The Political And Policy Ideas Of The Liberal Economists Versus Those Of The Businessman

Here the difficulty is that as a rule the social philosophies of the lib­eral economists were not made at all fully explicit in their writings. "Political economy" was already beginning to change—become con­tracted or narrowed down—into "economics"; economists were becom­ing more strictly specialized, or concentrating their efforts, with a new intensity, on just working out a full, precise, and rigorous development of their own body of abstract theory of the potential working, or proces­ses, of the "free" and competitive business economy. Many of them in­deed also made contributions to the kinds of empirical research con­nected with that, which were beginning to advance beyond the early rudimentary stages to more modern scientific forms or methods and achievements. But the main emphasis was still on theoretical research in economics; and the social-institutional ideals and assumptions or presuppositions of liberal-and-scientific economic theory tended as a rule, in the new development and expositions of the latter, to be more latent than explicit. But a glance at what generally were their explicit views on some particular issues about proper governmental economic policies will serve to bring out the rather wide distance separating their (more consistent) liberal ideals from those which were then domi­nant in the business community and generally in the ruling climate of opinion of that era.

The business community's and general public's form or version or .understanding of economic (laissez-faire) liberalism was naturally not really self-consistent or fully in line with the authentic tradition of thought of the liberal political economists. For of course "practical" men have always tended to demand, simultaneously, ample freedoms for themselves, from public control of or interference with their acquisi­tive activities, and restrictions, for their protection or benefit, of the freedoms of others to invade their markets or fields of opportunity as new competitors on even terms. Hence the spread among the Western world's businessmen, after the age of mercantilism ended, of inclina­tions to support laissez faire in general never made them all supporters, e.g., of international free trade—or made this part of the consistent pro­gram generally popular among them, outside of mid-nineteenth-century England, where the special, local, and temporary situation of the Eng­lish manufacturers of that time did lead them to support this also, in their own self-interests. But in other countries and very generally in this slightly later time of which I am speaking, tariff protectionism was, inconsistently, a part of the program of public policies strongly supported among businessmen devoted in (some) other respects to lais­sez faire. Nor was there in the business world ever a prevailing, full, consistent awareness of the fact, and the implications for public policy of the fact, that within each national economy there could be a real harmony of all private business interests with the common or public economic interest of that whole community only if the economy in question had in it no monopolies, and no impediments limiting the mobility of labor, capital, and resources of all kinds out of the less and into the more productive and demanded and rewarding fields of employ­ment for them. Public policies designed to foster and maintain full prevalence of real, complete "free competition" in that sense, throughout each national economy, have always been included in the policy programs of the liberal economists, but were not generally sup­ported by businessmen in this era. On the contrary, the latter generally wanted the governments of their countries and localities to not only tolerate but actively assist their efforts to achieve and maintain more or less monopolistic power positions for their enterprises, and put ob­stacles in the way of their would-be competitors. In short, they really wanted the state to be active in all the ways seen as helpful to their own business interests; and laissez faire to them meant only a ban against all the kinds of reform legislation or state intervention that were beginning to be demanded by spokesmen for labor, social service workers and re­formers, discontented agrarian groups, etc.

Now the views of the leading "orthodox" economists of this same era, as to what public policies should be, were in almost complete opposi­tion, on all these points, to the views prevailing in the dominant busi­ness and political circles. The economists continued, with virtually complete unanimity, to argue for complete freedom of international trade, or free development, and full use of the benefits, of the interna­tional division of labor. Also, they all realized and stressed the need for either nonexistence or public control of monopolies, and full mobility and "free competition," as the precondition of realization of "the eco­nomic harmonies." Hence, all at least opposed public policies or meas­ures seen as aiding growth or maintenance of private monopolies; while many, especially in the United States, where governmental "antitrust" or antimonopoly legislation began to develop in this era, saw its con­sistency with the spirit of true economic liberalism, and strongly sup­ported it. Nor did the economists only thus, in these two areas, of for­eign-trade policy and policy with respect to domestic competition and monopolies, uphold the full, consistent, laissez-faire tradition and op­pose the tendencies of business-community sentiment that were in­consistent with its applications in these areas. The economists or many of them also, in varying degrees, themselves departed from adherence to strict laissez faire in some of the other fields or directions in which the businessmen most strongly insisted on it, and supported many of the reforms most vigorously opposed in the business world. Among these were inspections of factories and mines and enforcement of laws to safe­guard the health and safety of the workers; restrictive regulations of fe­male labor and child labor, and compulsory education; workmen's com­pensation for industrial accidents and diseases; and legalization of previ­ously illegal labor-union activities. Also they generally favored public regulation of the services and charges for the services of such both pub­licly essential and naturally monopolistic enterprises as the railroads and (later) light and power companies; and monetary policies that would allow adequate expansion of the supplies of money and credit along with the growth of production and trade, and be just to debtor as well as to creditor classes. All these and many other such issues found the leading economists, more often than not, aligned with the demo­cratic, popular, and progressive reformist elements, and against the con­servative businessmen. Thus, all in all, there was already in that time a tendency among the latter to regard the academic economists generally as "subversive radicals."

A few among the economic theorists of the time, moreover, gave still more ground for that charge against them by giving favorable theoreti­cal consideration to the possibilities and possible merits of thor­oughgoing socialism as a regime or system alternative to free and com­petitive capitalism. But these were exceptional; although the range of differing political views among the economists was fairly wide, the ma­jority were firm believers in the liberal capitalist system and the program of liberal public economic policies already indicated here. Whether and how far my term "conservative liberal' applies to them is perhaps an open question; certainly they were as a rule much less "conservative" for more "progressive," perhaps even "radical" in many cases and on inany issues, than were most of the businessmen and upper- and mid­dle-class peonle of the. time.. But I think, that on the whole the greater number of the eminent theoretical economists of this era can be clas­sified as tending to be in slight degrees at least "conservative" liberals in their over-all social, moral, and political outlooks. They were adherents of the traditional liberal vision, of the good, "free" society and economy with its limited role for the state and large role for the "free play" of private interests and initiatives, competition, voluntary adjustments among individuals and groups, etc.; and adherents of that vision who thought it was on the way to progressively fuller realization in the world around them. Thus they viewed that world with considerable optimism, and argued for preservation of its essential features and against all really radical, socialist, and other programs for change away from them. There was often too little realization, by these economic theorists, of the real width of the gap between their ideals and those that were dominant in the business community and were exerting more influence than their own on the current evolution of the real, existing order. But I have said enough about all these matters; it is time to turn to the new developments, in this period, in or of economic theory itself