So the typical narrative of the history of liberal thought goes something like this:
Liberalism is the belief that people should be able to pursue their own good in their own way. Classical liberals come along and tell us that liberty (including economic liberty) is the precondition for people to pursue their own good in their own way, free from state interference. Thus, the minimal state. Then modern liberals come along and tell us that liberty doesn’t mean much unless people have a sufficient level of material resources at their disposal. Abstract liberty is not especially meaningful for the least advantaged group. A sufficient level of material resources is a precondition for people to pursue their own good in their own way. Thus, the welfare state.
This story is one of evolutionary progress – early on, liberals defended a limited and incomplete account of liberty (abstract, negative liberty), and later on, they defended a more complete notion of liberty (material, positive liberty).
On the modern liberal account, the economic liberties that are so prized by classical liberals are downgraded. Economic liberties are no longer considered basic liberties, and can be regulated in all kinds of ways for the sake of other social goals.
Up to this point, the modern liberals have a good case. However, there’s a new kind of liberal – they call themselves “neoclassical liberals” (see a great overview of the position in this ungated paper by John Tomasi and Jason Brennan). They agree with the classical liberals that economic liberty is vitally important, and they agree with the modern liberals that economic liberty is only really important if it helps benefit everyone – including the least advantaged group. Their reply to the modern liberal is an interesting one. They argue that thick economic liberty is a precondition for resources (even redistributed resources to the poor) to be capable of being used to pursue one’s own good in one’s own way. This point was nicely captured by James W. Nickels in a rather obscure article on Rawls entitled “Economic Liberties”:
“Egalitarian liberals frequently argue that important liberties are not very valuable unless one has the personal and financial resources to make use of them. In consequence, they advocate redistributive schemes that try to ensure that everyone has these resources. My arguments are structurally similar. I try to show that important noneconomic liberties [like freedom of religion, association, movement, speech, etc] are not very valuable unless one has the economic liberties that are frequently needed to make use of them. These two kinds of arguments are not incompatible, and in fact they intertwine. Most of the economic liberties will not have their full value if people do not have some financial and other assets to make use of them. And the money and other resources that disadvantaged people get through redistribution will not have their full value unless they have economic liberties to make use of them” (174, fn. 8, my italics).
This is a nice move here. Redistribution, yes. Thick economic liberties, yes. Resources are a precondition for liberty to be meaningful, but economic liberty is a precondition for resources to be useful.
So the modern liberals are right that a sufficient level of material resources are required for people to pursue their own good in their own way. As Gerald Gaus (a classical / neoclassical liberal) notes, “Certainly, the classical liberal’s acceptable range must be based on recognition that there are many acceptable property practices, and that most (perhaps all) of these will include transfer payments.” That is, all reasonable liberal regimes will include transfer programs to ensure an adequate level of material resources for all. However, this does not justify narrowing and circumscribing the range of economic liberties that we are entitled to. The most important of the modern liberals, Rawls, had a pathetically narrow view of the scope of economic liberties that ought to be basic: freedom of occupation and the right to hold personal (nonproductive) property. Every other aspect of our economic lives is to be regulated so as to achieve fair equality of opportunity and the difference principle. One has no basic right to sell one’s labor on one’s own terms. One has no basic right to own any form of productive property. Etc.
We should, for Rawlsian reasons (that is, in order to benefit the least advantaged), preserve much more robust rights to self-organized economic activity. Because economic activity (free from force and fraud) is a positive-sum game, a series of mutually beneficial transactions that allows for social cooperation to take place amidst deep pluralism. Given just background conditions, this is all good stuff.
Jason Brennan has a nice way of putting this. Modern liberals are right that we need a social insurance state (which guarantees a basic minimum and protects people against risk), but classical liberals are right that we should be skeptical of the administrative state (which restrains and regulates economic activity in the attempt to achieve other social goals). Here’s how he puts it:
“Thus, suppose we separate the idea of the administrative state—which tries to control, regulate, manipulate, and manage the economy—from the social insurance state—which provides tax-financed education, healthcare, or unemployment insurance … The administrative state directly interferes with citizens’ economic liberty. To expand the scope of the administrative state’s power just is to limit the scope of individual citizens’ economic liberty. What about the social insurance state, especially one that works pretty well? If you regard all taxation as theft, then you’ll see the social insurance state as a direct assault on property rights. But, even then, the social insurance state does not, in itself, directly curtail most economic liberties. (Of course, if the government taxes almost all of your income away or sets a limit to how much you can own, then that will limit your effective economic liberty.) We could imagine a political-economic regime in which there is a completely or largely unregulated free market but in which the government taxes people to provide social insurance and some other welfare benefits. On its face, this regime seem much congenial to classical liberalism than a regime that provides no welfare benefits, but which regulates most enterprises, sets prices, controls entry into markets, and imposes licensing rules.”
This seems like a promising new avenue for liberal political philosophy.