Libertarianism and Classical Liberalism: Is There a Difference?

Mario Rizzo*


I consider myself both a libertarian and a classical liberal. I have been teaching a seminar in classical liberalism at the NYU Law School for six semesters. I am always asked about the difference.  My answer is basically this. Classical liberalism is the philosophy of political liberty from the perspective of a vast history of thought. Libertarianism is the philosophy of liberty from the perspective of its modern revival from the late sixties-early seventies on.

The philosophy of liberty has always admitted of gradations or degrees. Consider that in the nineteenth century there were such thinkers as Lysander Spooner, Auberon Herbert, and Benjamin Tucker. These thinkers are sometimes called “individualist anarchists.” Clearly, they espouse a political philosophy that would anathema to most who call themselves “classical liberals.” Yet they do begin from many of the same premises as mainline liberals. They disagree with those who advocated a limited state insofar as they believed that a completely voluntary order based on private property was possible and morally desirable. They elevated the individual to the primary place in their analysis just like the rest of the classical liberal tradition.

Of course, a completely voluntary society might not work. It might degenerate into anarchy in the bad sense or into authoritarian government. If this is true, then of course the perspective is seriously deficient.

In the nineteenth century there was also Herbert Spencer. Although he was, at least later in life, an advocate of limited government, he did not have much on his agenda for government to do. He cast a critical eye on even things like municipal sanitation rules. But as one reads his Principles of Ethics, for example, it easy to see how he builds up a system individualism and extremely limited government based on ideas he shared with many other classical liberals of his day.

There was also the John Stuart Mill of On Liberty and his earlier (and better) inspiration Wilhelm von Humboldt. Von Humboldt wrote his famous treatise The Limits of State Power at the close of the eighteenth century. He was clearly opposed to the government provision of positive welfare and thought the state’s role should be confined to the so-called negative liberties. And yet he made an exception for the government provision of (limited) education. People needed education to become autonomous human beings.

In the late nineteenth century when liberal ideals were perceived as being under attack by the expanding suffrage, “unlimited democracy,” labor movement and so forth, the historian William H. Lecky sometimes sounded like a “conservative” in his defense of the traditional British political system and the House of Lords. The conflict between liberty and democracy, as he saw it, was of a piece with the views of the framers of the U.S. Consititution, John Stuart Mill’s views of representative government, and Herbert Spencer’s idea of political liberty as simply a fallible means to protect fundamental liberties rather than an end in itself.

In the early twentieth century, the classical liberal position was vigorously defended by the economist Ludwig von Mises at a time when it was dying across Europe and the U.S. Mises’s liberalism was in the tradition of Spencer, and earlier of Adam Smith, Jeremy Bentham, John-Baptiste Say, which saw economic liberty and international peace (anti-imperialism) as intimately connected. The warfare state destroys liberalism.  Friedrich Hayek largely followed Mises’s lead, especially in his critique of socialism, but at least in The Constitution of Liberty was much more sympathetic to the welfare state than Mises.

The general point is that classical liberalism or libertarianism is a broad philosophy, united in it elevating property, freedom of contract, and individual autonomy to the center of normative (and positive) analysis. All liberals and libertarians view the state as the central threat to liberty today.

Among those who hold to a philosophy ofliberty there can be two types of issues that separate them. The first (and in my view less important) are the philosophical or issues of principle. As I teach my students, some forms of classical liberalism are grounded in natural law, others in utilitarianism – both direct and indirect, others in contractarianism, and so forth. The more one studies these the more it becomes clear that the differences are often, although not always, marginal in practice.   The second are differences in empirical assessments. For example, to what extent can public goods be provided privately? Clearly, shopping malls are a way of providing certain public goods as are gated housing communities. Clearly, arbitration of disputes need not be provided by the state. How far can this go?

I do not meet classical liberals who object, on principle, to the shrinking of the state with regard to its “traditional” function when they can be reliably provided privately. The argument is generally over empirical assessments and practicality.

On issues of foreign policy and homeland defense there are differences across the classical liberal and libertarian spectrum. But it is a set of differences with the philosophy of liberty for a long time. Are these empirical or philosophical differences? Sometimes empirical differences have a way of being transformed into differences of principle if the participants in a debate see the issue as having very broad implications and if the empirical differences are difficult to resolve.

In 1899 the liberal William Graham Sumner vehemently decried the Spanish-American War as a threat to American liberty. This tradition of non-intervention, interrupted by the Second World War, was the norm. In the postwar world it was reaffirmed by Senator Robert A. Taft. But the threat of communism seemed to warrant a different philosophy to some like William F. Buckley, Jr. Many of his followers, however, were more disaffected communists than they were liberals or libertarians. Nevertheless, with the fall of communism the split on this subject between various kinds of classical liberals was reborn.

