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A friend of mine was talking to me about economics and he said that he's a right-wing and believes in a system of welfare, where people must have basic conditions (health, education and security) to start off, and then work on in their merits to acquire things in life: meritocracy. He stated that this was the view of classic liberalism or, at least, that this was how liberalism started as. Also, he said that classic liberals also believed in taxing inheritance, because inherited money doesn't come from one's merits, but from their parents'.

I have not found any sources on these claims. Welfare and taxation doesn't really seem liberal. Did the classic liberals actually believed this, and if so, I'd love to know your references (books, articles) or maybe my friend has been fooled by a left-wing using the Overton's window?

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    "Now, I have not found any sources on these claims." What have you found instead? Maybe that already answers the question. You could easily ask the opposite question. Did classic liberals believe wealth being concentrated in a few hands? Dec 30, 2022 at 17:41
  • I assume your confusion here is viewing classic liberal as libertarian. Libertarian is often described as "classic liberal", but that's not really accurate. Most modern libertarians are minarchist or similar. As some of these answers allude, classic liberal historically makes sense as libertarian, because they were fighting against aristocracy (they wanted less government), but they didn't typically advocate for what modern libertarians do (a super minimal government).
    – user2578
    Dec 31, 2022 at 17:37
  • There's also the confusion of libertarian with "right wing". Libertarian is not very well described as right wing political philosophy.
    – user2578
    Dec 31, 2022 at 17:50

3 Answers 3

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Yes. See for example Adam Smith's Weath of Nations. in the Appendix to articles 1 and 2 he considers several forms of tax.

He says of a tax on inheritance by a son that is "forisfamiliated", ie emancipated and living of his own means (in contrast to a son who is a dependent of the deceased father):

Whatever part of his succession might come to such children, would be a real addition to their fortune, and might, therefore, perhaps, without more inconveniency than what attends all duties of this kind, be liable to some tax.

And Smith, in particular analyses the Dutch system in which "Collateral successions are taxed according to the degree of relation, from five to thirty per cent."

Smith is a "Classical Liberal". He is not opposed to government, not to taxation on principle. He did insist that taxes be fair, transparent, progressive (in that the wealthy pay more) and minimal. He considered a structured inheritance tax to satisfy these requirements.

On the matter of "welfare" Smith says very little. He speaks about charity of the church, and therefore paid by tithe, not tax. He discusses the British system of the poor of the parish being supported by parish rates, a system he criticises not because of the "tax-and-spend" but because it creates obstacles to the poor moving to another parish in search of work, and so limits the free flow of labour and capital. He is, of course, writing hundreds of years before the welfare state and when support for the poor meant workhouses and debtors prisons. And in a time when labour shortage meant that a living wage was generally possible for most able men to earn. So "welfare" was mostly the support of the elderly and infirm.

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There's a lot to unpack here. Let's begin with the understanding that the Classical Liberal understanding of inheritance was predicated on 16th/17th century practices. On one hand there was the 'natural' inheritance from father to son, where savings, property, and family businesses established by the father would be passed down. This was seen (by Locke, at least) as a question of property rights, in which any man has the right to dispose of his property as he sees fit. It wasn't an absolute right — the basic needs of all legal descendants should be recognized, charity should be observed, taxation was not out of the question — and thinkers of the time were worried about the stagnation and indolence that comes from inherited wealth. But inheritance of this type was generally accepted as reasonable.

On the other hand, there was the forms of inheritance practiced by aristocracies, in which titles, powers, lands, sinecures, and immunities were passed down a particular bloodline in perpetuity. Most of the Classical Liberal theorists found this offensive, less because it was inherited wealth than because it was inherited power. In that period there was no equivalent among commoners for the sheer scale of hereditary wealth and power in among aristocrats, and there was no reason to compare the (small) inheritances passed among commoners to the (vast) inheritances passed among aristocrats.

In short, it's safe to say that Classical Liberal theorists wanted to dispose of (or at least control and reduce) titled inheritance, but left common inheritance an open question of debate.

Next, we should remember that all of the Classical Liberal theorists were liberal in the sense that they believed that all people — well, all white, male, propertied individuals, at any rate — were equal under the eyes of God and possessed of inalienable rights. They would have firmly believed that no man should be denied the opportunity to advance himself or be forced to live in squalor and oppression. But this didn't extend to the modern notion of 'welfare' (i.e., government subsidy) because they largely believed that the 'wealth of nature' was inexhaustible, and that any man who got up off his duff and put his mind to it could make a living for himself. They believed in charity — helping out those who have fallen on hard times or suffer from physical ailments — but the idea of government safety nets would have been alien to them.

