V
Economic Liberty
Apart from monopolies, industry was shackled in the earlier part of the modern period by restrictive legislation in various forms, by navigation laws, and by tariffs. In particular, the tariff was not merely an obstruction to free enterprise, but a source of inequality as between trade and trade. Its fundamental effect is to transfer capital and labour from the objects on which they can be most profitably employed in a given locality, to objects on which they are less profitably employed, by endowing certain industries to the disadvantage of the general consumer. Here, again, the Liberal movement is at once an attack on an obstruction and on an inequality. In most countries the attack has succeeded in breaking down local tariffs and establishing relatively large Free Trade units. It is only in England, and only owing to our early manufacturing supremacy, that it has fully succeeded in overcoming the Protective principle, and even in England the Protectionist reaction would undoubtedly have gained at least a temporary victory but for our dependence on foreign countries for food and the materials of industry. The most striking victory of Liberal ideas is one of the most precarious. At the same time, the battle is one which Liberalism is always prepared to fight over again. It has led to no back stroke, no counter-movement within the Liberal ranks themselves.
It is otherwise with organized restrictions upon industry. The old regulations, which were quite unsuited to the conditions of the time, either fell into desuetude during the eighteenth century, or were formally abolished during the earlier years of the industrial revolution. For a while it seemed as though wholly unrestricted industrial enterprise was to be the progressive watchword, and the echoes of that time still linger. But the old restrictions had not been formally withdrawn before a new process of regulation began. The conditions produced by the new factory system shocked the public conscience; and as early as 1802 we find the first of a long series of laws, out of which has grown an industrial code that year by year follows the life of the operative, in his relations with his employer, into more minute detail. The first stages of this movement were contemplated with doubt and distrust by many men of Liberal sympathies. The intention was, doubtless, to protect the weaker party, but the method was that of interference with freedom of contract. Now the freedom of the sane adult individual—even such strong individualists as Cobden recognized that the case of children stood apart—carried with it the right of concluding such agreements as seemed best to suit his own interests, and involved both the right and the duty of determining the lines of his life for himself. Free contract and personal responsibility lay close to the heart of the whole Liberal movement. Hence the doubts felt by so many Liberals as to the regulation of industry by law. None the less, as time has gone on, men of the keenest Liberal sympathies have come not merely to accept but eagerly to advance the extension of public control in the industrial sphere, and of collective responsibility in the matter of the education and even the feeding of children, the housing of the industrial population, the care of the sick and aged, the provision of the means of regular employment. On this side Liberalism seems definitely to have retraced its steps, and we shall have to inquire closely into the question whether the reversal is a change of principle or of application.
Closely connected with freedom of contract is freedom of association. If men may make any agreement with one another in their mutual interest so long as they do not injure a third party, they may apparently agree to act together permanently for any purposes of common interest on the same conditions. That is, they may form associations. Yet at bottom the powers of an association are something very different from the powers of the individuals composing it; and it is only by legal pedantry that the attempt can be made to regulate the behaviour of an association on principles derived from and suitable to the relations of individuals. An association might become so powerful as to form a state within the state, and to contend with government on no unequal terms. The history of some revolutionary societies, of some ecclesiastical organizations, even of some American trusts might be quoted to show that the danger is not imaginary. Short of this, an association may act oppressively towards others and even towards its own members, and the function of Liberalism may be rather to protect the individual against the power of the association than to protect the right of association against the restriction of the law. In fact, in this regard, the principle of liberty cuts both ways, and this double application is reflected in history. The emancipation of trade unions, however, extending over the period from 1824 to 1906, and perhaps not yet complete, was in the main a liberating movement, because combination was necessary to place the workman on something approaching terms of equality with the employer, and because tacit combinations of employers could never, in fact, be prevented by law. It was, again, a movement to liberty through equality. On the other hand, the oppressive capacities of a trade union could never be left out of account, while combinations of capital, which might be infinitely more powerful, have justly been regarded with distrust. In this there is no inconsistency of principle, but a just appreciation of a real difference of circumstance. Upon the whole it may be said that the function of Liberalism is not so much to maintain a general right of free association as to define the right in each case in such terms as make for the maximum of real liberty and equality.