As the recent NSA revelations have made clear we have classical liberals on different sides. This issue is not divorced from a broader position of foreign policy. Some liberals contend that the terrorism problem is blowback from an interventionist foreign policy. So how to defend a liberal order (or a relatively liberal order) from outside aggression without destroying its liberal character is the common issue.

So there are important differences among liberals and libertarians but I view these are differences along a spectrum. Some are principled (“Never, ever, initiate the use of force”) and some are empirical (“Many public goods can be provided privately”) and some are hard to classify (“The NSA should not collect masses of meta data”). Some people will want to take these differences and harden them into different political philosophies with different names and so forth. But I suggest that libertarians and classical liberals have too much in common for any divorce. I see the important differences in various positions. I am much more sympathetic to some than to others.

So my answer is simple: Classical liberalism is a spectrum of thought. There are differences regarding the proper philosophical grounding of first principles, the strength of the presumption of these principles, as well as differences of an empirical nature. I prefer the term “classical liberal” because it evokes a long history of intellectual work and because I stubbornly believe that progressives have no right to the term “liberal.” 

*Dr. Mario J. Rizzo is associate professor of economics and co-director of the Austrian Economics Program at New York University.  He received his BA from Fordham University, and his MA and PhD from the University of Chicago.  He was also a fellow in law and economics at the University of Chicago and at Yale University.  He currently lectures for the Institute for Humane Studies and is an adjunct scholar of the Cato Institute. Professor Rizzo is also a member of the NYU Journal of Law & Liberty's Board of Advisors. 

Let the Wedding Cake Bakers Discriminate in Peace

Mario Rizzo*

“A Colorado judge says a baker who refused to make a wedding cake for a same-sex ceremony must serve gay couples despite his religious beliefs, a ruling that a civil rights group hailed as a victory for gay rights.”  (Fox News 12/06/2013).

Friedrich Hayek argues in his famous essay “Why I am Not a Conservative” that conservatives and socialists alike have no principled way of dealing with people whose moral views differ from theirs. Neither of them has absorbed the true lessons of toleration. Socialists (and I would add “progressives”) argue, in effect, for the imposition of their specific collective hierarchy of values including ideas about the allocation and distribution of resources in society. Conservatives often want to impose a hierarchy  of social values including restrictions on pornography, teaching of traditional values in the public schools (“creationism”), restrictions on entry into consensual social relations (“marriage is exclusively for one man and one woman”) and so forth.

Colorado cake.jpg

The classical liberal insistence on a society that makes maximal room for a pluralism of values starts with the insight that markets permit individuals to make decisions according to their own hierarchies of values. Markets do not insist that we all share the same goals about the use of resources. And yet, subject to a few basic general rules, we can have coordination (not homogenization) of values through the price system. You can work , for example, for Amazon to help pay for your child’s clothing while the manager in your Amazon division is saving for a flat screen TV; the executive working for Amazon may be working for a vacation while the senior-citizen stockholder of Amazon is using the appreciation of stock-value to pay for copays on his medicine.  And then there are all of the different goals of those working or investing in firms that deal with Amazon. And so forth as we spread our sights through the whole complex system of market interactions.

The argument generalizes in two ways. First, it applies to refusals to interact as well as agreements to interact.  Suppose I am offered $10 per hour for my typing services but I believe that I can get more elsewhere or that, at that wage, I would rather paint my home instead or, even, take a nap eschewing social interaction. I can do that. Cooperation is on my terms. I cannot be used as merely a means to the ends of others.

Second, the argument generalizes to all forms of social interaction, not just to the “economic.” After all, the economic does not apply to a domain of interaction but to all interaction under a certain aspect – choice under scarcity. So a choice between the “moral” and the “material” is a relevant expression of individual value-hierarchy in a market. If I am selling tomatoes in a free market, I can decide that my religious duties preclude me from selling them on a Saturday or a Sunday. Having elected to sell tomatoes, I am not thereby obligated to sell them at all times that may be convenient for various buyers.  

Let us continue the analysis. Does this break down at any point? Well, suppose the state has given me a monopoly of the sale of electricity. I now refuse to deal with certain potential customers because they are polygamists.  My religious beliefs are such that I find polygamy not only immoral but disrespectful toward the status of women.  (Let us abstract from any law that prohibits polygamy.) Should I be permitted to do this? No. The grant of monopoly privilege prevents others who do not share these values from selling electricity to polygamists.

In a competitive market setting where freedom of entry is respected, those who have different values regarding to whom, when, where, and how to provide products and services are given free reign.  The principle of trading on the basis of mutual consent is not compromised and yet the market opens opportunities for individuals care more about their profits than perhaps the usual prophets to trade with the polygamists.

