1. Introduction: Luigi Einaudi and Liberalism

Luigi Einaudi stands among the few Italian liberals revered within the Pantheon of European political thought. But what did liberalism mean to him? For the moment we can only outline a general definition reflecting his lifelong conviction: liberalism is “the doctrine of those who prioritise the advancement and elevation of the human person above all else...a moral doctrine, transcending the contingencies of time and place” (Liberalism, L'Italia e il secondo Risorgimento, 29 July 1944; in Riflessioni di un liberale sulla democrazia 1943-1947, ed. P. Soddu, Florence, Olschki, 2001, p. 65).

Even a purely moral doctrine, however, requires institutional embodiment. Politically, Einaudi asserted, “liberalism is a doctrine of limits,” maintaining that democracy becomes liberal only when the majority refrains from coercing individuals in realms deemed inviolable by the moral order—“a domain sacred to the person” (ibid., pp. 65-66).

Economically, while Einaudi saw no inherent link between liberalism and economic structures (ibid., p. 66), he firmly believed that a liberal and democratic society necessitates substantial economic freedom—granting individuals autonomy as savers, consumers, and producers:
"Liberals deny that human freedom stems from economic freedom; that the latter is the cause and moral, spiritual, and political freedoms its effects. A morally free society, grounded in respect for human dignity, creates economic institutions in its own image. Machines enslave only those who submit to enslavement. There is indeed a connection between economic freedom and broader liberties, including political freedom, but it is far subtler than commonly asserted in propaganda” (Il nuovo liberalismo, La Città Libera, I, 1945, no. 1; in Riflessioni di un liberale sulla democrazia, cit., pp. 119-120).

2. The Roots of Einaudian Thought

Einaudi drew deeply from the great classics of the liberal tradition, including David Hume, Adam Smith, Alexander Hamilton, and James Madison, as well as Italian thinkers like Carlo Cattaneo and Francesco Ferrara, and figures such as Benjamin Constant and Alexis de Tocqueville. Among his contemporaries, he engaged in meaningful dialogue with Benedetto Croce, Gaetano Mosca, Vilfredo Pareto, and Maffeo Pantaleoni, as well as international scholars like Lionel Robbins, Wilhelm Röpke, and Friedrich von Hayek. Einaudi, in turn, exerted a profound influence on key Italian economists and political thinkers of the 20th century, including Carlo Rosselli, Ernesto Rossi, Piero Gobetti, Costantino Bresciani Turroni, and Bruno Leoni.

While his intellectual influences were diverse or even unorthodox—admiring figures as disparate as the idealist Thomas Carlyle and the socialist Charles Fourier—Einaudi never made a mystery of considering England as his political and cultural ideal homeland. In a celebrated essay, he referred to himself as a “passionate, almost monomaniacal reader of English books” (Germanofili ed anglofili, La Riforma Sociale, XXIII, vol. XXVII, 1916; in Gli ideali di un economista, Florence, Edizioni de La Voce, 1921, p. 153).

Adam Smith was particularly inspiring to him. Einaudi composed evocative essays examining Smith's reception in Italy and analysing specific themes contained in unpublished chapters from the early drafts of The Wealth of Nations (1763). To Einaudi, Smith epitomised the liberal thinker attentive to the ethical and political dimensions of economics. While an advocate of competition, Smith also championed robust anti-monopoly policies and severely criticised some shortcomings of the market even though he is being viewed still today as the greatest prophet by collective imagination.

Smith's pluralistic approach to scholarship, combining “moral, historical, and economic judgements (Di una prima stesura della ‘Ricchezza delle Nazioni’ e di alcune tesi di Adamo Smith intorno alle attribuzioni dei frutti del lavoro, «Rivista di storia economica», III, 1938, n. 1, now in Id., Saggi bibliografici e storici intorno alle dottrine economiche, Rome, Edizioni di Storia e Letteratura, 1953, p. 101). More importantly, Smith in his dual capacity of philosopher and economist both authored The Wealth of Nations and The Theory of Moral Sentiments achieving widespread recognition across Europe, including Italy, by the late 18th century. His ability to bridge between diverse theoretical domains, and more often than not after dwelling upon 'historically ascertained and economically analysed facts' he called upon the “moralist so alive in him” to correlate the ethical and the economic planes (ibid.).