I'd tend to call your friend's viewpoint Neo-Classical Liberalism, in that he seems to be reinterpreting Classical Liberalism through 19th/20th century lenses. The modern world has lost any belief in the boundless wealth of nature, and the stranglehold of perpetual feudal-aristocratic blood-land heredity has been supplanted by a stranglehold of perpetual corporate-oligarchic blood-class heredity. The references to welfare (by which he means state subsistence guarantees) and meritocracy (which is intended to attack the indolence of blood-class heredity) and natural ways to reconceptualize Locke in the modern world. Locke would approve, but so would Marx.

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    This raises an interesting question: the idea is that government welfare is not acceptable is because there is an underlying idea that anyone can, by their "own 'huff and duff'", make enough to meet 100% of their need. However, that's an empirical, and historically situated, question. Does this mean we could perhaps find an "objective" answer by some form of scientific study to how much achieving that is possible for the vast majorities of people in today's countries (say at least everyone without a severe physical or mental disability)? Jan 1, 2023 at 6:31
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The James K answer answers question about inheritance tax but omits the question about welfare. Hence I will focus on that part of your question.

Classical liberals were not opposed to minimal welfare. For example, F. A. Hayek, who was prominent classical liberal in last century stated (Hayek, Consitution of Liberty pp 374) [emphasis mine]:

All modern governments have made provision for the indigent, unfortunate, and disabled and have concerned themselves with questions of health and the dissemination of knowledge. There is no reason why the volume of these pure service activities should not increase with the general growth of wealth. There are common needs that can be satisfied only by collective action and which can be thus provided for without restricting individual liberty. It can hardly be denied that, as we grow richer, that minimum of sustenance which the community has always provided for those not able to look after themselves, and which can be provided outside the market, will gradually rise, or that government may, usefully and without doing any harm, assist or even lead in such endeavors. There is little reason why the government should not also play some role, or even take the initiative, in such areas as social insurance and education, or temporarily subsidize certain experimental developments. Our problem here is not so much the aims as the methods of government action. ...

We shall see that some of the aims of the welfare state can be realized without detriment to individual liberty, though not necessarily by the methods which seem the most obvious and are therefore most popular; that others can be similarly achieved to a certain extent, though only at a cost much greater than people imagine or would be willing to bear, or only slowly and gradually as wealth increases; and that, finally, there are others—and they are those particularly dear to the hearts of the socialists—that cannot be realized in a society that wants to preserve personal freedom. ...

Here, however, an important distinction has to be drawn between two conceptions of security: a limited security which can be achieved for all and which is, therefore, no privilege, and absolute security, which in a free society cannot be achieved for all. The first of these is security against severe physical privation, the assurance of a given minimum of sustenance for all; and the second is the assurance of a given standard of life, which is determined by comparing the standard enjoyed by a person or a group with that of others. The distinction, then, is that between the security of an equal minimum income for all and the security of a particular income that a person is thought to deserve.

Other classical liberals such as Friedman (see Capitalism and Freedom) also advocated for welfare in the form of negative income tax. J.S. Mill also advocated for welfare programs for the poor (see Kurer 1991).

Hence classical liberals were not opposed to welfare state per se. Rather they had completely different conception of welfare state.

Classical liberals did not advocate for welfare state to reduce income, wealth or consumption inequality. Rather they advocated for minimalist welfare state that would ensure nobody falls below certain minimum. Generally, they advocated for something that I would term 'subsistence level welfare'. That is welfare that enables an individual to subsist in society without perishing if an individual is unable to earn enough to subsist on but they would not go very far beyond this. Of course, as in any ideology different classical liberals slightly differ in their position on this issue. For example, Friedman negative income tax would go much further when it comes to redistribution than let's say Hayek's very minimalist view of welfare.

Hence, most classical liberals were not opposed to welfare per se. Rather they advocated for a very simple subsistence level of welfare as opposed to very generous welfare systems, that exist not just for the poorest members of the society, which you can nowadays see in many European states.


PS: There seems to be some widespread confusion about whether Hayek or Friedman count as classical liberals so I want to clear that out.

Friedman and Hayek are sometimes erroneously described as neoliberals due to their influences on neoliberalism and due to poor understanding of taxonomy and research in the field political economy or lack of rigorous. However, majority and virtually all top political economy scholars would consider Friedman and Hayek classical liberals not neoliberals.

This confusion likely arises because both classical liberals and neoliberals have similar thick conception of liberty. However, there is a crucial distinction between them when it comes to the issue of affirming the use social justice in evaluation of society's structure (see the Oxford Handbook of Political Economics pp 117).