So now to the wedding cake bakers.  A same-sex married couple wants a wedding cake. They offer to pay the baker’s standard price for the cake. He refuses because he doesn’t approve of same-sex marriage (not an entirely unheard of preference).  Just because he has consented to provide wedding cakes in exchange for a certain price does not mean that he has consented to provide his service and product always and everywhere under all conditions. Just because he is an open-for-business wedding cake baker does not mean that he can be used merely as a means to other people’s ends. He does not give up his autonomy because he has entered the market. His values do not need to fall before the socially-approved hierarchy in which his expression of religious beliefs is less important than the same-sex couple feeling bad – and having to go elsewhere to buy a cake.

My goodness – someone feeling bad and having to buy a cake elsewhere is too great a price to pay for individual autonomy and a society of pluralistic values!  What happened to “Give me liberty or give me death”? I know there are fates worse than death – but those do not include being denied the sale of a wedding cake.

Let the wedding cake bakers discriminate in peace.


*Dr. Mario J. Rizzo is associate professor of economics and co-director of the Austrian Economics Program at New York University.  He received his BA from Fordham University, and his MA and PhD from the University of Chicago.  He was also a fellow in law and economics at the University of Chicago and at Yale University.  He currently lectures for the Institute for Humane Studies and is an adjunct scholar of the Cato Institute. Professor Rizzo is also a member of the NYU Journal of Law & Liberty's Board of Advisors. 

Obamacare and Rational Expectations

Mario Rizzo*

At first glance this may seem to be an unlikely combination of topics. But the puzzle is this. Obama effectively promised Americans a free lunch. Everyone could keep their insurance coverage as it is if they liked it, but new benefits would magically spring from the legislation (See Richard Epstein’s post below.) There would be better coverage (as defined by the government), no exclusion for pre-existing conditions, coverage for “children” on their parents’ policies up to the age of 25, and the abolition of life-time caps of coverage, among other things. In effect, the American people were told that these benefits are free – presumably many thought they would come out of the profits of greedy insurance companies. Of course, now that the costs are beginning to be manifested, many people are shocked. (As a political strategy side-point, didn’t Obama realize that at least some of the costs would be revealed once the scheme got going?)

This is not the first time many Americans have fallen for the free lunch illusion, although given the relative unpopularity of Obamcare many have not in this case. Yet the puzzle remains: Why are people fooled again and again? Where are rational expectations when you need them?

My answer is in two parts. First, the political arena is not the market. In the political arena, the cost of errors made by an individual is zero to that individual. Since, generally speaking, my individual vote or publicly manifested opinion counts for almost nothing in determining whether legislation is successfully passed, my personal errors in understanding the legislation do not affect the costs that will ultimately be imposed upon me. It is very different in the marketplace because if I make a mistake in understanding which washing machine or refrigerator is best for me, I will suffer costs individually.

Second, legislation is often complex – Obamacare is among the most complex laws ever passed. Companies have arisen to help employers understand the implications of the law.  (Of course, they charge for the service.) Relatedly, each promise of a free lunch is different. The patterns of interaction and cost shifting are not exactly repeated in all cases in which the voter is fooled. The rational expectations hypothesis, however, assumes that the structure of the world remains unchanged period after period. If you are experiencing exactly the same “game” over and over, you may eventually learn the structure of the underlying mechanism that producing the outcomes.  But this is not what is happening. The politicians are, in turn, smart enough to complicate matters.  Even when repeated patterns do exist (which they always do at some level), the costs of piercing complexity to find these patterns are high for the typical citizen.

The bottom line is that it is vastly more likely that the public will fall for the free-lunch fallacy in the political arena than in the market place, however imperfect people may be in all aspects of life.


*Dr. Mario J. Rizzo is associate professor of economics and co-director of the Austrian Economics Program at New York University.  He received his BA from Fordham University, and his MA and PhD from the University of Chicago.  He was also a fellow in law and economics at the University of Chicago and at Yale University.  He currently lectures for the Institute for Humane Studies and is an adjunct scholar of the Cato Institute. Professor Rizzo is also a member of the NYU Journal of Law & Liberty's Board of Advisors. 

Professor Eugene Volokh Comes to NYU to Take on Slippery Slope Arguments

On Thursday April 18th, UCLA Professor, and JLL Advisor, Eugene Volokh is coming to NYU to discuss the concept of slippery slope arguments in an event titled "Mechanisms of the Slippery Slope." Professor Volokh will discuss the appeal of slippery slope arguments to libertarians, conservatives, and progressives alike.  He will also show how these arguments apply to a vast range of fields, such as free speech, guns, privacy, medical ethics, tort liability, same-sex marriage, and more.

NYU Professor, and JLL Advisor, Mario Rizzo will also offer his thoughts on how slippery slope mechanisms relate to current gun control and food paternalism policies in NYC.

The event will be held at 4pm in Vanderbilt Hall Room 204. Both professors will welcome questions from the audience. Food and beverages will be served.