Authored by Philippe Lemieux via Mises Institute,
Liberty’s history is often portrayed as a direct result of the Enlightenment: traditional authority was challenged by reason, persecution was replaced by toleration, monarchy gave way to constitutional government, and privilege transformed into individual rights. While this narrative is valuable, it is not exhaustive.
Liberty evolved through the fusion of two lineages. The first is the modern lineage of Enlightenment critique, which demanded that political power justify itself before reason. The second is an older realist tradition, spanning from Aristotle and Thomas Aquinas to the School of Salamanca, Richard Cantillon, Carl Menger, Eugen von Böhm-Bawerk, Ludwig von Mises, and Murray Rothbard. These thinkers did not belong to a single school, nor did they always agree. What united them was a common belief: reality follows an orderly pattern, human action has a structure, and political power cannot be eliminated through command.
The key distinction is not between the Enlightenment and the older tradition, or between reason and faith. Important strands within the Enlightenment, particularly the Scottish Enlightenment, acknowledged that customs, laws, money, and markets could arise without deliberate planning. The fundamental conflict lies between a constructivist trend in modern thought and an older causal-realist approach to social order. Friedrich Hayek identified the peak of this constructivism as the “fatal conceit,” the mistaken belief that humans can shape the world according to their desires. The realist tradition highlights the intelligibility and causal structure of social phenomena, while the constructivist tendency places more trust in intentional organization and direction.
The peril arose when criticism of inherited institutions transformed into confidence in consciously designed ones. Locke was not Marx, and constitutional government was not socialism. The similarity lies in methodology: once social order is viewed primarily as a product of design, political disputes increasingly revolve around the identity of the designer, the purpose of the plan, and the extent of control allowed. This inclination is evident in social planning, price controls, central banking, licensing, regulation, and the bureaucratic management of economic activities.
The older lineage starts from a different premise. Aristotle began with beings as they are and the goals they pursue. Humans make choices, deliberate, use means, form households, exchange goods, and join associations. Thomas Aquinas extended this realism to law and politics. A command does not become just simply because a ruler issues it. Human law derives its normative order from principles that political authority does not invent.
Many late Scholastics, particularly the Spanish Scholastics linked to Salamanca, expanded this framework to property, exchange, money, and political authority. They increasingly equated the just price with common estimation, influenced by utility, scarcity, and market conditions, rather than an objective measure of production costs. By embedding economic phenomena within moral agency and commutative justice, they set boundaries on the arbitrary exercise of political authority in economic affairs. Within this tradition, thinkers like Juan de Mariana also articulated strict limits on taxation, confiscation, and monetary debasement.
Richard Cantillon advanced this analysis by placing entrepreneurship, uncertainty, production, and market-price formation at the core of economic life. Merchants and retailers bought at fixed prices and sold at unpredictable prices, while farmers committed to fixed rents without knowing the value of their output. Thus, profit, loss, and bankruptcy emerged from judgment under changing conditions of demand, competition, weather, and consumer preference.
Carl Menger marked a critical shift within the Austrian tradition. While much of British classical economics, especially in the Ricardian tradition, explained long-term exchange value primarily through labor and production costs, Menger began with human needs and the individual’s knowledge of, and control over, goods that satisfy those needs. Value was not an inherent quality of an object; it derived from the relationship between an individual, their needs, and the available goods. Market phenomena had to be traced back to individual decisions, choices, and transactions. Prices, money, and other social institutions could emerge from economic activities even without deliberate planning.
Böhm-Bawerk expanded this analysis to capital and time. He viewed social or productive capital as intermediate goods used in time-consuming production processes before final consumer goods became available.
Mises generalized the Austrian perspective through praxeology, positioning economics as part of a broader study of human action. The premise was not a collective entity, a social class, or a governmental aim; it was the individual acting to achieve specific ends using limited resources. Exchange, prices, profit, loss, money, capital, and production are only understandable within this framework of purposeful behavior. Mises presented praxeology as an a priori science rooted in the category of human action, with implications that could be deduced through logical reasoning irrespective of historical context.
The extent to which this epistemology should be viewed as Kantian remains a topic of debate. Jörg Guido Hülsmann has argued that Mises is better understood as an adherent of Aristotelian realism. While Mises used a priori language, Hülsmann highlights the method of Mises’s economic analysis, which consistently seeks to identify the nature and essential relationships of economic phenomena. Hülsmann thus places Mises within the broader Austrian realist tradition of Menger and Böhm-Bawerk, suggesting that his connection to Kant should not be overstated. According to this interpretation, Mises occupies a middle ground within the lineage outlined here: his epistemological vocabulary is partly Kantian, while the substance of his economic analysis retains a significant Aristotelian-realist character.
Mises’s critique of socialism exposed the practical implications of this approach. Socialist planning fails not because officials are corrupt, uninformed, or unintelligent. It fails because the elimination of private ownership in production means there is no genuine exchange in capital goods. Without exchange, there are no market prices for planners to compare different resource uses through monetary calculation.
A planning authority may gather technical data, set goals, and assign numerical values. However, these values do not result from transactions among distinct owners. A statistical table can list quantities, but it cannot determine whether steel should be used for bridges, machinery, railways, or buildings in a manner that reflects consumer demand and opportunity costs. The flaw is not in the planner’s character; it is inherent in the system’s institutional structure.
Rothbard took this lineage to its logical political conclusion. He fused Austrian value theory, capital theory, and economic calculation with a broader theory of natural law, natural rights, property, and the state. His philosophical foundation differed from Mises’s. While Rothbard retained the deductive praxeological method, he interpreted the action axiom from an Aristotelian-Thomistic epistemological perspective, grounding it in the nature of reality rather than in Mises’s neo-Kantian view of the action axiom as an a priori thought category.
Rothbard also rejected the conventional narrative that economics originated with Adam Smith and progressed linearly to modern science. In his history of economic thought, he reinstated the Spanish Scholastics, Cantillon, the French liberal tradition, and other overlooked thinkers, arguing that their contributions had been overshadowed by the later dominance of British classical economics.
The bureaucratic state exemplifies the consequences of disconnecting the emancipatory rhetoric of the Enlightenment from the constraints imposed by human action, scarcity, property, and economic calculation. It speaks of rights while transforming them into permits. It acknowledges property and allows markets while retaining the authority to direct their usage through zoning, licensing, taxation, monetary policy, and regulation. It upholds elections while delegating decisions to agencies, central banks, and experts. The system remains liberal in language but managerial in practice. Failures are not seen as indications of institutional limitations but as reasons for further adjustments, new rules, expanded staff, or broader jurisdiction.
Hence, the history of liberty is not the tale of a single Enlightenment becoming more coherent, but of two intersecting lineages. One questioned established authority; the other underscored the restrictions imposed by human action, causality, property, and economic calculation. Austrian economics stands at the convergence point of these lineages. Social order emerges through individual action, exchange, calculation, and cooperation under conditions that no central authority can completely control.