It was during this period of industrialization that the individualistic worldview of classical liberalism became the dominant ideology of capitalism. Many of the ideas of classical liberalism had taken root and even gained wide acceptance in the mercantilist period, but it was in the late eighteenth and nineteenth centuries that classical liberalism most completely dominated social, political, and economic thought in England. The Christian paternalist ethic was still advanced in the writings of many of the nobility and their allies as well as many socialists, but in this era these expressions were, by and large, dissident minority views.

The Psychological Creed

Classical liberalism's psychological creed was based on four assumptions about human nature. People were believed to be egoistic, coldly calculating, essentially inert, and atomistic. (See chap. 3 for a discussion of the egoistic theory of human nature.) The egoism argued by Hobbes furnished the basis for this view, and in the works of later liberals, especially Jeremy Bentham, it was blended with "psychological hedonism": the view that all actions are motivated by the desire to achieve pleasure and avoid pain.

"Nature," he wrote, "has placed mankind under the governance of two sovereign masters, pain and pleasure. . . . They govern us in all we do, in all we say, in all we think" (Bentham 1955, p. 341). Pleasures differed in intensity, Bentham believed, but there were no qualitative differences. He argued that "quantity of pleasure being equal, pushpin is as good as poetry." This theory of human motivation as purely selfish is found in the writings of many of the most eminent thinkers of the period, including John Locke, Bernard Mandeville, David Hartley, Abraham Tucker, and Adam Smith. Smith's ideas are examined in some detail later in this chapter as well as in the appendix to this chapter.

The rational intellect played a significant role in the classical liberal's scheme of things. Although all motives stemmed from pursuit of pleasure and avoidance of pain, the decisions people made about what pleasures or pains to seek or avoid were based on a cool, dispassionate, and rational assessment of the situation. Reason would dictate that all alternatives in a situation be weighed in order to choose that which would maximize pleasure or minimize pain. It is this emphasis on the importance of rational measurement of pleasures and pains (with a corresponding deemphasis of caprice, instinct, habit, custom, or convention) that forms the calculating, intellectual side of the classical liberal's theory of psychology.

The view that individuals were essentially inert stemmed from the notion that pleasure or the avoidance of pain were people's only motives. If people could see no activities leading to pleasurable conclusions or feared no pain, then they would be inert, motionless, or, in simpler terms, just plain lazy. Any kind of exertion or work was viewed as painful and therefore would not be undertaken without the promise of greater pleasure or the avoidance of greater pain. "Aversion," wrote Bentham, "is the emotion-the only emotion -which labor, taken by itself, is qualified to produce: of any such emotion as love or desire, ease, which is the negative or absence of labor-ease not labor-is the object" (quoted in Girvetz 1963, p. 38).

The practical outcome of this doctrine (or perhaps the reason for it) was the widespread belief of the time that laborers were incurably lazy. Thus, only a large reward or the fear of starvation and deprivation could force them to work. The Reverend Joseph Townsend put this view very succinctly: "Hunger is not only peaceable, silent and unremitted pressure, but, as the most natural motive to industry and labor, it calls forth the most powerful exertions." Townsend believed that "only the experience of hunger would goad them [laborers] to labor" (Bendix 1963, p. 74).

This view differed radically from the older, paternalistic ethic that had led to the passage of the Elizabethan Poor Relief Act of 1601. The paternalistic concern for the poor had lasted for two centuries and had culminated in 1795 in the Speenhamland system, which guaranteed everyone, able-bodied or not, working or not, a minimal subsistence to be paid by public taxes. It was against this system that the classical liberals railed. They eventually succeeded in passing the Poor Law of 1834, the object of which, according to Dicey, "was in reality to save the property of hard-working men from destruction by putting an end to the monstrous system under which laggards who would not toil for their support lived at the expense of their industrious neighbors" (Dicey 1926, p. 203).

Classical liberals were persuaded, however, that the "higher ranks" of individuals were motivated by ambition. This differentiation of people into different ranks betrayed an implicit elitism in their individualistic doctrines. In order to ensure ample effort on the part of the "elite," the classical liberals believed the state should put the highest priority on the protection of private property. Although the argument began "as an argument for guaranteeing to the worker the fruits of his toil, it has become one of the chief apologies for the institution of private property in general" (Girvetz 1963, p. 50).

