Like any political label, classical liberalism has multiple definitions, sometimes incompatible with each other. For the purposes of this essay, we'll stick to using the economic “laissez faire” aspect of classical liberalism, which states that if you let the market run its natural course society will benefit. It was born in the midst of the 18th century, during a time of rapid social change and it brought light to the abuses of feudalism and mercantilism and helped, in part, to lead the West into an area of prosperity that continues to this day.
Classical liberalism was a valuable development for its time - it helped fix some of the flaws in mercantilist and protectionist policy. Classical liberals had many notable victories - such as overturning the infamous Corn Laws, which enriched landlords at the expense of the working poor.
Not everything was a bed of roses, however, and classical liberalism had many flaws. It created a nice (and deceiving) narrative where one’s success in life was determined by one’s own doing. If you were rich, it was because you saved and invested; if you were poor, it was because you squandered your earnings. Classical liberals generally believed your success (or lack of it) was your own.
Classical liberals also opposed regulation and believed any government assistance to the poor was a waste of money. This laissez-faire approach had unintended consequences and by the turn of the 19th century monopolies were rampant, your class determined your future, competition was severely constrained, and a few rich men controlled most of the wealth.
Another point against the system is that an unregulated economy often fails to deliver good outcomes like ensuring everyone a minimum standard of education and healthcare, securing environmental integrity in the country or stopping general business malpractices altogether.
Classical liberalism was the dominant ideology up until the 1930s, where the havoc caused by the Great Depression followed by the failures to react and improve the lives of the working classes let the door open for Keynesianism, a more hands on approach to capitalism.
Keynesians believed governments should spend in times of crises to stimulate the economy and they were an integral part in redesigning the world economy after World War II. Many of President Roosevelt’s programs (like Social Security) could be considered Keynesian.
There are a lot of people today who claim they are really just ‘classical liberals’ as a way of distancing themselves from both the right and the left. But using this label is misguided, because classical liberalism faded from view for very good reasons. We’ve learned from the mistakes of laissez-faire.
Every change made since then has had a Keynesian blueprint on which to work from and advocates of the free market have learned to live with taxes and regulations. The system absorbed a little, from the good and the bad, to form the synthesis that constitutes the modern mixed economy. Going back to the ways things were at the start of 20th century is a move backwards, and it’s only used by the speaker to try and sound more serious.
Many of classical liberalism’s principles are as still as important as they were back in the day. Among these principles are openness to trade, an emphasis on markets, and a focus on institutional soundness. But its heirs should also try to advance them by focusing on establishing good regulations instead of doing away with them altogether.
Classical liberalism is dead, and we shouldn’t try to bring it back: we can and should do better.