The era of big government never ended: taking stock of the challenges to freedom.

The Challenge of Liberty: Classical Liberalism Today, edited by Robert Higgs and Carl P. Close, Oakland, Calif.: Independent Institute, 422 pages $19.95

IT HAS BEEN just 17 years since the Berlin Wall fell. It has also been 17 years since the socialist economist Robert Heilbroner proclaimed that "the contest between capitalism and socialism is over: capitalism has won.... Capitalism organizes the material affairs of humankind more satisfactorily than socialism." And it has been only a little more than a decade since Bill Clinton declared "the era of big government is over." Classical liberalism--the liberalism, that is, of the 18th and 19th centuries, when the word denoted individual rights, free trade, rule of law, and, above all, private property--seemed, even to its critics, to have triumphed intellectually. It was expected to triumph politically as well.

It hasn't quite turned out that way. No, classical liberalism doesn't face the grand theoretical challenges posed by a rival ideology like Marxism. Rather, the threat to personal freedom and property rights--in the United States, at least--advances under several banners: public health, the environment, national security, and plain old pork-barrel politics.

The Challenge of Liberty--edited by the economists Robert Higgs and Carl Close of the Independent Institute--attempts to examine just how well liberalism is dealing with these challenges and to provide some answers to them. Libertarian heavyweights such as Thomas Szasz and James Buchanan tackle subjects ranging from the role of ideology in national defense to group loyalty. The essays, originally published in The Independent Review during the last decade, always prove edifying, though some of the more policy-oriented contributions may seem less urgent than they did when first published. But on the whole, the volume leaves you with the impression that liberal intellectuals have only begun to recognize the challenges to liberty in this era.

The book's first essay--"The Soul of Classical Liberalism," by Nobel laureate economist James Buchanan--asks what may be the key question: Did the collapse of socialism and the election of politicians who mouthed small-government rhetoric lull libertarians into believing there is greater support for their agenda than there actually is? Buchanan believes it did.

"Classical liberals who do have an appreciation of the soul of the whole two-century enterprise quite literally went to sleep during the decade of the 1980s, especially after the death of socialism both in idea and in practice," he writes. "The nanny-state, paternalist rent-seeking regimes in which we now live emerged from the vacuum in political philosophy." He goes on to chide classical liberals for acting as if the big battles have been won, and for not spending enough time presenting a coherent and attractive vision of what a liberal society is and why it's worth struggling for.

The essay can best be read as an elaboration on a point made almost 60 years ago by another Nobel laureate economist, F.A. Hayek, in his 1949 essay "The Intellectuals and Socialism." Wrote Hayek: "We must make the building of a free society once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia, a program which seems neither a mere defense of things as they are nor a diluted kind of socialism, but a truly liberal radicalism ... which is not too severely practical, and which does not confine itself to what appears today as politically possible.... Those who have concerned themselves exclusively with what seemed practicable in the existing state of opinion have constantly found that even this had rapidly become politically impossible as the result of changes in a public opinion which they have done nothing to guide."

Buchanan doesn't advocate a withdrawal from the world of policy debate. (Nor, for that matter, did Hayek.) Rather, he argues that people who engage in those debates must make their arguments within the framework of an integrating philosophy, not on ad hoc utilitarian grounds. Classical liberals oppose price and wage controls, for example, but the libertarian economist's task "is not that of demonstrating specifically to the citizenry that coercively imposed price and wage controls cause damages that exceed any possible benefits," Buchanan writes. "Of course, such specific demonstration is strictly within recognized competence. But a distinction must be made between exemplary use of the analysis and its use merely as a contribution to the ongoing political argument."

For the liberal, liberty is the paramount political value. But as the French libertarian Anthony de Jasay points out in "Liberalism, Loose or Strict," it isn't the only value in play. Among others, there are security, order, and equality. Sometimes, De Jasay argues, these values seemingly can be gained only by curtailing freedom. And in the day-to-day realm of politics, these competing values tend to eat away at liberty. Two centuries of "regulation, taxation and public services," De Jasay says, have crowded out nongovernmental institutions that promote social cooperation and left individuals and societies in the West less capable of sustaining a free society. "The best that strict liberalism can do is to combat this state intrusion step by step at the margin, where some private ground may yet be preserved and where some ground may even be regained," he concludes.

