Economics and the liberal context

‘A liberal’, as Maurice Cranston (1967) observed, is ‘a man who believes in liberty’. ¹ However, liberty has meant many different things to different people and at different times, so that the appellation is by no means unambiguous. His- torically, liberal political philosophy was primarily a project of the Enlighten- ment: anthropocentric, individualistic, secular, giving primacy to reason as the source of authority. Let us then bear witness to a cavalcade of individuals who have made major contributions to the development of liberal philosophy and liberal economic theory across the years. This will enable us to chronicle the emergence of the two major twentieth century strands of political liberalism – which we will refer to respectively as the ‘new liberal’ and the ‘neo-liberal’ (or ‘libertarian’) strands – and how they were interpreted in economics. ² It was the libertarian strand that gained the ascendancy in the latter part of the century, and so in the second half of the chapter consideration is given to the political philo- sophy of Friedrich von Hayek, a major proponent of the libertarian economy.