The last of the four tenets was atomism, which held that the individual was a more fundamental reality than the group or society. "Priority ... [was] ... assigned to the ultimate components out of which an aggregate or whole ... [was] composed; they constituted the fundamental reality" (Girvetz 1963, p. 41). With this notion, the classical liberals rejected the concept, implicit in the Christian paternalist ethic, that society was like a family and that the whole, and the relationships that made up the whole, were more important than any individual. The liberals' individualistic beliefs were inconsistent with the personal and human ties envisioned in the Christian paternalist ethic. The group was no more than the additive total of the individuals that constituted it. They believed that restrictions placed on the individual by society were generally evil and should be tolerated only when an even worse evil would result without them.

This atomistic psychology can be contrasted with a more socially oriented psychology that would lead to the conclusion that most of the characteristics, habits, ways of perceiving and thinking about life processes, and general personality patterns of the individual are significantly influenced, if not determined, by the social institutions and relationships of which he or she is a part. Atomistic psychology, however, sees the makeup of the individual as somehow independently given. It therefore regards social institutibns as both tools for and the handiwork of these individuals. In this view society exists only because it is useful, and if it were not for this usefulness each individual could go his or her own way, discarding society much as he or she would discard a tool that no longer served its purpose.

The Economic Creed

Several explanations are necessary for an understanding of why the classical liberals thought society so useful * For example, they talked about the "natural gregariousness of men," the need for collective security, and the economic benefits of the division of labor, which society makes possible. The last item was the foundation of the economic creed of classical liberalism, and the creed was crucial to classical liberalism because this philosophy contained what appears to be two contradictory or conflicting assumptions.

On the one hand, the assumption of the individual's innate egoism had led Hobbes to assert that, in the absence of restraints, people's selfish motives would lead to a "natural state" of war, with each individual pitted against others. In this state of nature, Hobbes believed, the life of a person was "solitary, poor, nasty, brutish, and short." The only escape from brutal combat was the establishment of some source of absolute power, a central government, to which each individual submitted in return for protection from all other individuals (Hobbes, pp. 192-205).

On the other hand, one of the cardinal tenets of classical liberalism was that individuals (or, more particularly, businessmen) should be free to give vent to their egoistic drives with a minimum of control or restraint imposed by society. This apparent contradiction was bridged by the liberal economic creed, which asserted that if the competitiveness and rivalry of unrestrained egoism existed in a capitalist market setting, then this competition would benefit the individuals involved and all society as well. This view was put forth in the most profound single intellectual achievement of classical liberalism: Adam Smith's The Wealth of Nations, published in 1776.

Smith believed that "every individual ... [is] continually exerting himself to find out the most advantageous employment for whatever capital he can command" (Smith [1776] 1937, p. 421).

Those without capital were always searching for the employment at which the monetary return for their labor would be maximized. If both capitalists and laborers were left alone, self-interest would guide them to use their capital and labor where they were most productive. The search for profits would ensure that what was produced would be what people wanted most and were willing to pay for. Thus, Smith and classical liberals in general were opposed to having some authority or law determine what should be produced: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest" (Smith 1937, p. 14). Producers of various goods must compete in the market for the dollars of consumers. The producer who offered a better-quality product would attract more consumers. Self-interest would, therefore, lead to constant improvement of the quality of the product. The producer could also increase profits by cutting the cost of production to a minimum.

Thus a free market, in which producers competed for consumers' money in an egoistic quest for more profits, would guarantee the direction of capital and labor to their most productive uses and ensure production of the goods consumers wanted and needed most (as measured by their ability and willingness to pay for them). Moreover, the market would lead to a constant striving to improve the quality of products and to organize production in the most efficient and least costly manner possible. All these beneficial actions would stem directly from the competition of egoistical individuals, each pursuing his or her self-interest.

