Editing Classical liberalism (section)

== Intellectual sources ==
=== John Locke ===
Central to classical liberal ideology was their interpretation of [[John Locke]]'s ''[[Two Treatises of Government#Second Treatise|Second Treatise of Government]]'' and ''[[A Letter Concerning Toleration]]'', which had been written as a defence of the Glorious Revolution of 1688. Although these writings were considered too radical at the time for Britain's new rulers, Whigs, radicals and supporters of the [[American Revolution]] later came to cite them.<ref>Steven M. Dworetz, ''The Unvarnished Doctrine: Locke, Liberalism, and the American Revolution'' (1989).</ref> However, much of later liberal thought was absent in Locke's writings or scarcely mentioned and his writings have been subject to various interpretations. For example, there is little mention of [[constitutionalism]], the [[separation of powers]] and [[limited government]].{{sfn|Richardson|pp=22–23}}

James L. Richardson identified five central themes in Locke's writing:

* [[Individualism]]
* Consent
* [[Rule of law]] and government as trustee
* Significance of [[property rights|property]]
* [[Religious toleration]]

Although Locke did not develop a theory of natural rights, he envisioned individuals in the state of nature as being free and equal. The individual, rather than the community or institutions, was the point of reference. Locke believed that individuals had given consent to government and therefore authority derived from the people rather than from above. This belief would influence later revolutionary movements.{{sfn|Richardson|p=23}}

As a trustee, government was expected to serve the interests of the people, not the rulers; and rulers were expected to follow the laws enacted by legislatures. Locke also held that the main purpose of men uniting into commonwealths and governments was for the preservation of their property. Despite the ambiguity of Locke's definition of property, which limited property to "as much land as a man tills, plants, improves, cultivates, and can use the product of", this principle held great appeal to individuals possessed of great wealth.{{sfn|Richardson|pp=23–24}}

Locke held that the individual had the right to follow his own religious beliefs and that the state should not impose a religion against [[Dissenter]]s, but there were limitations. No tolerance should be shown for [[Atheism|atheists]], who were seen as amoral, or to [[Catholic Church|Catholics]], who were seen as owing allegiance to the Pope over their own national government.{{sfn|Richardson|p=24}}

=== Adam Smith ===

[[Adam Smith]]'s ''[[The Wealth of Nations]]'', published in 1776, was to provide most of the ideas of economics, at least until the publication of [[John Stuart Mill]]'s ''[[Principles of Political Economy]]'' in 1848.{{sfn|Mills|pp=63, 68}} Smith addressed the motivation for economic activity, the causes of prices and the distribution of wealth and the policies the state should follow to maximise wealth.{{sfn|Mills|p=64}}

Smith wrote that as long as supply, demand, prices and competition were left free of government regulation, the pursuit of material self-interest, rather than altruism, would maximise the wealth of a society<ref name = smith/> through profit-driven production of goods and services. An "[[invisible hand]]" directed individuals and firms to work toward the public good as an unintended consequence of efforts to maximise their own gain. This provided a moral justification for the accumulation of wealth, which had previously been viewed by some as sinful.{{sfn|Mills|p=64}}

He assumed that workers could be paid wages as low as was necessary for their survival, which was later transformed by [[David Ricardo]] and [[Thomas Robert Malthus]] into the "[[iron law of wages]]".{{sfn|Mills|p=65}} His main emphasis was on the benefit of free internal and international trade, which he thought could increase wealth through specialisation in production.{{sfn|Mills|p=66}} He also opposed restrictive trade preferences, state grants of monopolies and employers' organisations and trade unions.{{sfn|Mills|p=67}} Government should be limited to defence, public works and the administration of justice, financed by taxes based on income.{{sfn|Mills|p=68}}

Smith's economics was carried into practice in the nineteenth century with the lowering of tariffs in the 1820s, the repeal of the [[Poor Relief Act 1662|Poor Relief Act]] that had restricted the mobility of labour in 1834 and the end of the rule of the [[East India Company]] over India in 1858.{{sfn|Mills|p=69}}
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=== Classical economics ===
In addition to Smith's legacy, [[Say's law]], [[Thomas Robert Malthus]]' theories of population and [[David Ricardo]]'s [[iron law of wages]] became central doctrines of [[classical economics]]. The pessimistic nature of these theories provided a basis for criticism of capitalism by its opponents and helped perpetuate the tradition of calling economics the "[[dismal science]]".{{sfn|Mills|p=76}}

