Hobhouse was determined to show in his work that from the perspective of social ethics state intervention would be a definite mark of social progress, progress being a key characteristic of liberalism. For J.A. Hobson the new liberalism differed from classical liberalism in three key respects. First, as Hobson wrote in Confessions of an Economic Heretic (1938), new liberalism “envisaged more clearly the need for important economic reforms, aiming to give a positive significance to the ‘equality’ which figured in the democratic triad of liberty, equality and fraternity.” He was of the view that classical liberalism had given short shrift to equality in the interests of liberty, meaning the private freedom to compete and accumulate. Hobson made the case in his work to give expression to the “socialism in liberalism.” Widespread social inequality could not be allowed to fester unchecked, and far more state action was required to foster a true economic equality of opportunity.

A second glaring fault with classical liberalism for Hobson was its impoverished version of social relations. It pictured society as nothing more than a multitude of separate private individuals each pursuing and attempting to maximize their own advantage and utility. Classical liberalism seemed unwilling to acknowledge that social relations, an individual being in community with others could transform an individual’s character. In other words, new liberalism recognized that people are social beings. Social problems needed collective solutions not individual ones. Hence, new liberals saw the state not from a negative or intrusive point of view but rather as an instrument for fostering the social interest and social good of the entire society.

Thirdly, Hobson and other new liberals took issue with the assumption of classical liberalism that saw human reason as nothing more than raw calculation, a human capacity that Adam Smith valued since it meant that each individual had adequate reason to calculate their own self-interest. Classical liberals though did not think there was sufficient reason to involve the state in organizing certain aspects of the social system such as health care and social welfare. New Liberals invoked Darwin’s theory of evolution to argue that human reason had now evolved sufficiently so that reason could be applied to the alleviation of social ills through state action.

The person who laid the foundation for new liberalism was the Oxford idealist philosopher T. H. Green. Green was well informed about social conditions and took a keen interest in social reform and was the first to put forward the novel idea of ‘positive liberty’: the conviction that an increase in state intervention might actually enhance rather than diminish individual freedom. For Green, if people were to be truly free they needed some minimum amount of material wealth and life-chances to develop their capacities. Central to Green’s thought is the idea of the common good, which meant the creation of a social order where each individual could achieve self-realization, and the full development of their capacities.  But none of this could be accomplished in isolation and hence Green argued for a moral framework of human connectedness where the good of each individual is intertwined with that of everyone else. Although he did not use the phrase Green gave a strong shove forward to the notion that we are relational beings and flourish best when the social structure through the state provides for such things as equality of opportunity and social welfare.

It was L.T. Hobhouse who best captured how new liberalism would provide a grounding and rationale for the emergence of a welfare state. Being very much in the Enlightenment tradition Hobhouse’s sociology was a study of human progress. Progress, from his perspective, meant the development of both the individual and society to a state of ‘harmony.’ This is the essence of his ideal of Humanity where cooperation and individualism, as well as liberty and community could all work harmoniously together. He based these conceptions on T.H. Green’s idea of a ‘common good.’ In Liberalism (1911) Hobhouse he said that the ‘common good’ “is founded on personality in each member of the community. This is the foundation not only of equal rights before the law, but also equality of opportunity.” Hobhouse with his organic understanding of society was convinced that the heart of social life revolved around social interaction and relationships. The thrust of his arguments pointed sharply in the direction of abandoning laissez-faire ideas and embracing a much greater degree of state intervention for both personal and social advancement.

For most new liberals, and Hobhouse was no exception, poverty was at the forefront of their social concern. An unregulated liberal capitalist economy was for Hobhouse at the root of poverty. To eradicate poverty’s two main causes, unemployment and low wages he promoted the ‘right to work’ and the ‘right to a living wage’ and a minimum income for all. People are not fully free in their political capacity,” he wrote in Liberalism, “when they are subject industrially to conditions which take the life and heart out of them.” The various social reforms he backed for social support were necessary conditions, he believed, for freedom and liberty to have any substantial meaning for the majority of the population.

For Hobhouse then there was no inherent contradiction in personal freedom and collective action by the state. The one was dependent on the other. Hence, as the New or Social Liberalism developed into the 20th century a new legitimacy was given to planned state intervention and by the 1930s the phrase ‘social planning’ had entered the vocabulary. This in turn fueled a concern with poverty, the idea of social rights, and the notion of a social minimum for a civilized existence for all members of society. Hobhouse’s writings all pointed to the desirability of steering a middle course between laissez-faire liberalism on the one hand, and doctrinaire, economically deterministic socialism on the other. He was convinced that a reconciliation between liberalism and socialism was absolutely essential to the survival of the liberal tradition. Hobhouse was intent on drafting the liberal instruments that would allow social harmony to prevail. Far reaching social reform was necessary which in its intent for change would show “more regard to the welfare of the masses than is paid by the blind and sometimes blindly adored forces of competition” and which would facilitate the “harmonious working out to their fullest possible development of the best capacities of all members of the community.”

In Canada the political figure who ultimately transformed liberalism from its 19th century formation and moved the Canadian Liberal Party towards developing a welfare state was Prime Minister Mackenzie King. King had been significantly influenced by British New Liberalism, in particular by the ideas of T.H. Green. He adopted Hobhouse’s conception of social harmony and the well being of the whole community. By the time he published Industry and Humanity (1918), King had accepted collectivist ideas and the notion of the ‘positive state’ :

At the Liberal party convention in 1919 King was a strong advocate for a new social liberalism and he personally sponsored that part of the 1919 Liberal party platform which stated: “that in so far as may be practicable , having regard for Canada’s financial position, an adequate system of insurance against unemployment, sickness, dependence in old age, and other disability …should be implemented by the federal government.” Thus was Canada’s welfare state born. Fifty years later Canada finally had a program of national public health care.

Next, in the third and last article in the series I will explore neo-liberalism which since 1973 has successfully sought to replace the New Liberalism.

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