What a far cry from the "solitary, poor, nasty, brutish" world Hobbes

thought would result from human competitiveness. The wonderful social institution that could make all this possible was the free and unrestrained market, the forces of Supply and Demand. The market, Smith believed, would act as an "invisible hand," channeling selfish, egoistic motives into mutually consistent and complementary activities that would best promote the welfare of all society. And the greatest beauty of the market was the complete lack of any need for paternalistic guidance, direction, or restrictions. Freedom from coercion in a capitalist market economy was compatible with a natural orderliness in which the welfare of each, as well as the welfare of all society (which was, after all, only the aggregate of the individuals that constituted it), would be maximized. In Smith's words, each producer

intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not a part of it. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it. (Smith 1937, p. 423)

With this statement it is evident that Smith had a philosophy totally antithetical to the paternalism of the Christian paternalist ethic. The Christian notion of the rich promoting the security and well-being of the poor through paternalistic control and almsgiving contrasts sharply with Smith's picture of a capitalist who is concerned only with "his own advantage, indeed, and not that of the society.... But the study of his own advantage naturally, or rather necessarily leads them to prefer that employment which is most advantageous to the society" (Smith 1937, p. 421).

Not only would the free and unfettered market channel productive energies and resources into their most valuable uses, but it would also lead to continual economic progress. Economic well-being depended on the capacity of an economy to produce. Productive capacity depended, in turn, on accumulation of capital and division of labor. When one man produced everything he needed for himself and his family, production was very inefficient. But if men subdivided tasks, each producing only the commodity for which his own abilities best suited him, productivity increased. For such a subdivision of tasks a market was necessary in order to exchange goods. In the market each person could get all the items he needed but did not produce.

This increase in productivity could be extended further if the production of each commodity were broken down into many steps or stages. Each person would then work on only one stage of the production of one commodity. To achieve a division of labor of this degree, it was necessary to have many specialized tools and other equipment. It was also necessary that all the stages of production for a particular commodity be brought together and coordinated, as, for example, in a factory. Thus, an increasingly fine division of labor required accumulation of capital in the form of tools, equipment, factories, and money. This capital would also provide wages to maintain workers during the period of production before their coordinated efforts were brought to fruition and sold on the market.

The source of this capital accumulation was, of course, the profits of production. As long as demand was brisk and more could be sold than was being produced, capitalists would invest their profits in order to expand their capital, which would lead to an increasingly intricate division of labor. The increased division of labor would lead to greater productivity, higher wages, higher profits, more capital accumulation, And so forth, in a never-ending, upward-moving escalator of social progress. The process would be brought to a halt only when there was no longer sufficient demand for the products to warrant further accumulation and more extensive division of labor. Government regulation of economic affairs, or any restriction on the freedom of market behavior, could only decrease the extent of demand and bring the beneficial process of capital accumulation to a halt before it would have ended otherwise. So here again there was no room for paternalistic government meddling in economic affairs.

The Theory of Population

Thomas Robert Malthus's population theory was an important and integral part of classical liberal economic and social doctrines. He believed most human beings were driven by an insatiable desire for sexual pleasure and that consequently natural rates of human reproduction, when unchecked, would lead to geometric increases in population, that is, the population would increase each generation at the ratio of 1, 2, 4, 8, 16, and so forth. But food production, at the very best, increases at an arithmetic rate, that is, with each generation it can increase only at a rate such as 1, 2, 3, 4, 5, and so on.

Obviously, something would have to hold the population in check. The food supply could not support a population that was growing at a geometric rate. Malthus believed there were two general kinds of checks that limited population growth: preventive checks and positive checks. Preventive checks reduced the birthrate, whereas positive checks increased the death rate.

Moral restraint, vice, and birth control were the primary preventive checks. Moral restraint was the means by which the higher ranks of humans limit their family size in order not to dissipate their wealth among larger and larger numbers of heirs. For the lower ranks of humans, vice and birth control were the preventive checks; but they were grossly insufficient to curb the vast numbers of the poor.

Famine, misery, plague, and war were the positive checks. The fact that preventive checks did not succeed in limiting the numbers of lower-class people made these positive checks inevitable. Finally, if the positive checks were somehow overcome, the growing population would press upon the food supply until starvation, the ultimate and unavoidable check, succeeded in holding the population down.

