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The Controversy between “Old” and

Bill Lai
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Introduction

Human beings crave for convenience, and this instinct is typically reflected in our

invention of classification. For various objects, phenomena, and people, we like to create terms,

which are defined by their shared properties, so that we can describe each of them with these

simple terms, instead of long, descriptive sentences. When we see Van Gogh’s Sunflower, we

do not say “its hue is randomly put, not consistent with the reality,” but call it a “post-

impressionism painting;” when we refer to a novel with enormous description of characters’

psyche, we say it is “Victorian literature”. However, when a term is so often used that people,

when using it, no longer bother to carefully consider its exact definition, its meaning will

become vague and, therefore, easy to manipulate; as a result, the same term used under different

contexts and by different people could have different, or even conflicting, meanings. Then it is

quite reasonable to suspect that, “liberalism,” the core value constantly held and advocated

during the western civilization, might be the most typical “overused” term. In fact, it is. We

call John Locke a “liberal,” who proposed that to secure individuals’ liberty, government power

should be limited, and government does not have moral responsibility for its subjects. However,

watching candidates proposing plans of national free healthcare on the Democratic Debates,

we also call them “liberals”. The ideas of liberalism in these two circumstances are contrary to

each other, yet they are both classified as “liberal.” Indeed, after a theory is proposed, it will

be inevitably evaluated, questioned, and then modified, and the modified version will then

become a new subject of evaluation, questioning, and modification. The original liberalism

theory has always been through this dynamic process, thereby resulting in the miscellaneous

“liberalisms” we can identify today. During such development, there are two branches of liberal
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ideas – classical liberalism and new liberalism – that has constantly been arguing against each

other all the way into today.

Liberalism in General

Since they are both called “liberalism,” these two ideas (and other more nuanced ideas

classified as “liberal”) must have some shared properties. Therefore, it is desirable to identify

these properties before examining different branches of liberalism separately.

Liberalism. Liberty. Freedom. Right after we see the first word, the second and third come

to our mind. Indeed, liberalism is about freedom. As Maurice Cranston says, “by definition, a

liberal is a man who believes in liberty” (459). Specifically, liberals believe that humans are

naturally in “a State of perfect Freedom to order their Actions […] as they think fit […] without

asking leave, or depending on the Will of any other Man” (Locke 287). They regard freedom

as men’s inherent right, so any act that deprives him of this right must be justified. Typically,

because political authority is the most powerful source of restriction on men’s liberty, whether

political authority can be justified becomes central question to liberals. In fact, most liberals

agree on that political authority is necessary to human society. However, an affirmative answer

to this question necessarily leads to another question, which is, as Jean-Jacques Rousseau put,

To find a form of association which may defend and protect with the whole force

of the community the person and property of every associate, and by means of

which each, coalescing with all, may nevertheless obey only himself, and remain

as free as before (14).

That is, a justifiable political authority should both preserve unity and stability of the society
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and protect liberty of the individuals; liberals develop controversial opinions on what such

authority should be like. Classical liberalism and new liberalism are two of the most

representative opinions to this problem.

Classical Liberalism

Originating in the 18th century, classical liberalism – “old” liberalism – insists on that to

secure individual liberty, government should protect property right, since the latter is intimately

related to the former. They believe that “an economic system based on private property is

consistent with individual liberty, allowing each to live her life – including employing her labor

and her capital – as she sees fit” (Gaus et al., par. 14). For many classical liberals, liberty and

property are just two sides of the same coin. For instance, some of them argues that “all rights,

including liberty rights, are forms of property,” while others maintain that “property is itself a

form of freedom” (qtd. in Gaus et al., par. 14). Therefore, as Lionel Robbins put, free market

based on private property itself is an embodiment of freedom (104). Under this market order,

people are free to buy anything they can afford, sell anything they are willing to produce, make

contracts with their employers, and dispose income according to their personal need – if people

are prevented from these acts, which is based on the security of their right to their property,

they are not actually free.

Other classical liberals strive to connect liberty with private property in another way. They

insist that the establishment of private property is the only effective means to protect liberty.

