA is a Modern liberal democracy that is based on a mixed economy and the welfare state.

Modern Liberalism can be said to have risen as a consequence of the hardships faced by the people belonging to the working class, during the times of the Industrial Revolution and Great Depression. The socialist movements of the 19th and 20th centuries are attributed to be responsible for the transformation from Classical to Modern Liberalism by means of a rise of government intervention in the economy. The features of a Modern liberal society were visible in the US. They were – public healthcare, minimum wage laws, public education etc.

Modern Liberalism propagates a mixed economy (combination of collectivism and individualism) which is often considered to be more stable. It also enables the existence of individual rights and rule of law. These are its positive impacts.

Modern Liberalism is also associated with some negative consequences. One has to remember that through the mechanism of taxation, in a mixed economy the government intervention is more. Again, there’s another problem connected to Modern Liberalism and that is the finding of the accurate balance between laissez-faire capitalism and socialism. This, indeed, is recognized as a difficult job. Mixed economies also encounter large income gaps, very much like free markets. Thus, these societies of Modern Liberalism also struggle with the challenges of poverty and unemployment.

John Maynard Keynes influenced Modern Liberalism  like Adam Smith influenced the Classical aspect of it. He had an enormous impact on the economic theory during the times of Great Depression. His book “The General Theory of Employment, Interest and Money” outlined his opinions about how, during the times when national economies suffer negatively, the government must borrow and spend in order to increase economic activities. According to him, such actions would help the country’s economy to grow and some of the proceedings can be beneficial to the repayment of the debts involved.

President Roosevelt was influenced by this theory of Keynes when he developed the policies of the New Deal.

To sum up, Modern Liberalism  uphold the mixture of social justice and mixed economy. Modern liberals comprehended the negatives of minimum or no intervention of government. It propagated the involvement of government for the overall good. The terrible economic situations of the working classes led to the development of this new school of thought, that was called ‘Modern Liberalism ’.

Differences between Classical Liberalism  and Modern Liberalism  

So, according to all the progresses and changes, liberal thought emerged from laissez-faire government to one such government where the involvement of it is very necessary for the poor, especially. To look at the primary and basic differences, one should look at the following.

  • Definition wise, Classical Liberalism  is a blend of civil, political and economic freedom while Modern Liberalism  mixes the concepts of social justice and mixed economy.
  • According to Classical Liberalism , the government is a ‘necessary evil’ while Modern Liberalism  advocates an active involvement of the government, advocating a “welfare state”.
  • Classical Liberalism  upholds universal unity of human and Modern Liberalism  accepts multiculturalism, identity and group rights.
  • In Classical Liberalism , property rights are inviolable while in Modern Liberalism  accepts distributive justice.
  • The freedom in Classical Liberalism is called “Negative Freedom” while the freedom in Modern Liberalism is called “Positive Freedom”.

In spite of all the differences, Classical Liberalism and Modern Liberalism agree on certain points.

  • Both of these thoughts agree that the purpose of the state is to promote and protect individuals’ natural rights.
  • “Government by consent” is another point they agree upon.
  • They agree that the state has to be Constitutional in nature with certain limits, dispersing political power.

If the economic aspect is considered, Classical Liberalism  propagated low taxes, low or no tariff but when it comes to Modern Liberalism , it championed the necessity of high tax, high minimum wage laws etc. In other words, these 2 kinds of Liberalisms disagree on if the state taxation exposes a threat to liberty or fosters enablement of liberty.

Names of  Classical Liberalism thinkers :

John Locke,  Adam Smith, Thomas Paine, and so on and so forth.

Names of Modern Liberalism thinkers :

J.S. Mill, John Rawls, T.H. Green, and so on and so forth.

Like every other Ideology, this ideology has evolved so far and is still evolving. There exist these differences but both of these ideologies are the branches of one ideology – Liberalism. In this regard, it should be mentioned that none other than John Locke is the father of Liberalism. Modern Liberalism is spreading throughout the world now. India is a country based on the Modern aspect of democracy. Being aware of the basic differences between Classical Liberalism and Modern Liberalism is quite significantly.

Also Read: Political Liberalism by Rawls

Reference: _in_the_United_States -essay-on-modern-Liberalism /40278 -and-vs-Classical-Liberalism /

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I am a student pursuing Masters in Political Science from the University of Calcutta and I graduated from the same university (Scottish Church College). I have participated and won various creative writing contests, held online. I have also worked as a journalist in an E newspaper. My works have been published in various anthologies available on Flipkart and Amazon. I am an aspiring writer.