Before starvation set in, Malthus advised that steps be taken to help the positive checks do their work:

It is an evident truth that, whatever may be the rate of increase in the means of subsistence, the increase in population must be limited by it, at least after the food has once been divided into the smallest shares that will support life. All the children born, beyond what would be required to keep up the population to this level, must necessarily perish, unless room be made for them by the deaths of grown persons. To act consistently therefore, we should facilitate, instead of foolishly and vainly endeavouring to impede, the operation of nature in producing this mortality; and if we dread the too frequent visitation of the horrid form of famine, we should sedulously encourage the other forms of destruction, which we compel nature to use. Instead of recommending, cleanliness to the poor, we should encourage contrary habits. In our towns we should make the streets narrower, crowd more people into the houses, and court the return of the plague. In the country, we should build our villages near stagnant pools, and particularly encourage settlements in all marshy and unwholesome situations. But above all, we should reprobate specific remedies for ravaging diseases; and those benevolent, but much mistaken men, who have thought they were doing a service to mankind by projecting schemes for the total extirpation of particular disorders. If by these and similar means the annual mortality were increased . . . we might probably every one of us marry at the age of puberty, and yet few be absolutely starved. (Malthus 1961, pp. 179-180)

The masses, in Malthus's opinion, were incapable of exercising moral restraint, which was the only real remedy for the population problem. They were, therefore, doomed to live perpetually at a bare subsistence level. If all income and wealth were distributed among them, it would be totally dissipated within one generation because of profligate behavior and population growth, and they would be as poor and destitute as ever.

Paternalistic attempts to aid the poor were thus doomed to failure. Furthermore, they were a positive evil because they drained wealth and income from the higher (more moral) ranks of human beings. These higher-class individuals were responsible, either in person or by supporting others, for all the great achievements of society. Art, music, philosophy, literature, and the other splendid cultural attainments of Western civilization owed their existence to the good taste and generosity of the higher classes of men. Taking money from them would dry up the source of such achievement; using the money to alleviate the conditions of the poor was a futile, foredoomed exercise. It is obvious that the Malthusian population theory and the liberal economic theories led to the same conclusion: Paternalistic government should avoid any attempt to intervene in the economy on behalf of the poor. Malthusian views-that poverty is the fault of the poor, who have too many babies, and that nothing can be done to end poverty-are still held by many people today.

The Political Creed

The economic and population doctrines of classical liberalism gave rise quite naturally to a political creed that rejected the state, or government, as an evil to be tolerated only when it was the sole means of,avoiding a worse evil. Much of this antipathy stemmed directly from the many corrupt, despotic, capricious, and tyrannical actions of several European kings, as well as from the actions of the English Parliament, which was notoriously unrepresentative and often despotic. The liberal creed was not put forward as an objection against particular governments, however, but against governments in general. Thomas Paine reflected the sentiment of classical liberals when he wrote: "Society in every state is a blessing, but government, even in its best state, is but a necessary evil; in its worst state, an intolerable one" (quoted in Girvetz 1963, p. 66).

What were the functions that classical liberals thought should be given to governments? In The Wealth of Nations Adam Smith listed three: protection of the country against foreign invaders, protection of citizens against "injustices" suffered at the hands of other citizens, and the "duty ... of erecting and maintaining those public institutions and those public works, which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature, that the profit could never repay the expense to any individual or small number of individuals, and which it therefore cannot be expected that any individual or small number of individuals should erect and maintain" (Smith 1937, p. 681).

This list is very general, and almost any kind of government action could be justified under one of these three functions. In order to understand the specific functions that the liberals believed government should have, it is necessary to deal first with an objection that is frequently raised when the writings of Adam Smith are said to comprise part of an ideology justifying capitalism. It is often pointed out not only that Smith was not a spokesman for the capitalists of his day but also that many of his passages show that he was in general suspicious and distrustful of capitalists. This contention is certainly true. Nevertheless, capitalists used the arguments put forward by Smith to justify their attempts to eliminate the last vestiges of paternalistic government when these stood in the way of their quest for profits. It was Smith's rationale that enabled them to quiet their consciences when their actions created widespread hardship and suffering. After all, they were only following his advice and pursuing their own profits; this was the way they should act if they wished to be of the greatest service to society.