Specifically, a free market economy, by giving individuals freedom in doing what they want,

disperses power into hands of individuals, thereby protecting the liberty of subjects against
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encroachment by the government. As F.A. Hayek argues, “There can be no freedom of press if

the instruments of printing are under government control, no freedom of assembly if the needed

rooms are so controlled, no freedom of movement if the means of transport are a government

monopoly” (“Liberalism” 149). In other words, property right is “the guardian of every other

right”; only when property right is secured, people are able to attain other rights (Ely 26)

In addition, classical liberals believe that property right is righteous not only because it

ensures liberty, but also because it leads to prosperity. British economic thinker Adam Smith

believes that as long as property right is secured, individuals, allowed to freely pursue

economic practices that will benefit themselves, simultaneously help allocate scarce resources

and make the society as a whole prosperous (Smith, 330).

Emergence of the New

However, in the late nineteenth and early twentieth centuries, some intellectuals began to

question classical liberalism’s view on the relationship between individual liberty and private

property and finally developed a new branch of liberalism – the new liberalism.

From various economic malperformances, especially the Great Depression, in which

individual economic behavior accumulated to lead the economy into a circle of depression,

they lost faith in classical liberals’ ideal of free market based on private property in bringing

prosperity. John Maynard Keynes, for instance, believes that an underregulated economy is

unstable and vulnerable to lasting high unemployment.

While new liberals became disillusioned with power of the market, they increasingly

believed in government as a necessary agent to supervise the functioning of the economy. Life
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experiences further confirmed their belief. During World War I, government attempted at

economic planning seemed to succeed (Dewey 551–60). During the Great Depression, US

president Franklin Roosevelt’s New Deal, which significantly increased government’s role in

economic activity, effectively set the economy on the way of recovery, crediting the term “New

Deal Liberalism”. These events made new liberals more convicted to their claim that

government intervention is the key to economic prosperity.

More importantly, new liberals’ new vision of government’s ideal role in the economy was

spurred by the democratization of western nations, under which the elected government

officials could truly become “representatives of the community” (Hobson 49). As D.G. Ritchie

remarked,

be it observed that arguments used against ‘government’ action, where the

government is entirely or mainly in the hands of a ruling class or caste, exercising

wisely or unwisely a paternal or grandmotherly authority – such arguments lose

their force just in proportion as the government becomes more and more

genuinely the government of the people by the people themselves (64).

Therefore, according to new liberals, government, when become more democratic, is no longer

a formidable threat to individual liberty as classical liberalism proposes.

Furthermore, new liberals criticize that the property right worshipped by classical

liberalism is harmful not only to the economy, but also to the society as a whole. They believe

that, far from guarding every other right, property right actually fosters an unjust inequality of

power, undermining every other right of the socially disadvantaged, such as the working class.

This belief is confirmed by the emergence of railroad and manufacturing monopolies in US as

a result of the underregulated economy at the end of the 19th century, which harmed the interests

of farmers in the South. In this case, the liberty of the farmers is deprived rather than preserved.

The Revival of the Old

In the 20th century, as the new liberalism gradually become a fashion among policy makers,

there emerged people who worried about the resulted expansion of government power. Their

concerns were furtherly spurred by the appalling loss of individual liberty under Russia’s

communist government. Therefore, these people, who are generally called “neoliberals,”

sought to counter the trend by reviving arguments of classical liberalism.

After the World War II, the Labor Party, led by Prime Minister Clement Atlee, became the

dominant party in the British Parliament. Atlee enacted a series of policies that greatly

increased government participation in the economy, such as expanding the welfare system and

extent of economic planning. Friedrich Hayek warned that such trend will inevitably lead to

dictatorship, which then inevitably results in a complete loss of individual liberty:

planning leads to dictatorship because dictatorship is the most effective

instrument of coercion and the enforcement of ideals and, as such, essential if

central planning on large is to be possible (110).

Arguing that planning leads to dictatorship, Hayek recalled classical liberalism’s

caution against government and fear of the deprivation of individual freedom by the

government.

Meanwhile, American philosopher Ayn Rand put the arguments of classical liberalism to

a more radical direction. In her novel Atlas Shrugged, Rand shows how government
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supervision and regulation of the economy finally lead to the collapse of economy and loss of

individual liberty. She created a new branch of philosophical theory – objectivism, which

argued for a complete elimination of government and a free market supported by individual

self-interest and rationality.

