David Boaz: The 19th century, thanks to liberalism and the technology that it generated, is the wealthiest century in the history of the world – a world that had been, in many ways, unchanged for centuries. Peasants lived on farms. My Scottish ancestors in the 18th century probably lived in thatched cottages with dirt floors, and they kept warm by having the animals sleep with them in the house.
Through the 19th century, this changed. People developed much more comfortable lives, the highest standard of living the world had ever known. And one of the things that happened then during the 19th century was that people forgot how hard it had been to get there. They thought, “We’ve mastered the problem of production and consumption.” John Stuart Mill suggested that the problem of production having been solved, now we can talk about how to distribute. And so people started talking about redistribution.
What do people talk about when the world starts to get rich, whether it’s in the 1850s or the 1950s? They start saying, “Why are some people poor?” That’s always the wrong question. The question is, “Why are some people rich?” Poverty is the natural condition of mankind, but it’s easy to forget that. And so in the 19th century, people start saying, “Some people are getting really, really rich. The 1 percent, the robber barons, they’re really rich and some people are still poor. So why don’t we start redistributing? Why don’t we have the government step in – not on the side of the rich and powerful as it did under the ancien régime, the old system, but on the side of the weak and the poor?” And they got away from the ideas of liberalism. And indeed, the very word liberalism changed its meaning. Now liberals were people who wanted government to take a more active role on behalf of what they thought genuinely was the poor and the powerless. And in some ways, this is the darkest time for the philosophy of classical liberalism or libertarianism because the founding generation, the early John Stuart Mill, all of these people have passed from the same. You now have people who don’t remember monarchy, tyranny, who don’t remember the poverty that the world was in before this era. And they think a democratic government can be used on the side of good instead of on the side of evil. And so you start to get the progressive era, lots of new regulations, government programs. Nobody ever in the beginning thought the federal government had any authority to regulate railroads or regulate medicine or anything like that. But now we get the idea that hey, we are the people, we are a democratic country. We can do whatever is good for the people. And so the new liberals, people like Green and Hobhouse in England, people eventually like John Dewey in the United States, Herbert Crowley, start arguing for this new kind of liberalism.
And the last remaining liberals at the end of the 19th century were distraught. Herbert Spencer wrote essays with titles like The New Toryism, which he considered a very bad thing. Toryism meant defending the power of the monarch. And The Coming Slavery, the nation is regarded these days as a left‐wing magazine. But it was a classical liberal magazine when it was created. And its editor in 1900, E.L. Godkin, wrote about the wonderful things that liberalism had brought to people in the 19th century but mourned that these ideas had been forgotten, and we are doomed to a century of war and conflict before we could get back to liberalism. And he called it pretty well. The 20th century turned out to be a century of Great War and conflict.
A lot of times libertarian or classical liberal ideas develop in response to some claim of power, some aggrandizement of the king’s power or the government’s power – obviously, the Levellers, the Dutch Revolt, anti‐slavery movement, the Abolitionist Movement, of course. And this happens again to some extent, not really in opposition to the Progressive Era. There’s very little opposition, it seems, to what the progressives are doing, except just sort of old‐fashioned institutional… the people who are going to have their money taken or whatever don’t like it.
But an intellectual opposition really starts to develop in the era of the New Deal. Franklin Roosevelt becomes president in 1933. He says, “Give me the power you would give me if we were at war, and I will fix this depression. I will lead the country as an army.” A lot of people like that idea. We were deep in depression. But a lot of people didn’t, and a movement in opposition to the New Deal starts that’s based on constitutional liberty, individualism, and free enterprise.
Around that same time, but somewhat independently, the Austrian school of economics is developing, first in Austria, then other places. Ludwig von Mises and Friedrich Hayek start writing in the 1920s, 1930s. But at first, their books are published in German, so they’re not really known in the wider world, not in England and America. But Austrian economics is developing. It develops the most powerful critique of socialism, which is not all that strong in America. But in Europe, the idea of socialism is very significant. And obviously, starting in 1917, the Soviet Union actually sees its state power.
The New Deal opposition includes, notably for libertarians, three amazing women who all wrote books, published them in 1943. And some people say this is when the modern libertarian movement started. In 1943, Rose Wilder Lane writes The Discovery of Freedom, Isabel Paterson writes The God of the Machine, and Ayn Rand, who becomes the most famous of these writers, writes The Fountainhead. They all knew each other. They all came from different parts of the world: Ayn Rand from St. Petersburg, Russia, Isabel Paterson from Western Canada, and of course Rose Wilder Lane from the little house on the prairie because her mother was Laura Ingalls Wilder. They all end up in New York at various times. They come to know each other. They write these books. A few people read them.
