What is a Classical Liberal?

Gerald O’Driscoll, Jr., writing in Tuesday’s Wall Street Journal, has a great description of classical liberalism: “Classical liberals, whose modern counterparts are libertarians and small-government conservatives, believed that the state’s duties should be limited (1) to provide for the national defense; (2) to protect persons and property against force and fraud; and (3) to provide public goods that markets cannot. That conception of government and its duties was articulated by the Declaration of Independence and embodied in the U. S. Constitution.”

He quotes Thomas Carlyle, the 19th century Victorian essayist, who assailed classical liberalism as “anarchy plus a constable.” O’Driscoll opined, “As a romantic, Carlyle hated the system – but described it accurately.” Donald Boudreaux, a great (Cajun) economist at George Mason disagrees:

My friend and former professor Gerry O’Driscoll eloquently explains that “crony capitalism” has as much to do with real capitalism as praying mantises have to do with real prayer (“An Economy of Liars,” April 20).  But I must pick one nit.

Gerry writes that “Thomas Carlyle, the 19th century Victorian essayist, unflatteringly described classical liberalism as ‘anarchy plus a constable.’  As a romanticist, Carlyle hated the system – but described it accurately.”  I disagree that Carlyle’s description is accurate.

To the modern American ear, “anarchy” no longer means simply “no ruler”; instead it now means “no law” – true, free-for-all chaos.  In vivid contrast, capitalism – real capitalism – is infused with law, most of which is self-enforcing.  The manufacturer who pays his suppliers late gets poorer credit terms in the future; the retailer who cheats her customers loses business; the customer who doesn’t pay his bills can no longer buy on credit.

The chief problem with crony capitalism is precisely that it injects significant amounts of lawlessness into the economy, transforming capitalism into something entirely different and dysfunctional.  Under crony capitalism, government excuses the politically influential from capitalism’s laws.  Thus unleashed from the impartial discipline of the invisible hand, the politically influential become criminals who lie, rape, pillage, and plunder.  And that’s true lawlessness and chaos.

Sincerely,
Donald J. Boudreaux

SDG,
The Farmer

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2 responses to this post.

  1. Posted by BradleyT on April 26, 2010 at 7:18 pm

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