Continuous Debate

Just as the emergence of new liberalism encouraged the revival of old liberalism, the

revival of old liberalism – in the form of neoliberalism – in turn incurs attacks from new liberals.

New liberals criticize the failure of the application of neoliberal ideology in real life and

neoliberalism’s consequence of enlarging social inequality. For instance, in his analysis of the

failure of the Eurozone during the 2008 financial crisis, economist Joseph Stiglitz remarks that

the neoliberal ideal entailed in the system, which believes in the efficiency of the market itself,

should partly account for the failure (24).

Therefore, in history, the controversy between classical liberalism and new liberalism has

never ceased – as soon as one becomes dominant, the other will stand out to oppress it. As a

result, a dynamic equilibrium is reached, and it is reasonable to predict that such equilibrium

will be preserved at least for a period time in the future, with more arguments and theories

developed on both sides. As the equilibrium goes on, the society benefits. On the one hand, as

the two sides argue against each other back and forth, the society will develop a more

comprehensive understanding on what role the government should play in the society, which

then lead to more comprehensive and, therefore, beneficial policies and legislation. On the

other hand, the equilibrium ensures that the society will not go too far on either direction: when
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the government involvement in social affairs increases, classical liberalism will stand out to

warn the public against the expansion of government power and the loss of individual liberty;

when the role government plays in the society is too limited, new liberals will stand out to call

for social welfare programs and structural reforms to benefit the disadvantaged groups. In this

sense, under the dynamic equilibrium, the society will gain both liberty and welfare (though

this does not imply that the two are naturally against each other), and will be neither too

authoritative because of the expansion of government power, nor too divided because of lack

in government intervention in society.

Conclusion

The development of liberalism theories entails the lasting controversy between old and

new liberalism. While the old liberalism worships property right and call for limited

government intervention in the economy and social affairs, new liberalism believes that

property right is not necessary to securing liberty, and that government intervention can even

promote liberty in the society. Such controversy has continued for over a century, and it is very

likely that they will continue in the future. However, this “stagnation” is not harmful but

beneficial, since from it the society was able to attain the advantages that each of the two

promises.
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Works Cited

Cranston, Maurice. “Liberalism.” The Encyclopedia of Philosophy, edited by Paul Edwards,

Macmillan and the Free Press, 1967, pp. 458–461.

Dewey, John. Characters and Events. Edited by Joseph Ratner, Henry Holt, 1929.

Ely, James W. The Guardian of Every Other Right: A Constitutional History of Property Rights.

Oxford University Press, 1992.

Gaus, Gerald, et al. “Liberalism.” Stanford Encyclopedia of Philosophy, Stanford University,

22 Jan. 2018, plato.stanford.edu/entries/liberalism/#DebAboReaLib.

Hayek, F. A. “Liberalism.” New Studies in Philosophy, Politics, Economics and the History of

Ideas, Routledge and Kegan Paul, 1978.

Hayek, F. A.. The Road to Serfdom, edited by Bruce Caldwell, The University of Chicago Press,

2007 [1944].

Hobson, J. A. The Economics of Unemployment. Allen and Unwin, 1922.

Keynes, John Maynard. The General Theory of Employment, Interest and Money, Macmillan

and Cambridge University Press, 1973 [1936].

Locke, John. The Second Treatise of Government in Two Treatises of Government, edited by

Peter Laslett, Cambridge University Press, 1960 [1689], pp. 283–446.

Ritchie, D. G. Principles of State Interference. 2nd ed., Swan Sonnenschein, 1896.

Robbins, L. The Theory of Economic Policy in English Classical Political Economy.

Macmillan, 1961.

Rousseau, Jean-Jacques. The Social Contract. Translated by H. J. Tozer, Wordsworth Editions

Ltd., 1998.
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Smith, Adam. The Wealth of Nations (Illustrated). Clap Publishing, 2017.

Stiglitz, Joseph E. The Euro and Its Threat to the Future of Europe. Penguin Books, 2016.