Written by ‘Classical Liberal’
[You can read Part I here]
Despite the fears of men of property, Europe witnessed a gradual increase in the electoral franchise during the 19th century – largely driven by the liberal rallying cry that ‘all men are created equal’. However, liberals also needed to balance the notion of majority rule with those who favoured that the majority’s power should be limited. The difficulty lay in achieving this balance in a way that was consistent with democratic ideals. How could the majority’s power be checked without conceding undue power to the propertied classes or some other elite group?
The liberal answer to the question of how to limit the powers of a democratic majority contained several strands. The first was a separation of powers – the division of power between government agencies with different functions, such as the executive branch, the legislative branch, and the judiciary. This system, and the checks and balances that make it work, is exemplified in the USA’s Constitution; the political rationale having been expounded in the Federalist papers (1787-1788) by James Madison, John Jay, and Alexander Hamilton. Alternatively, separation of powers could also have been accomplished via a mixed constitution – where power is divided between a king, a hereditary chamber, and an elected parliament; like the form of government in Britain during the American Revolution. Indeed, the US Constitution also includes parts of a mixed constitution, like the dividing of the legislature into the House of Representatives, elected by the popular vote, and the Senate, whose members were initially selected by the state governments. As unenlightened sovereigns and unelected aristocrats continued to block the ambitions of the middle classes, they moved to embrace the idea of majority rule.
The second strand involved elections staggered to render the decisions of any particular majority open to the oversight of other majorities staggered over time. For example, in the USA one-third of the Senate is elected every two years for six year terms, members of the House of Representatives are elected every two years, and presidents are chosen every four years. Thus, the majority that elects a House of Representatives every two years or a president every four years is different from the majority that elects one-third of the Senate two years before and the majority that chooses another third of the Senate two years after. They are then checked by the Constitution, which was ratified and amended by previous majorities. In Britain, an act of Parliament becomes part of the uncodified constitution as soon as it is passed; but, before moving on a very controversial issue, Parliament must seek a popular mandate, which constitutes a different majority than the one that elected it. Therefore, in a constitutional democracy, the power of the current majority is checked by the majorities that preceded and follow it.
The third strand of the answer is derived from liberalism’s fundamental commitment to individual freedom, which the limitation of power is intended to uphold. From this perspective, an individual is not just a citizen who shares a social contract with his or her fellow citizens but also someone with rights which the state must not encroach upon if majority rule is to have true meaning. A majority electoral verdict can only be achieved if people are free to share their views. This implies freedom of expression, freedom of association, and, most importantly, freedom from fear of oppression. An individual also has other rights apart from their role as a voter. These rights guarantee personal safety and, thus, protection from arbitrary arrest. Beyond them are rights that protect privacy. In a liberal democracy, some matters are no concern of the state. These matters include religion, and artistic expression, for example. For 18th and 19th century liberals these matters also included most of how individuals engaged in production and trade. Declarations proclaiming these rights included the British Bill of Rights (1689), the US Declaration of Independence (1776) and Constitution (1788), France’s Declaration of the Rights of Man and of the Citizen (1789), and many other documents throughout the world that took these declarations as their inspiration. These declarations asserted that there is much more to freedom than voting in elections; freedom is the fundamental right of individuals to live their own lives.
The economic seeds of liberalism were also sown in Britain. By the 18th century, parliamentary checks were rendering it hard for British sovereigns to embark upon the same means of increasing national power as most European monarchs. They jockeyed for military supremacy, which rested upon a firm economic foundation. Mercantilist orthodoxy viewed international trade as a winner-takes-all contest – one country’s gain resulted in another’s loss. Therefore, governments acted to set prices, protect their producers from foreign competition, and safeguard economic information.
These ideas were soon challenged by liberal ideas. A group of French intellectuals known as the physiocrats suggested that unrestrained economic competition is the best way to generate wealth. They advised the government to ‘let it be, leave it alone’ (‘laissez faire, laissez passer’). The most influential advocate of laissez-faire was the Scottish philosopher and economist Adam Smith, author of The Wealth of Nations (1776). Smith argued that free trade benefits all parties because competition results in the production of more and better products at reduced prices. Giving people the freedom to follow their self-interest in an exchange economy founded upon the division of labour will improve the welfare of society as a whole. The self-interested person is connected to the public good as in an exchange economy he or she needs to serve others to serve himself or herself. However, this positive outcome is only achievable in a truly free market. Any other system, such as monopoly or nationalised, will cause regimentation, exploitation, and economic stagnation.
All economic systems must decide not just what will be produced but also how it will be distributed. In a market economy, both of these decisions are made via the price mechanism. The question of how society’s resources – capital, labour, and goods – should be employed is determined by the free choices of individual buyers and sellers. These choices are revealed in the bids that determine the price of a commodity. When the demand for something is high, its price increases, rendering it profitable for producers to increase supply; as supply equals demand, prices drop until producers move resources to other endeavours. Thereby, the free market delivers the nearest possible connection between what is wanted and what is produced. And, when it comes to the distribution of the wealth gained, the free market is claimed to guarantee a reward in relation to merit. This is based upon the assumption that in a truly competitive economy in which no one is prevented from engaging in economic activity, the money gained from an activity is a just measure of its worth to society.
This is based upon the notion of individuals as rational and self-interested economic actors seeking to minimise costs and maximise gains. As every individual knows their interests better than anyone else does, an individual’s interests could never be furthered, only stymied, by government interference in their economic activities.
[To be concluded tomorrow with Part III]
Photo by deemikay