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      Political and Legal Conditions

      There can be no capitalism without freedom. The appearance of liberalism was therefore an essential condition for the emergence of this economic system. In France, this was part of the philosophy of the Enlightenment, which extended from the death of Louis XIV to the Revolution of 1789 and would come to gradually impose itself, first, in the minds of the intellectuals of the time, and subsequently in the minds of the French people as a whole. The word liberalism initially had a purely political meaning, as the leaders of a nation were forced to promote the freedom and equality of individuals owing to the return of a political regime that had proved its worth many centuries earlier but had been forgotten in many countries: democracy.

      At a legal level, liberalism extends the right of ownership from the right to just land to the holding of all production assets. This was an essential condition for economic growth in the form of savings and thus for the formation of productive capital. This legal evolution was the result of a new social class, the bourgeoisie, composed of entrepreneurs whose domination began to impose itself on the whole of society. However, this domination came up against the appearance of another source of domination: that of state bureaucracy.

1.1. Liberalism and democracy: new eldorados of political thought and political life

Liberalism brought the superiority of the individual to the fore. Prior to that period, the individual did not constitute an element of society to which philosophers gave prominence. Capitalism would develop from this new way of thinking, even though liberalism and capitalism should not be confused, especially with regard to the role of the state and their respective positions vis-à-vis monopolies.

      Liberalism is also at the origin of the advent of democracy – a guarantee of formal equality – whereas an aristocratic society can only generate inequality. In such a situation, the more equality extends, the more the demand for equality widens and the more inequalities appear unacceptable. This change in political structure has completely different economic consequences.

      1.1.1. Liberalism, defender of the superiority of the individual, and its economic application, capitalism

      The foundation of liberalism rests on the assumptions that human beings are rational – that is, driven by desires and individual interests of which they are more or less clearly aware – and that they strive to use the means they consider best to achieve their goals. The individual must use their freedom through action, which enables them to achieve autonomy and well-being. They are able to prioritize their preferences. It follows that, in society, it is the individual who is most important. Thus, de Tocqueville and Weber speak of the actions of individuals, not of society as a whole. Humans must be understood as they have been, as they act and think, hence the importance of referring to history.

      Liberalism is thus presented as the doctrine that best allows each individual to assert themself within the society in which they live, since this doctrine is supposed to reward the individual energy that is the source of life and development within a society. For example, the taste for work is an essential motivation of liberalism. Not only does labor allow us to measure the value of all goods, but it is also a source of capital. Encouraged to work more to improve the conditions of their existence, each individual has the chance to succeed and is able to save money in order to increase their income, and thereby their personal well-being, and at the same time, promote the economic development of their country.

It follows that each individual must dominate nature in order to satisfy in an ever more complete manner their needs, which increase in number and intensity as they become more civilized. As a consequence of their freedom, they are then be able to benefit from the resulting progress, which gives them confidence in the institutions that allow them to implement it. Thus, at the heart of liberalism is the defense of individual liberties and private initiatives everywhere and at every opportunity. It is an inexorable evolution. Thus, de Tocqueville explains that “the history of humanity shows that the gradual development of the equality of conditions is constant. It is a providential fact, with key characteristics: it is universal, it is lasting, it escapes human power every day […] All events, like all men, serve its development”.

      He adds that there can be no political equality without parallel economic equality, that “those who believe that they can permanently establish complete equality in the political world without at the same time introducing a kind of equality in civil society, those seem to me to be making a dangerous mistake. I think that one cannot give men with impunity a great alternative of strength and weakness, making them touch extreme equality in one sense and letting them suffer extreme inequality in others, without soon aspiring to be strong, or becoming weak in all senses”. As for the relationship between equality and liberty, de Tocqueville explains that it is equality that prevails, because humans know that, in a democratic society, the state tries not to let anyone die of hunger; “nations, nowadays, cannot make conditions within them unequal; but it depends on them whether equality leads them to servitude or to liberty, to enlightenment or to barbarism, to prosperity or to misery”.

      However, this doctrine is not blind: if we take the previous example of work, it attempts to differentiate between the economic point of view and the moral point of view. It recognizes that, in the first case, it is a constraint that humans are obliged to assume if they want to satisfy their desires and enrich themselves, while affirming that, in the second case, work is the means of developing moral and physical faculties in the individual’s own interest.

Capitalism and liberalism are two notions that are often confused, even though they are of different but complementary natures. Even today, it is only in Western nations that we find, to varying degrees, these two concepts together. In fact, capitalism was, and still is, spoken of in countries in which all forms of liberalism are totally absent. This is the case for what is called “state capitalism” in the former USSR, Cuba or China, which simply means that the state owns all the means of production and therefore controls all the capital of national enterprises. Nothing to do, therefore, with liberalism and capitalism as we will describe them. Conversely, countries that claim to be liberal sometimes, and in important respects, behave in a non-liberal way, for example by implementing protectionist measures.

      Liberalism is at the heart of a political philosophy that advocates the participation of all individuals in public life to the detriment of the decision-making power exercised

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