LIBERISMO. — Liberism is an economic liberalism and at the same time designates both a doctrine and an economic policy: the economic doctrine which holds that a beneficial and peaceful economic order is immanent in reality, and the virtually negative economic policy that derives from II. Both arose around the middle of the eighteenth century and lasted, with some sporadic revivals, until near the end of the following century.
Liberism apparently interrupted abruptly a constant and more-than-millenary tradition which had until then led people to distrust the instinctive order in the economy and had encouraged and practised a positive policy of rationalizing the economy. In reality, it had been slowly prepared by characteristic events and ideas in the dual order of facts and doctrines.
In the order of facts, the most influential factors were above all the reaction of the agricultural classes and of settler colonies against the policy of irrational exploitation practised toward them by late mercantilism, which was wholly directed toward strengthening national trade and industry, as well as the reaction generated by the excesses of credit voluntarism, which sometimes led to disasters—such was the case of the Law bank—of a national character. In the course of the eighteenth century, even the upper merchant-financial and industrial class, which mercantilism had itself nurtured through its favours, now feeling sufficiently strong and wealthy and therefore able to stand on its own, no longer valued the privileges with which this system had united it, whereas it was highly critical of the burdens that the system continually imposed on it for the strengthening of the State.
In the order of ideas—to pass over those that were properly philosophical, such as the Cartesian conception of a universe governed by mathematical, eternal, and immutable laws, or the individualistic conceptions that reassessed egoism in English sensationalism—particular observations were highly important. As concrete analysis advanced, these accumulated within mercantilism itself concerning the natural mechanism of spontaneous and spontaneously rationalizing actions and reactions, apparently inherent in various particular aspects of economic activity and rendering every deliberate action superfluous.
Liberism essentially begins with physiocracy. The physiocrats, however, remained suspended between liberism and voluntarism. They were already liberists because they held that the beneficial and peaceful order was already established, indeed established ab aeterno, and therefore ought not to be created but only recognized. They were still voluntarists because they believed that the beneficial and peaceful order did not come about spontaneously, but had first to be recognized and then realized, by removing all the impediments accumulated through human ignorance, and finally constantly defended against that ignorance.
It was Adamo Smith (1723–90), author of the famous book The wealth of nations (1776), which acclimatized liberism throughout Europe, who cut the moorings that still held emerging liberism to the voluntarist shore. Smith collected and organized all the criticisms that had been directed against mercantilist policy by the mercantilists themselves and by the physiocrats, giving them a truly scientific systematic form. From the physiocrats, in particular, he derived the idea of a natural order, an order characterized for him too by the capacity to maximize the product of society; but he saw it as coming about spontaneously and also corrected their original error of limiting productivity to the land.
The characteristic feature of A. Smith’s thought consists in his affirmation of the spontaneity and goodness of the economic order, which he brings out from the facts rather than from dogmatic reasoning. The explanation he gives of it, however, is dogmatic and also highly mysterious: human beings, each acting in his own interest, are led by an invisible hand to promote together, at the same time, the greatest good of society.
The State’s economic action should be essentially limited to administering justice, defending the country, and constructing and maintaining certain public works and institutions that would never be provided by individuals and private associations, although there are cases in which public intervention is desirable. International free trade is also necessary, and it too admits various exceptions, especially those intended to preserve the country’s security.
Smith’s doctrines quickly became popular in England and also on the Continent, especially through the mediation of the Frenchman Jean Baptiste Say (1767–1832), who in his Traité d'économie politique (1803) gave an organic arrangement to Smith’s ideas, perfecting them on many points and presenting economic science for the first time as a natural science. Where Smith had spoken of spontaneous order, he spoke of natural laws.
The Smithian school, in England as well, took a distinctly dogmatic and naturalistic direction. Two names deserve particular mention: that of Robert Malthus (1766–1836), author of the famous theory of population, and that of David Ricardo (1772–1823), author of the theory of rent, foreign trade, and money. The latter, above all, exerted a great influence on English and Continental legislation in a liberist direction.
With John Stuart Mill (1803–73), one is already outside the properly liberal current, insofar as he clearly distinguishes between economic science and economic policy and admits extensive interventions in the distributive sector. Yet precisely when Mill’s thought was at its height, liberism experienced a new, though rather short-lived, spring through the French school, and Federico Bastiat (1801–50) above all, as well as the Manchester men in England. They took great pains to dispel the shadows that Malthus’s and Ricardo’s theories had cast over the natural order and rejected without concession the criticisms of the socialists, critics and theorists of the national economy, seeking to demonstrate that all the evils complained of arose from the fact that people had departed from freedom and would disappear by returning to II. They made economic freedom an essential requirement of political freedom.
With these authors, liberism made its greatest effort in political practice as well (the establishment of free trade in England and elsewhere is due to them). After this, it would undergo a slow decline in facts and doctrines.
During its nearly century-long career, liberism exerted an enormous influence in the world of facts and doctrines. First of all, it gave credibility to economic naturalism, finally persuading people that economic activity should be rationalized according to purely economic criteria and thus justifying economic individualism and amorality. Secondly, it accelerated the pace of humanity’s material progress, though at the cost of great suffering for the humbler classes and therefore with the accumulation of serious problems for the future. Finally, it increased interest in economic matters and thus extraordinarily stimulated economic observation, consequently enriching humanity’s knowledge in this field.