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Much of the confusion prevailing in the historical study of liberalism can be traced to John Stuart Mill, who occupies a vastly inflated position in the conception of liberalism entertained by English-speaking peoples. This "saint of rationalism" is responsible for key distortions in the liberal doctrine on a number of fronts. In economics, Mill's opinion that "the principle of individual liberty is not involved in the doctrine of free trade," provided ammunition for the protectionist arsenal, and accepted and even elaborated socialist arguments (Mill 1977: p. 293; Mises 1978a: p. 195; Raeder 2002: p. 357 n. 76 and p. 374 n. 23; and especially Rothbard 1995 2: pp. 277–85).

Mill rejected the liberal notion of the long-run harmony of the interests of all social classes, including entrepreneurs and workers, on the grounds that "to say that they have same interest … is to say that it is the same thing to a person's interest whether a sum of money belongs to him or to someone else" (Ashcraft 1989: p. 114). Following that odd and shortsighted reasoning would reveal a very large number of hitherto unsuspected conflicts of interest in society (e.g., between any two people who passed each other in the street). Indeed, in arguing that anticapitalism is one of the hallmarks of liberalism, Alan Ryan (1993: p. 302) invokes none other than John Stuart Mill, who wrote (1965: p. 209), "The generality of laborers in this and most other countries have as little choice of occupation and freedom of locomotion … as they could … on any system short of actual slavery" — this at a time when English and other "serfs" were migrating in the millions to the towns and cities and even to foreign lands.

In international affairs, Mill repudiated the liberal principle of nonintervention in foreign wars, whose most trenchant exponent was Richard Cobden (1973). Where Cobden feared that such entanglements would undermine liberty at home, Mill provided interventionists with what has become a favorite argument — that a strong and free country like Britain has a moral obligation to come to the aid of peoples struggling for their freedom if they are threatened by outside powers. That such a standing policy of intervention would most likely compromise domestic freedom was not a problem that Mill, or those who have followed his lead, cared to address.

Worst of all was Mill's deformation of the concept of liberty itself. Liberty, it seems, is a condition that is threatened not only by physical aggression on the part of the state or other institutions or individuals. Rather, "society" often poses even graver dangers to individual freedom. This it achieves through "the tyranny of the prevailing opinion and feeling," the tendency "to impose, by other ways than civil penalties, its own ideas and practices as rules of conduct on those who dissent from them," to "compel all characters to fashion themselves upon the model of its own" (1977: p. 220). True liberty requires "autonomy," for adopting "the traditions or customs of other people" is simply to engage in "ape-like" imitation.

Where others see men and women choosing goals laid out for them by institutions whose authority over them they freely accept, Mill perceives the extinction of freedom. In a striking and utterly preposterous illustration, the saint of rationalism writes, "An individual Jesuit is to the utmost degree of abasement a slave of his order" (1977: p. 308). One wonders what is supposed to follow from this. Must we form abolitionist associations to emancipate the willing "slaves" of the Society of Jesus? How should we go about selecting our John Brown to lead the storming of the slave-pits of Fordham and Georgetown Universities? One wonders by what right Mill and his alter ego Harriet Taylor could ever have imagined themselves entitled to legislate on the status of members of Catholic or Orthodox orders, of Orthodox Jews and devout Muslims, or of any other believers.

His comment on the Jesuits illustrates a facet of Mill too rarely noticed — he was, in the words of Maurice Cowling, "one of the most censorious of nineteenth century moralists." He constantly passed judgment on the habits, attitudes, preferences, and moral standards of great numbers of people of whom he knew nothing. As Cowling dryly observes, "Bigotry and prejudice are not necessarily the best descriptions of opinions which Comtean determinism has stigmatized as outdated" (1963: pp. 143–44, emphasis in original).

In a posthumously published work, Joseph Hamburger (1999) examines the "dark side" of John Stuart Mill. Here Hamburger, who tells us that he long entertained the conventional view of Mill as a consummate proponent of individual freedom, analyzes Mill's On Liberty, but also his other writings and letters and the reports of his intimate friends. His conclusion is that the freedom of opinion espoused in On Liberty was largely part of Mill's grand strategy — to demolish religious faith, especially Christianity, and received mores, on the way to erecting a social order based on "the religion of humanity." True individuality would be incarnated in the future "Millian man," dreamt of by Mill and Harriet Taylor, a being in whom selfishness and greed would be replaced by altruism and the constant cultivation of the loftier faculties.