Of course, in the United States at least, the last two centuries have seen more than just increased regulation and taxation. We've also seen the abolition of slavery and Jim Crow laws, an increase in protections for free speech, and an end to harsh restrictions on the freedom of women. As Donald Rumsfeld might say, we don't have any metrics to weigh the losses of freedom against the gains.

I'm more sympathetic to the views of George Mason University economist Daniel B. Klein, whose contribution shows how the values of liberty, personal responsibility, and individual dignity are intertwined. Interfering with one, he argues, tends to reduce all three. "Paternalism demeans its subjects and becomes a self-fulfilling prophecy," he writes.

As Klein shows, liberty really isn't in conflict with these other two important values. He cites an essay by a long-term smoker in the magazine Excursions, in which the author endorses a large increase in cigarette taxes because it will give him greater resolve to quit smoking, as an example of how lack of responsibility and dignity can lead to pressure to reduce liberty. "Rather than searching as an adult to come to terms with his habit, [he] glibly asks that he (and all other smokers) be treated as a helpless child," Klein writes.

Klein adds that restrictions on liberty can, in turn, further undermine respect for responsibility and dignity. "Paternalist prohibitions and restrictions flatly tell the individual: 'You are not competent to choose fully; we must circumscribe your choice,'" he writes.

Unfortunately, when other liberal thinkers have grappled with the relationship between liberty and other political values, they have sometimes come away from their attempts with a weaker commitment to liberty. In "What Is Living and What Is Dead in Classical Liberalism?," Charles Rowley, another economist at George Mason, looks at why the philosophers John Gray and Robert Nozick moved away from their earlier libertarianism. His piece is carefully nuanced, as one would expect from a discussion of two complex thinkers, but his conclusion is clear. "In my view," he writes, "the retreat from classical liberalism on the part of both Nozick and Gray is completely explained by their shift, in a troubled world, from a preoccupation with preserving liberty to [a preoccupation with] preserving order, that is from a commitment to the philosophy of Locke to [a commitment to] that of Hobbes."

Once preserving order becomes the top political priority, Rowley continues, "the dike is opened for those who would invade individual rights to do so under the guise of avoiding anarchy. One only has to review the reactions in all branches of government to the tragedy of Oklahoma City to see how quickly opportunities to trample on liberties are seized upon by those who perceive economic or political gain."

Rowley's essay was first published in 1996. If it had been written in 2006, he could just as aptly have substituted "9/11" for "Oklahoma City." Since 2001 the most prominent debates on the limits of liberty and the role of the state have come in the context of the War on Terror. Can the government detain U.S. citizens, captured on U.S. soil, indefinitely without pressing charges against them? Should the government be allowed to listen in on telephone calls to or from the United States without court approval?

Many Americans, including some who call themselves libertarians, have answered "yes" to such questions. Some have even fretted that the government isn't doing enough to curtail liberties in the name of fighting terror. But there's nary a mention of warrantless wiretaps or data mining or extraordinary renditions in the index of this book.

And with good reason. About three-quarters of the essays were originally published in 2001 or earlier. I realize there's a certain amount of lag time in publishing a book. But it's difficult to see how anyone could publish a volume on current challenges to liberty that almost completely ignores the continuing resurgence of the national security state.

For that reason, many of the more philosophical essays, such as Rowley's or Buchanan's, have a more urgent feel to them than the ones that focus on "present day" policy concerns--say, James R. Otteson's discussion of "Freedom of Religion and Public Schooling," which is a perfectly fine essay but of a type libertarians have been writing for decades. The challenge of liberty in the near future will be to show how those philosophical arguments about liberty and order, freedom and safety, bear on current debates regarding the powers assumed by the government in the War on Terror.

Contributing Editor Charles Oliver (oliverc2@ yahoo.com) writes for a daily newspaper in Georgia.