[[Jean-Baptiste Say]] was a French economist who introduced Smith's economic theories into France and whose commentaries on Smith were read in both France and Britain.{{sfn|Mills|p=69}} Say challenged Smith's [[labour theory of value]], believing that prices were determined by utility and also emphasised the critical role of the entrepreneur in the economy. However, neither of those observations became accepted by British economists at the time. His most important contribution to economic thinking was Say's law, which was interpreted by classical economists that there could be no [[overproduction]] in a market and that there would always be a balance between supply and demand.{{sfn|Mills|p=70}}<ref>{{cite journal|first1=Mark|last1=Blaug|title=Say's Law of Markets: What Did It Mean and Why Should We Care?|url=https://www.jstor.org/stable/40325773|journal=Eastern Economic Journal|date=1997|issn=0094-5056|pages=231–235|volume=23|issue=2|jstor=40325773}}</ref> This general belief influenced government policies until the 1930s. Following this law, since the economic cycle was seen as self-correcting, government did not intervene during periods of economic hardship because it was seen as futile.{{sfn|Mills|p=71}}

Malthus wrote two books, ''[[An Essay on the Principle of Population]]'' (published in 1798) and ''[[Principles of Political Economy (Malthus)|Principles of Political Economy]]'' (published in 1820). The second book which was a rebuttal of Say's law had little influence on contemporary economists.{{sfn|Mills|pp=71–72}} However, his first book became a major influence on classical liberalism.<ref>{{cite book|first1=Ashleigh|last1=Campi|first2=Lindsay|last2=Scorgie-Porter|title=An Analysis of John Stuart Mill's On Liberty|url=https://books.google.com/books?id=qjQuDwAAQBAJ|publisher=CRC Press|year= 2017|isbn=978-1351352581|via=Google Books}}</ref>{{sfn|Mills|p=72}} In that book, Malthus claimed that population growth would outstrip food production because population grew geometrically while food production grew arithmetically. As people were provided with food, they would reproduce until their growth outstripped the food supply. Nature would then provide a check to growth in the forms of vice and misery. No gains in income could prevent this and any welfare for the poor would be self-defeating. The poor were in fact responsible for their own problems which could have been avoided through self-restraint.{{sfn|Mills|p=72}}

Ricardo, who was an admirer of Smith, covered many of the same topics, but while Smith drew conclusions from broadly empirical observations he used deduction, drawing conclusions by reasoning from basic assumptions.{{sfn|Mills|pp=73–74}} While Ricardo accepted Smith's [[labour theory of value]], he acknowledged that utility could influence the price of some rare items. Rents on agricultural land were seen as the production that was surplus to the subsistence required by the tenants. Wages were seen as the amount required for workers' subsistence and to maintain current population levels.{{sfn|Mills|pp=74–75}} According to his iron law of wages, wages could never rise beyond subsistence levels. Ricardo explained profits as a return on capital, which itself was the product of labour, but a conclusion many drew from his theory was that profit was a surplus appropriated by [[Capitalism|capitalists]] to which they were not entitled.{{sfn|Mills|p=75}}

=== Utilitarianism ===
The central concept of [[utilitarianism]], which was developed by [[Jeremy Bentham]], was that public policy should seek to provide "the greatest happiness of the greatest number". While this could be interpreted as a justification for state action to reduce poverty, it was used by classical liberals to justify inaction with the argument that the net benefit to all individuals would be higher.{{sfn|Mills|p=76}}

Utilitarianism provided British governments with the political justification to implement [[economic liberalism]], which was to dominate economic policy from the 1830s. Although utilitarianism prompted legislative and administrative reform and [[John Stuart Mill]]'s later writings on the subject foreshadowed the [[welfare state]], it was mainly used as a justification for ''laissez-faire''.{{sfn|Richardson|p=32}}