Rights, Public Goods, and Externalities

Abstract

This chapter gives a preliminary characterization of classical liberalism and modern liberalism and identifies the points of agreement between two sides about the proper role of government. The two sides agree that: (i) government should respect fundamental political and personal rights; (ii) the economic system should be a market economy in which there is a presumptive but overridable commitment to private ownership of the means of production; and (iii) there is a role for the state in providing some public goods and in dealing with some externalities. It also identifies four kinds of arguments that modern liberals might use to convince classical liberals (and vice-versa) of their respective views of the proper scope of government. These are common ground, convergence, conversion, and practical liberal arguments.