Finally, most classical liberals interpreted Smith's theory of the three general governmental functions in a way that showed they were not hesitant about endorsing a paternalistic government when they, the capitalists, were the beneficiaries of paternalism. Thus "the original doctrine of laissez-faire ... passed, for the most part, from the care of intellectuals like Adam Smith ... into the custodianship of businessmen and industrialists and their hired spokesmen" (Girvetz 1963, p. 81).

First, the requirement that the government protect the country from external threats was to be extended in the late nineteenth century to a protection or even enlargement of foreign markets through armed coercion. Second, protection of citizens against "injustices" committed by other citizens was usually defined to mean protection of private property, enforcement of contracts, and preservation of internal order. Protection of private property, especially ownership of factories and capital equipment, is of course tantamount to protection of the sine qua non of capitalism. It was their ownership of the means of production that gave the capitalists their economic and political power. Giving the government the function of protecting property relations meant giving the government the job of protecting the source of power of the economically and politically dominant class: the capitalists.

Contract enforcement was also essential for the successful functioning of capitalism. The complex division of labor and the necessity for complex organization and coordination in production, as well as the colossal capital investments necessary in many commercial ventures, meant that capitalists had to be able to depend on people to meet contractual commitments. The medieval notion that custom and the special circumstances of a case defined an individual's obligations was just not compatible with capitalism. Therefore, the duty to enforce contracts amounted to governmental coercion of a type necessary for capitalism to function.

The preservation of internal order was (and is) always necessary. In the late eighteenth and early nineteenth centuries, however, it often meant brutally crushing labor union movements or the English Chartist movement, which capitalists considered threats to their profit-making activities.

Finally, the function of "erecting and maintaining those public institutions and those public works" that were in the public interest generally was interpreted to mean the creation and maintenance of institutions that fostered profitable production and exchange. These included the provision of a stable and uniform currency, standard weights and measures, and the physical means necessary for conducting business. Roads, canals, harbors, railroads, the postal services, and other forms of communication were among the prerequisites of business. Although these were often privately owned, most capitalist governments were extensively involved in their erection and maintenance either through financial subsidies to private business or through the government's direct undertaking of these projects.

Thus it may be concluded that the classical liberals' philosophy of laissez faire was opposed to government interference in economic affairs only if such interference were harmful to the interests of capitalists. They welcomed and even fought for any paternalistic interferences in economic affairs that stabilized business or made larger profits possible.

Classical Liberalism and Industrialization

The Industrial Revolution and the triumph of the classical liberal capitalist ideology occurred together during the late eighteenth and early nineteenth centuries. Liberalism was the philosophy of the new industrial capitalism, and the new liberal ideas created a political and intellectual atmosphere in eighteenth-century England that fostered the growth of the factory system. In its medieval version, the Christian paternalist ethic had led to a pervasive system of restrictions on the behavior of capitalists during the mercantilist period. Capitalists and their spokesmen opposed most of these restrictions with a new individualistic philosophy that advocated greater freedom for the capitalist to seek profits in a market free of encumbrances and restrictions. It is not surprising that the triumph of this philosophy should coincide with the greatest achievement of the capitalist class: the Industrial Revolution. The Industrial Revolution vaulted the capitalist class into a position of economic and political dominance, and this fact goes far toward explaining the triumph of classical liberalism as the ideology of the new age of industrial capitalism.

Summary

The pressure of rapidly increasing demand and the prospect of larger profits led to a "veritable outburst of inventive activity" in the late eighteenth- and early nineteenth centuries. This period of widespread innovation, the Industrial Revolution, transformed England (and later western Europe and North America) into urban societies dominated by great manufacturing cities in which large numbers of workers were subjected to the dehumanizing discipline of factory production.

During this period, the classical liberal ideology of capitalism came to dominate social and economic thinking. The new ideology pictured individuals as egoistic, coldly calculating, lazy, and generally independent of the society of which they were a part. Adam Smith's analysis of the market as an "invisible hand" that channeled egoistic drives into the most socially useful activities supported a doctrine of laissez faire. The only functions this philosophy assigned to the government were those that would support and encourage profit-making activities.

Finally, the Malthusian theory of population taught that social action designed to mitigate the suffering of the poor was not only useless, but even had socially deleterious effects. Acceptance of this view necessitated complete abandonment of the Christian paternalist ethic.