Liberty as a principle in political theory has been closely identified with the liberal–capitalist tradition. It primarily stands for liberty of contract and private property and follows the policy of laissez faire. Equality in its legal and political form was demanded by the rising capitalist class to seek equality with aristocratic elements and the nobility. This was meant to abolish privileges and special opportunities they enjoyed. It was also argued that equality was significant if democracy was to be successful. Legal and political equality were invoked to bring rule of law, citizenship, voting rights, etc., considered essential for democracy. However, when demands for equality in other dimensions, namely, social and economic, were raised in the nineteenth century by the workers, it was argued that liberty must get priority over equality. Lord Acton, Alex de Tocqueville, Walter Bagehot and others argued against equality and considered it inimical to liberty. The Socialist and Marxian thoughts in Europe in nineteenth century influenced demand for economic and social equality. Positive liberals, social democrats and state welfare thinkers have advocated compatibility between equality and liberty. They include R. H. Tawney, L. T. Hobhouse, J. A. Hobson, Ernest Barker, H. J. Laski and C. B. Macpherson.
Some political sociologists and political theorists such as Vilfredo Pareto, Gaetano Mosca, Roberto Michels, Giovanni Sartori, J. A. Schumpeter, Robert Dahl, Harold Lasswell and Abraham Kaplan felt that the notion of democracy as the rule of the people, by the people for the people is misplaced. They argue that the elite manage and run the political process on behalf of the people. Without elites, democracy could not be managed and liberty will be jeopardized. Dahl gave a concept of polyarchy as the operational form of what we call democracy. The upshot of this argument is that democracy based on the elite does not require equality as a crucial factor and to argue for equality is opposed to operational mechanism of democratic process.
In the twentieth century, libertarian theorists, F. A. Hayek, Isaiah Berlin, Milton Friedman and Robert Nozick have given primacy to liberty and treated equality and liberty as incompatible. Relationship between equality and liberty is understood differently and primacy to one or the other is based on the perspective adopted. The one inclined to positive liberalism or social democratic ideas, supports compatibility of liberty and equality but the one who adopts the laissez faire or libertarian or elite theory perspective, treats equality and liberty incompatible with each other.
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