Francis Fukuyama on the Retreat from Classical Liberalism.

• Author: Keating, Maryann O.
• Position: Review Essay - Liberalism and Its Discontents

The "Good" in Classical Liberalism

Francis Fukuyama's Liberalism and Its Discontents (2022) defends classical/ humane liberalism--ideas that emerged in the second half of the seventeenth century--arguing for limitations on government, constitutions, the rule of law, and the protection of individual rights. Classical liberalism theory tends to be individualistic, egalitarian, universalist, and meliorist, with a capacity for self-correction. His goal is to describe contemporary American society's retreat from the better aspects of classical liberalism.

Fukuyama advocates neither left-of-center U.S. politics, sometimes referred to as progressive liberalism, nor right-of-center libertarianism. Fukuyama remains a relevant and frequently cited public intellectual; his writings are a reflection of a long career studying trends in domestic and international public policy. His insights, written for the public, are philosophical rather than empirical.

Fukuyama's "Good" is based on three pillars: liberal ideas, democracy, and the state. Liberalism's contribution is to contain violence in a diverse population, to protect basic human dignity, and to promote economic growth. Its mechanisms are rational evidence-based decisions, recognition of individual choice, and a marketplace of ideas.

Fukuyama addresses the tension between a commitment to state protection of property rights and the redistribution of wealth and income. At the same time, he is explicit about democracy's role in mitigating inequalities, an outcome due to liberalism.

What then does Fukuyama, who identifies as a classical liberal, recommend for addressing the current retreat from liberalism? First, he recommends that classical liberals avoid bizarre conspiracy theories and get past the neoliberal era in which the state was demonized. Diverging from many other classical liberals, he is concerned with the quality of government, not its size. He emphasizes that GDP growth should not be a nation's primary goal, but is realistic in recommending that social protections and transfers must fall within the limits of a nation's long-term financial sustainability.

Fukuyama laments contemporary society's discounting of reason and expertise. Societies cannot function if they fail to agree on basic facts supported by the expertise of courts, the scientific community, and professional journalists. What then is the appropriate response for protecting freedom of speech for these institutions and professionals? According to Fukuyama, the issue is not one of direct state regulation of private actors but, rather, the enforcement of antitrust laws to avoid large accumulations of private power.

Fukuyama thinks that democratic federalism (subsidiarity) should hold precedence over uniform common standards in policy areas like health and the environment. Nevertheless, he strongly recommends federal policies toward equalizing outcomes as long as they target fluid categories, such as income, rather than group membership.

Fukuyama's liberal vision of the good life in a modern pluralistic society is somewhat thinner than one suited for those living within a homogeneous society. Nonetheless, he maintains that the core values and benefits of classical liberalism are at risk from extremists on the left and right of the political spectrum.

Fukuyama's central thesis in an earlier book, The End of History and the Last Man (1992), has not stood the test of time. There, he presented history as a progressive development in the social order achieved through the clashing of ideas and ending with the triumph in 1989 of economic liberalism and democracy. Fukuyama in The End of History discerned a linear dialectic unfolding in history to produce a universal homogeneous state. This state was liberal insofar as it protected the universal right to freedom through law and the consent of the governed with democracy. Reason along with universally accepted rights, Fukuyama concluded, gave the social order legitimacy (Hay 2022). In this recent book, he admits he was wrong.

In Liberalism and Its Discontents, Fukuyama acknowledges that classical liberalism has not triumphed. He places most of the blame on neoliberalism, evolving in the late 1970s, which dramatically increased economic inequality and led to global financial crises. Liberalism somehow became associated with market economics in the public's mind, and, therefore, was assumed responsible for increasing economic inequality.

Fukuyama, in this recent book, notes how groups on the right, experiencing a loss of traditional cultural values, tend toward extreme nationalism, rejecting individualism. At the same time, groups on the left perceive that liberal societies do not offer equal treatment for all groups and may be incapable of doing so.

Liberalism and Its Discontents is then an attempt to balance the criticism of both right and left ideologues, and Fukuyama's newer insights have generally been positively received. This does not necessarily mean that his new book will change minds or affect policy. Nonetheless, the book functions as a useful examination of conscience for concerned American classical liberals.

Neoliberalism as a Threat to Classical Liberalism

Neoliberalism, coming to the fore in the late 1980s and 1990s, was representative of neither classical liberalism nor free enterprise, according to Fukuyama. With a large brush, he paints neoliberalism as a school of economics associated with Milton Friedman, Ludwig von Mises, and Friedrich Hayek. These economists, according to Fukuyama, denigrated the role of the state in the economy and justified the pro-market, anti-statist policies pursued by Ronald Reagan and Margaret Thatcher.

Fukuyama accuses certain neoliberal policies, tellingly not detailed, of destabilizing the global economy. He indicates that the World Bank and the International Monetary Fund encouraged draconian neoliberal austerity measures in the developing world under the so-called Washington consensus.

The draconian "austerity" that Fukuyama laments implies that the IMF and Washington were engaging in imperialism, usurping the sovereignty of nations. The difficulty with this is that any nation wishing to engage in international commerce cannot be released from the responsibility of managing its exchange rate, price stability, government spending, and tax policy. These measures are not so much austere as necessary for international loan conditionality.

Privatization, Fukuyama suggests, led to the dominance of clever oligarchs seizing property in the Soviet Union and elsewhere. However, Fukuyama overlooks the fact that Milton Friedman was one of the first to warn of this possibility in his popular early-eighties Free to Choose television series. From the beginning of the discipline, economists have recognized that free trade results in losses for workers and owners in certain domestic industries. Therefore, Friedman along with other...