Neoclassical liberalism (alternatively spelled as neo-classical liberalism and also known as new classical liberalism) is a tradition of the liberal thought that, with the premises of John Locke's classical liberalism applied to the industrialized society, opposes the welfare state and left-leaning social liberalism. In the United States, the Arizona School liberalism (also known as bleeding-heart libertarianism) co-opted the term neoclassical liberal to promote some ideas of Chicago School economist Milton Friedman such as the school voucher system and the negative income tax.

History

19th century neoclassical liberalism () 

In the late 19th century, the establishment of social liberalism advocated by Thomas Hill Green had led to an internal dispute within the liberal movement: the social liberals (welfare liberals) was favorable to a more regulatory state and social justice, while a faction of liberals continued to support laissez-faire economics. Despite industrialization, neoclassical liberals argued that the liberalism envisioned by the British philosopher John Locke in his Second Treatise of Goverment of 1690, according to their interpretation, continued to be the best guide for handling social and economic issues.
British sociologist Herbert Spencer proposed the principle of "survival of the fittest"; in his writing The Proper Sphere of Government, Spencer argued that individuals have only natural rights: the right to life and the right to property. Like the American William Graham Sumner, Spencer believed that state intervention in economic affairs (which he called officialism)  would lead to decadence and/or parasitism to the detriment of the employed, he therefore opposed to trade regulation, public education, state-sponsored religions, social security, and state-owned transportation systems. 

American social scientist William G. Sumner contended that the proper role of government was the protection of "the property of men and the honor of women", government was to be a rationalistic response of individuals to defend property rights and the purpose was to be merely contractualistic.

Mid-20th century right-libertarianism (1943-1980s) 
Neoclassical liberalism re-emerged mainly in the post-World War II era when modern liberalism was the main form of liberalism and Keynesianism and social democracy were the dominant ideologies in the Western world. After Franklin Delano Roosevelt's New Deal (1933-1944), which contributed to the expansion of the welfare state in the United States, economists such as Friedrich von Hayek (1899-1992) and Milton Friedman (1912-2006) began to reintroduce neoclassical liberal policies as alternatives to Roosevelt's social liberalism.

The U.S. libertarian movement of the late 20th century is seen as a successor to neoclassical liberalism. According to Ellen Grigsby, arguments of contemporary neoclassical thought are present in the philosophy of Robert Nozick, and in the party platform of the American Libertarian Party.

21st-century neoclassical liberals 
Contemporary neoclassical liberals have tried expunge the social Darwinistic implications of neoclassical liberal theory, the legacy of Spencer and Sumner, although they continue to advocate on behalf of the benefits of minimal state intervention and liberty for self-interested individuals.

Usage by Bleeding-Heart Libertarians 

Neoclassical liberalism, as understood by the Arizona School liberalism or bleeding-heart libertarians, is a libertarian political philosophy that focuses on the compatibility of support for civil liberties and free markets on the one hand and a concern for social justice and the well-being of the worst-off on the other. Adherents of neoclassical liberalism broadly hold that an agenda focused upon individual liberty will be of most benefit to the economically weak and socially disadvantaged.

The first known use of the term "Arizona School" was by Andrew Sabl, introducing David Schmidtz at a UCLA Department Colloquium in 2012. Upon being pressed to define "Arizona School" Sabl said the school is broadly libertarian but that its most distinguishing characteristic is that it produces  political philosophy that aims to be observation-based and empirically accountable.
The first recorded use of the term bleeding-heart libertarian seems to have been in a 1996 essay by Roderick T. Long. It was subsequently used in a blog post by Stefan Sharkansky and later picked up and elaborated on by Arnold Kling in an article for TCS Daily. Since then, the term has been used sporadically by a number of libertarian writers including Anthony Gregory and Bryan Caplan.

In March 2011, a group of academic philosophers, political theorists and economists created the Bleeding Heart Libertarians blog. Regular contributors to the blog included Fernando Tesón, Gary Chartier, Jason Brennan, Matt Zwolinski, Roderick T. Long, and Steven Horwitz.

Criticism 
Critics of the bleeding-heart libertarian movement include economist David D. Friedman, for whom bleeding-heart libertarians "insist that social justice ought to be part of libertarianism but are unwilling to tell us what it means."

See also 

 Classical liberalism
 Gary Chartier
 Compassionate conservatism
 Distributive justice
 Fred Foldvary
 Free Market Fairness
 Geolibertarianism
 Left-wing market anarchism
 Left-libertarianism
 Libertarian paternalism
 Lockean proviso
 Michael Munger
 Neo-libertarianism
 Michael Otsuka
 Poverty reduction
 Radical centrism
 Radicalism (historical)
 David Schmidtz
 Hillel Steiner

Notes

References 
 Jeffrey Edward Green (2016), The Shadow of Unfairness: A Plebeian Theory of Liberal Democracy, Oxford University Press.
 Jason Brennan, Bas van der Vossen, David Schmidtz, eds. (2017), The Routledge Handbook of Libertarianism, Routledge: "Libertarianism and the Welfare State" by Matt Zwolinski.

Further reading 
 Jeppe von Platz, "Absolute freedom of contract: Grotian Lessons for Libertarians", Critical Review 25(1), 2013, 107–119.
 Rob Reich, "Gift Giving and Philanthropy in Market Democracy", Critical Review 26(3–4), 2014, 408–422.
 Nicolás Maloberti, "Rawls and Bleeding Heart Libertarianism: How Well Do They Mix?", The Independent Review 19(4), 2015, 563–582.
 Otto Lehto, "The Limited Welfare State as Utopia: The Case for a Libertarian Basic Income", Presentation for the BIEN World Congress (Seoul, Korea, 2016).

External links 
 Bleeding Heart Libertarians – The official blog
 Matt Zwolinski discusses Bleeding Heart Libertarianism with Reason TV
 New Libertarians: New Promoters of a Welfare State – A historical look at the development of (and ultimately a criticism of) Bleeding Heart Libertarianism by John P. McCaskey
 Instituto Mercado Popular – BHL Brazilian research institute (in Portuguese)

Controversies within libertarianism
Liberalism
Libertarianism
Libertarianism by form
Political theories
Libertarianism in the United States
Liberalism in the United Kingdom
Liberalism in the United States
History of liberalism