VII.

Economics

The crisis concerning economic power was more profound. One branch of liberal philosophy was its economics as developed by the so-called classical economists, notably the Scottish philosopher Adam Smith and British economist David Ricardo. Economic liberals opposed mercantilist restrictions on economic activity and favored unhampered private enterprise. Such thinkers as the British statesman John Bright argued against such legislation as maximum-hour laws (see Hours of Labor) on the ground that it infringed on liberty and that society, particularly its economy, would flourish best when it was regulated least.

As industrial capitalism developed in the 19th century, economic liberalism continued to be characterized by a negative attitude toward state authority. The working classes began to suspect that the philosophy protected the interests of powerful economic groups, particularly manufacturers, and that it encouraged a policy of indifference and even of brutality toward the working classes. These classes, which had begun to acquire political status and organized strength, turned to the political liberalism that was more concerned with their needs—that of the socialist and labor parties.

The outcome of this crisis in economic and social thinking was the development of positive liberalism. As noted, certain modern liberals, like the Austrian-born economist Friedrich August von Hayek, consider the positive attitude an essential betrayal of liberal ideals. Others, such as the British philosophers Thomas Hill Green and Bernard Bosanquet, known as the “Oxford Idealists,” devised a so-called organic liberalism designed to “hinder hindrances to the good life.” Green and Bosanquet advocated positive state action to promote self-fulfillment—that is, to prevent economic monopoly, abolish poverty, and secure people against the disabilities of sickness, unemployment, and old age. They came also to identify liberalism with the extension of democracy.