The next year, Friedrich Hayek, a future Nobel laureate in economics, writes The Road to Serfdom, his most popular and readable book. It’s a big political sensation. It gets excerpted in the Reader’s Digest, the country’s largest magazine. Somebody publishes a cartoon version of The Road to Serfdom. A lot of people read it. Now when I say a lot of people, I’m not talking about what we consider a lot of people these days, but a lot more than had been reading any libertarian ideas.
1946, just three years after the three remarkable women, Leonard Reed forms the Foundation for Economic Education, the first free‐market think tank. And he actually seems to be the person who started using the word libertarian to mean the ideas that we understand as modern libertarianism because he saw that liberal could no longer be used in that way. Friedrich Hayek, and even Milton Friedman a generation later, still prefer to be called liberals. But to a lot of people, the term liberal just no longer meant individual rights, limited government, and free enterprise. So Reed started saying libertarian is the word for these ideas. A few people read these books. A few of them go to places like New York University to study Austrian Economics.
Perhaps a larger number rally around the ideas that Ayn Rand is writing. And she writes a bigger book, Atlas Shrugged, in 1957. Technology was such in those days that first you had to go to the bookstore and get the book, and then you had to read it. And then if you wanted to get in touch with other objectivists, you had to put ads in magazines or something. And eventually, they organized groups where people would drive for many miles to get together, sitting around a table or in a lecture hall to listen to a lecture on tape. They wouldn’t even have a speaker because there are not many speakers. There’s Ayn Rand. She doesn’t travel much. And there’s Nathaniel Branden, her disciple. But they give lectures and they record them on audio tape. And then people in Peoria and Nashville drive somewhere to sit in a hotel room or a personal home and listen to these lectures on tape. This small number of people continues to develop as the welfare State in America develops and as the Cold War develops. First, the notion of a constitutional republic, liberalism, still had to defeat the Nazis. Now it’s engaged in a battle with the Soviet communist movement. Through that time, these books are being written. A few people are reading them.
1969 to 1971 is another point that you could call the birth of a real modern libertarian movement. 1969, there’s a big split in the conservative student group Young Americans for Freedom. And all the libertarians leave and go form little libertarian organizations like the Society for Individual Liberty. 1971, the Libertarian Party is created. A lot of what’s going on here, it seems to me, is what we call Vietnam, Watergate, and stagflation. Why did more people become libertarians in the 1970s? Well, it’s not like any real intellectual like a Larry White or a Russell Roberts, economist you may know, said, “Because of Vietnam, Watergate, and stagflation, I have decided to become a Rothbardian libertarian.” But the failure of the United States in Vietnam, the huge cost of that failed war, the corruption symbolized by Watergate in the Nixon administration, and then the breakdown of the government’s attempt to micromanage the economy, which came to be known as stagflation. It had been thought that there was a trade‐off between inflation and unemployment. If you have more inflation, you can bring down unemployment. But then you might get too much inflation, so you bring that down a little, and you’ll get more unemployment. They tried that for a couple of decades, and they ended up with what came to be known as stagflation, a stagnant economy, no growth, few jobs, and inflation.
And so a lot of people wanted to look for an alternative economic system, and some of them discovered Austrian Economics. Others discovered Milton Friedman’s Chicago School of Economics at that time. A lot of libertarian organizations created in 1970s, the Reason Foundation then, the Cato Institute, the Libertarian Party also. The libertarian party ran its first presidential candidates and started again drawing more people to this banner.
Also in the 1970s, there was a huge step forward for recognition of libertarian ideas in the intellectual world. I was in college when Hayek won the Nobel Prize in economics. This was stunning. We never thought a free‐market economist could win this award from the Scandinavians, but he did. And two years later, Milton Friedman won the Nobel Prize in economics. And in fact, what we didn’t know at the time was that over the next few decades, something like seven economists at the university of Chicago, all of them essentially libertarian, would win the Nobel Prize in economics. But when Hayek won and Friedman won it, I think it was in the year between those two Nobel Prizes that Robert Nozick the National Book Award for his book, Anarchy, State, and Utopia. So right there in the mid 1970s, an academic community that has wanted to rule libertarian ideas, simply out of bounds, those are old 19th-century ideas, 18th-century ideas. Hubert Humphrey said of Barry Goldwater back in the 1960s, “Barry Goldwater is so handsome, 18th Century Fox wants to make a movie with him.” Now you might say it’s not really an insult to be called a man of the 18th century, a man who adheres to the principles of the Declaration of Independence and the American Revolution. But it was obviously intended to say, “These ideas about rugged individualism and limited government and free enterprise belong in the 18th century, not in the 20th century.” Suddenly, these prizes for the work of Hayek Nozick and Friedman really tell the academic community you can’t just dismiss these ideas. And you do start seeing more notice being paid to the challenge from libertarianism.