As clearly mentioned in the Oxford Handbook of Political Economics (pp 115), which can be considered definitive source on the matter [emphasis mine]:

By "Classical Liberalism" we mean a broad school that includes Adam Smith, David Hume, F.A. Hayek, and libertarians such as Robert Nozick.

The same source also lists M. Friedman as classical liberal elsewhere in the chapter.

In addition, neoliberalism itself is by serious researchers in the area of political economy considered confusing and unclear term. Following Venugopal (2015):

[Neoliberalism] is now widely acknowledged in the literature as a controversial, incoherent, and crisis-ridden term, even by many of its most influential deployers,

As a result the word neoliberalism is often thrown around incorrectly by people who do not have rigorous background/education in political economics.

In fact Venugopal (2015) even explicitly mentions:

There are indeed significant points of linkage and overlap in the neoliberalisms before and after 1980, including for example the link between the Chicago School and Chile’s Chicago Boys, and the inspiration that Hayek is reputed to have provided for Margaret Thatcher. But leaving aside the tendency of scholars to read too much into the influence of scholarly ideas on policy and politicians, these connections are weak and often based on exaggerated projections of the present into the past. The history of neoliberalism as a moniker does not always correspond to the genealogy of a radical free-market project, and this association, which seems self-evident in the ‘neoliberal present’, has come about through a series of haphazard and contingent processes.

...

Beyond conceptual proliferation and incoherence, there is an important third terminological feature of neoliberalism that more clearly distinguishes it from the multitude of other stressed and stretched concepts that dot the social sciences: it dares not speak its own name. While there are many who give out and are given the title of neoliberal, there are none who will embrace this moniker of power and call themselves as such. There is no contemporary body of knowledge that calls itself neoliberalism, no self-described neoliberal theorists that elaborate it, nor policy-makers or practitioners that implement it. There are no primers or advanced textbooks on the subject matter, no pedagogues, courses or students of neoliberalism, no policies or election manifestoes that promise to implement it (although there are many that promise to dismantle it). Pedantic as it may seem, this is a point that warrants repetition if only because there is a considerable body of critical literature that deploys neoliberalism under the mistaken assumption that, in doing so, it is being transported into the front-lines of hand-to-hand combat with freemarket economics.

Indeed the term neoliberalism is rarely used in actual mainstream scholarship on political economics. However, when it is used it is not primarily associated with Hayek and Friedman, but rather with other more modern Chicago School economics. Usually the distinction is drawn between thick liberal thinkers who rejected the idea of social justice and thinkers who embraced it. Moreover, the term neoliberalism itself is often inconsistently applied, so one can occasionally see confused mentions of Hayek and Friedman as neoliberal or they might be part of some heterodox and not widely accepted (by most Political Economy scholars) definitions of neoliberalism, but rigorous and generally accepted scholarship (e.g. Oxford Handbook of Political Economy) denotes these thinkers as classical liberal.

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    Hayes and esp. Friedman are what I would call neoliberals. They are literally the fathers of neoliberalism. Calling Chicago school classical is really a far stretch. Dec 31, 2022 at 16:38
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    "prominent classical liberal in last century" Damn, make us old folks feel like we're ancient. More seriously, neither Hayek nor Friedman are "classical liberals" in the same sense as J.S. Mills. Generally the term refers to 18th and 19th century political economists.
    – ohwilleke
    Dec 31, 2022 at 17:44
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    @PhilipKlöcking in fact the whole term "classical liberal" was popularized by Hayek in Road to Serfdom. Locke or Smith would not use the term they would call themselves classical liberal. Hayek popularized the term because of change of meaning of term liberal in the US but he disliked the term libertarian. Also I do not necessary endorse hayek's work but I am serious scholar and serious scholarship would clearly place Hayek as a classical liberal not neoliberal. Neoliberalism is distinct from classical liberalism that it rejects the strong laisses faire.
    – 1muflon1
    Dec 31, 2022 at 18:12
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    That may be as it may, I learned in German universities and there, classical liberalism is reserved for Kant, Locke, and Montesquieu in political theory and Adam Smith, David Ricardo, John Stuart Mill, and Jean-Baptiste Say in economic theory (= theorists who lived in the classical period). Early 20th century theorists like Eucken are called ordoliberalists and Hayek and Chicago School (laissez-faire economics/market liberalism) are called neoliberalism. But I can see your point and accept an obvious difference in the usage of terms, maybe as "libertarian" does not exist in German. Dec 31, 2022 at 18:24
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    @1muflon1, additionally one of the sources of your quote also says "Hayek was a pivotal figure in reestablishing liberalism after WWII and in encouraging and supporting what became known as neoliberalism". It seems like there is some confusion between being a classic liberal and standing in a classic liberal tradition.
    – redleo85
    Jan 1, 2023 at 0:31

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