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Book review: 'Liberty and Liberalism'

By Gregory Melleuish - posted Friday, 18 February 2005


He also argued against measures that might "diminish the incentive to self-help and independence of spirit in the generations which are to succeed it". Sadly he was proved correct. The protectionist measures of the early commonwealth created a culture and mentality that diminished the spirit of independence and self-help in Australia.

Liberalism might maximise both liberty and happiness but, for Smith, that did not mean social equality. Some people do better than others and are rewarded accordingly. The key was to ensure that the road to success was open to all who were willing to take it. Successful capitalists were "naturally selected" and "as a class they cannot be done without". State attempts to appropriate their profits would simply destroy incentives, thereby lowering the benefits created by capitalists and consequently the amount of happiness available to the community.

Smith conceded that his policy of non-state intervention and maximum individualism would create "much misery, much want, much unhappiness, and much suffering … in the struggle for existence". The point was that it would create much less misery than a policy that attempted to break away from liberal principles. Humanitarianism based on the voluntary principle, not coercive state action, was, for Smith, the answer to human misery.

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Hence Smith did not believe that the state had much to do beyond protecting liberty, life and property. Accepting that freedom should be the rule and interference the exception, Smith set out three broad guidelines that should guide any legislator. These were that taxes and public revenue should only be used to secure equal freedom to all citizens; that property should not be interfered with except in cases requiring the securing of equal freedom to all citizens, and then only if the owner was fully compensated; and that the personal liberty of citizens could only be restricted to secure equal freedom to all citizens. On this basis, Smith opposed poor laws or state welfare, state supported education (while conceding that parents should be made to educate their children) and public works not justified by expediency. Smith opposed public education on the grounds that education could be provided much more economically and efficiently by private enterprise.

For Smith politics was a science that found its expression in the tenets of liberalism. He did not believe that liberalism could create the perfect social order. It could not abolish human suffering. It simply was a means of providing a community with the maximum amount of liberty and happiness. It did so because it was founded on the voluntary principle, the idea that people should do things for themselves. Most certainly liberals should not mortgage their children's future for their own gain.

At first glance Smith's liberalism seems harsh. On reflection, however, one is struck more by its modesty and its capacity to bring together liberal principles and an appreciation of the realities of human existence. Its message is far more convincing than the one that comes out of the logic of his Deakinite liberal opponents: that massive state interference and spending will create a better world. That road does not abolish misery, it simply creates a debt that our grandchildren will be forced to pay.

It is this combination of realism and principle that should commend Liberty and Liberalism to everyone who is interested in the future direction of Australian politics. Smith was not a particularly successful politician because he refused to sacrifice his principles. He was the conscience of liberalism in the early 20th century when, under the influence of the Deakinites, it seemed determined to sup with the devil.

The liberal politician of recent times who most resembles Smith is probably (former NSW premier) Nick Greiner: He held to a vision of liberalism that combined an attachment to principle with recognition of the limits of politics. And, like Smith, he was not a "good" politician.

In a similar vein, Prime Minister John Howard can be seen as a contemporary version of "Yes/No" Reid. Like Reid, Howard has the capacity to appeal to the ordinary person and the willingness to follow the pragmatic route to power.

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That is why liberalism, and the Liberal Party, needs men like Smith who can act as the conscience of liberalism. Without such independent spirits, parties simply become a collection of courtiers seeking to fall in behind the leader. Independently minded individuals like Smith renew the liberal tradition and bring it back to its true principles.

This means that liberal principles should be espoused not only in opposition to the social liberal/Deakinite statists. They should also be used to remind those who have bent those principles in the name of political expediency of the meaning of liberalism.

That is why the reprinting of Smith's magnum opus is so welcome. It will enable us yet again to consider the principles of classical liberalism and their relevance to Australia. It should be read by all of those who, in 19th century terminology, would consider themselves to be in the "liberal interest".

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First published in The Australian Financial Review February 4, 2005 and also on The Centre for Independent Studies website.



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About the Author

Gregory Melleuish is associate professor of history and politics at University of Wollongong.

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