"For a century now, controversy has raged over the true meaning of liberalism."

The pioneering revisionism of Cowling and Hamburger has been confirmed by Linda C. Raeder. In her John Stuart Mill and the Religion of Humanity (2002), Raeder thoroughly examines all of Mill's major works and other relevant materials to uncover the pattern behind Mill's "self-avowed eclecticism" and his easy employment of "the idiom of the liberal tradition he knew so well." This pattern she finds in the early and permanent influence on Mill of philosophers Henri de Saint-Simon and Auguste Comte. The notion of progress entertained by these positivist philosophers was the steady advance to a this-worldly "religion of humanity" in which all of mankind would instinctively share. Mill's "aspirations for human beings were not for the flowering of their unique individuality but for their conformity to his personal ideal of value and service." In the end, Raeder concludes (p. 338), Mill was no "true friend of liberty."

The fateful linking of liberalism to an adversarial stance vis-à-vis received religion, tradition, and social norms is due to John Stuart Mill more to than anyone else. It has unfortunately become standard. In a typical example, Owen Chadwick, Dixie Professor Emeritus of Ecclesiastical History at Cambridge, writes (1975: p. 22),

A liberal was one who wanted more liberty, that is, more freedom from restraint; whether the restraint was exercised by police, or by law, or by social pressure, or by an orthodoxy of opinion which men assailed at their peril. … The liberal thought that men needed far more room to act and think than they were allowed by established laws and conventions in European society.

Note how in this statement no distinction is made between state coercion on the one hand, and social pressure, orthodox opinion, and conventions on the other. John Dunn states (1979: p. 29, emphasis in original),

If the central dispositional value of liberals is tolerance [sic], their central political value is perhaps a fundamental antipathy towards authority in any of its forms. … Dispositionally, liberalism has little regard for the past.

So much for Macaulay, Thierry, Lecky, Acton, and the other great liberal historians of the 19th century. Descriptions such as Chadwick's and Dunn's are much more expressive of the "antinomian" mentality of contemporary Western academics than of liberalism historically.

Mill's view tends to erase the rather critical distinction between "incurring social disapproval and incurring imprisonment" (Burke 1994: p. 30), and leads to pitting liberalism against innocent, noncoercive traditional values and arrangements, especially religious ones. It also forges an offensive alliance between liberalism and the state, even if contrary to Mill's intentions, since it is hard to see how one can be sure of uprooting traditional norms except through the massive use of political power. Contemporary writers like Steven Lukes, committed to the Millian project of enjoining "autonomy," do not shrink from advocating this course, presumably unaware of its totalitarian implications.

It is not disputed that the popular meaning of liberal has changed drastically over time. It is a well-known story how, around 1900, in English-speaking countries and elsewhere, the term was captured by writers who were essentially social democrats. Joseph Schumpeter (1954: p. 394) ironically observed that the enemies of the system of free enterprise paid it an unintended compliment when they applied the name liberal to their own creed, historically the opposite of what liberalism stood for from the start.

For a century now, controversy has raged over the true meaning of liberalism (Meadowcroft 1996b: p. 2). Stephen Holmes (1988: p. 101) scoffs at the dispute as involving nothing more than "bragging rights." That does not stop him, though, from joining others of the camp Schumpeter referred to in fighting to secure the label for themselves. There is a profound truth in Thomas Szasz's proposition (1973: p. 20): "In the animal kingdom, the rule is, eat or be eaten; in the human kingdom, define or be defined." This is nowhere clearer than in the "political kingdom."

How did this momentous transformation of the term liberal — what Paul Gottfried (1999: p. 29) calls "a semantic theft" — come about?

"The fateful linking of liberalism to an adversarial stance vis-à-vis received religion, tradition, and social norms is due to John Stuart Mill more to than anyone else."

