If the first layer emphasized liberalism’s role as a vehicle for expressing individual preferences that were not to be interfered with by others, the second layer of liberalism transformed that initial role. Rather than focusing on controlling the relationships between individual and individual, and individual and government, being free now meant being able to interrelate to others actively, with the chief end of self-improvement, material and spiritual. That transformation took the shape of elevating markets to the prime arena of liberalism in practice. ‘Keep off my grass’ was replaced by ‘let’s explore new fields’. Markets enabled the exchange of human capacity and epitomized an adventurous sense of open boundaries. A world of free enterprise beckoned, with individuals redefined primarily not as equal natural rights bearers—that area of the first sheet was partly obscured—but as unequal units of energy, endowed with talent and drive, and acting to change their social and economic environments. In Eastern European countries in the later 19th century that was coupled with a call for modernization to catch up with more developed societies.
Freedom of economic intercourse and movement could hardly be formulated as a natural right, for commerce could obviously not be pre-social. Instead, Locke’s natural right to property was brought into play. Locke’s view was an unusually powerful statement. By regarding property as a birthright rather than the outcome of social or legal consent, he inspired a belief in what the Canadian political theorist C.B. Macpherson termed ‘possessive individualism’—the open-ended accumulation of goods by private individuals. During the 19th century, the right to property and to its accumulation was enhanced and reformulated—to a far larger degree than envisaged by Locke—as a necessity for social and national flourishing. A major strand of liberalism thus accentuated the bond between person, property, and wealth.
The second liberal layer held that the unbounded economic and commercial activity of entrepreneurial initiative-takers, manufacturers, and financiers would direct the toil and labour of the newly industrialized working class. Increased production and consumption would stimulate wealth, diffuse knowledge, and endorse the virtues of a self-helping population. Individualism, honest work, and inventiveness would combine, in the words of John Bright, ‘to promote the comfort, happiness, and contentment of a nation’. Whether or not all these can describe the actual practices of trade and commerce is beside the point, for the rhetoric of unadulterated economic exchange and expansion became firmly coupled to the liberal doctrine, and also inspired what became known as liberal imperialism. In that particular version, liberals ingeniously intermingled the colonizing of foreign markets with a sense of a ‘civilizing’ mission and purpose concerning the spread of their wealth-producing, rational, and individualist values across the globe. They also re-invigorated the liberal connotations of contract—previously and famously employed to underpin the formation of a political society as a whole—by assigning it to regulating market exchanges and endowing them with security.
One significant consequence of re-interpreting the state as the guarantor of private initiative and socio-economic intercourse—but otherwise limited to preserving social order and defence—was as a precursor of myths about liberal neutrality: a liberal state and its government should steer clear of offering an opinion on individual choices and life-styles, let alone direct them, as long as the latter were not harmful to others. We shall return to the problem of neutrality in . For now we should note that, even were a neutral state a possibility, this need not entail a weak state. The liberal state of the second layer was expected to protect economic interests vigorously through legislation. In practice it also did so through the power of its army.
For many campaigners, however, free trade had an ethical as well as an economic rationale. Liberal aspirations were vented by Richard Cobden, who saw in the free trade idea ‘that which shall act on the moral world as the principle of gravitation in the universe—drawing men together, thrusting aside the antagonism of race, and creed, and language, and uniting us in the bonds of eternal peace.’ In sum, the second sheet of liberalism maintained the idea of individual liberty but re-thought the priorities of the state as liberty’s guardian. The free will area on the first sheet was re-inscribed, its penchant for limited government now associated with the free trade message that was etched in bold strokes on the second sheet. The task of government was no longer solely to protect against arbitrary oppression but to ensure against obstacles to the smooth running of economic relationships (). The second liberal layer marked out a new version of human nature: competitive, potentially aggressive, and insatiable. That such a version could nonetheless bring about ‘eternal peace’ was a massive feat of self-delusion.