This is the conventional interpretation — liberals from the 18th century on characteristically believed in laissez-faire. Beginning in the last decades of the 19th century, however, British thinkers like T.H. Green and L.T. Hobhouse (and their counterparts in the United States, Germany, and elsewhere) realized that laissez-faire was totally inadequate to the conditions of modern society. Often inspired by John Stuart Mill — in Hobhouse's reverent words (1964: p. 63), "The teaching of Mill brings us close to the heart of liberalism" — they undertook to give liberalism a more up-to-date shape. As one expositor of the conventional view has written,

The central value of the liberated individual, of man as far as possible his own sovereign, did not change; the understanding of that value and the means for achieving it did. (Smith 1968: p. 280)

In particular, the state, which earlier liberals had feared as the enemy of individual liberty, was now seen as a potent engine for furthering it in vital ways. The old liberalism gave way to the new.

The first thing to be pointed out is the political purpose behind the semantic change. It was to ease the way for the revolutionary extension of the state's agenda (ultimately, this has become in principle a limitless agenda). The crying need for such an extension, however, was grounded in a highly questionable theory, which is still operative. It is that the "old" liberalism of laissez-faire had been made obsolete by deep-seated changes in society. The pioneers of the "new liberalism" and their successors based their claims on the supposedly overwhelming power of business enterprise over consumers and workers. But, despite all their propaganda, such a power cannot be shown, empirically or theoretically, to exist (Rothbard 1970: pp. 168–73; Hutt 1954; Armentano 1982; Reynolds 1984: pp. 56–68; DiLorenzo and High, 1988).

Moreover, and decisively, the standard rationale for speaking of a "new liberalism" is analytically flawed. For the end of achieving "the liberated individual" cannot be definitive of liberalism. Other ideologies, among them communist anarchism and many varieties of socialism, share that end.

Consider this statement by Eduard Bernstein, the founder of revisionist socialism (1909: pp. 129, emphasis in original):

The development and protection of the free personality is the goal of all socialist measures, even of those which superficially appear to be coercive. A closer examination will always show that it is a question of a coercion that increases the sum of freedom in society, that gives more freedom, and to a wider group, than it takes away.

How does this differ from the standpoint of the "new liberals" for the past century and more? What divides liberalism from opposing ideologies is precisely its substantive program, the means it advocates — private property, the market economy, and the minimizing of the power of the state and of state-backed institutions.

In Anglophone countries, those who anywhere else would be straightforwardly identified as social democrats or democratic socialists shy away from acknowledging their proper name. It is hard to avoid the conclusion that this is essentially a matter of political expediency. For some reason, labels suggestive of socialism have not been popular in countries of English heritage (cf. Gottfried 1999: p. 9).

This stark political fact was clear to Edward Bellamy, author of the socialist classic Looking Backward. In 1888, in a letter to William Dean Howells, Bellamy weighed what to call his doctrine. He rejected the term "socialist." That was a word he "never could well stomach," since it is foreign "in itself and equally foreign in all its suggestions." "Whatever German and French reformers may choose to call themselves, socialist is not a good name for a party to succeed with in America," he confided to Howells (Schiffman 1958: pp. 370–71). Bellamy chose instead the name "nationalist." Others, on similar grounds, have preferred the label "liberal."

The social-democratic commandeering of liberal met with great success, leading some laissez-faire liberals to incline towards describing themselves as individualists (Raico 1997). Amusingly, the next step was for socialists like John Dewey to try to capture that term as well. It turned out, according to Dewey, that there was an old individualism before the age of great corporations and modern social science; that kind must now be replaced by a new individualism (Dewey 1930).

One product of this "new individualism" would be "a coordinating and directive council in which captains of industry and finance would meet with representatives of labor and public officials to plan the regulation" of the economy. While this was obviously a replica of the corporate state that Mussolini was erecting in Italy, Dewey chose to ignore that parallel. The power center he proposed would have a voluntarist, and thus appropriately American, slant, as the United States set out constructively "upon the road which Soviet Russia is traveling" in such a deplorably destructive way (Dewey 1930: p. 118). So, after the concept of liberalism was transformed to exclude adherents of the market economy and private property, now individualism was also to be redefined, to the same end. It is almost as if socialists like Dewey were trying simply to define the advocates of free enterprise out of existence, and debate, altogether.