Einaudi shared much intellectual ground with John Stuart Mill. Both were eminent economists, acute observers of socialism and the labour movement, and prominent figures in European liberalism, holding significant political roles. Einaudi, as we shall explore further, drew on Mill’s antagonistic view of progress and freedom. In 1925, amid Mussolini’s consolidation of power following his infamous speech of 3 January where he had taken responsibility for Matteoti murder and the disintegration of the Aventine secession, Einaudi invoked Mill’s principles in a striking and significant tribute. In the inspired preface to Gobetti’s new Italian edition of On Liberty, Einaudi urged resistance to the encroaching dictatorship:
“The Syllabus of errors, conformism, concord, and regressive press laws signal civil decay. Conversely, partisan struggles, criticism, non-conformism, and press freedom herald the ascent of peoples and nations. The years of imposed consensus from which Italians are painstakingly emerging have rekindled their appreciation of discord as a right and a benefit. They feel that freedom is not merely a tool but a shared end upon which all other civil, political, and spiritual aims depend. Yet this is perhaps more a sentiment than a firmly rooted conviction. Mill’s essay, once favoured by our elders, thus reappears at an opportune moment for Italians who are now anxiously seeking to define the foundations and limits of freedom" (Preface to J. S. Mill, La libertà, Turin, Piero Gobetti Editore, 1925, pp. vii-viii).

For Einaudi, the primary role of a liberal state worth this name was to safeguard the right to dissent, criticism, and debate about ideas and measures. He argued that fascism had to be opposed on this basis, restoring to Italians “the right and the advantage of discord.”

In economics, Einaudi acknowledged a profound debt to the Italian school of pure economics and science of public finance and considered him as a continuator. He regarded Maffeo Pantaleoni and Antonio De Viti de Marco as intellectual masters, the two had been “founders of the 'pure' direction of finance in Italy”. However, this was not the only reason for Einaudi’s admiration. Pantaleoni, author Pure Economics (1889), exemplified the pure economist, at the same time the forerunner and continuer to the Marshallian school and a historian of economic thought. Einaudi preferred Pantaleoni over Pareto, despite considering himself a devoted disciple of the latter, describing Pantaleoni as “so superior” to Pareto (Preface to A. De Viti de Marco, Principi di economia finanziaria, Turin, Einaudi, 1934, p. xv). Einaudi reiterated in 1950:
"Above all, I place Pantaleoni before Pareto—not only because he came first in the theoretical arena but because, though he considered himself lesser and a follower of the other great figure, he was, in truth, the master of all. He demonstrated that economic science is pure logic. Stripped of its utilitarian trappings, Pure Economics would turn out to be nothing more than a modern economic Euclid, essential for young people to permeate in order to learn clear reasoning about everyday matters" (La scienza economica. Reminiscenze [1946], in M. Finoia [ed.], Il pensiero economico italiano (1850-1950), Bologna, Cappelli, 1980, p. 99).

Einaudi was equally admiring of De Viti de Marco, with whom he maintained a friendship cultivated over long years of meetings and correspondence. He credited to De Viti the merit of developing the most sophisticated framework for analysing public finance of that period, “applying to the public sector the concepts of competition and monopoly which had been necessary to give a precise order and explain so many facts of private economics”. This led him to elaborate “on the one hand, the hypothesis of the monopolistic state where taxation and public expenditure are set in order to provide the maximum profit for the ruling leaders or elites” and “on the other, the hypothesis of the cooperative state whose the financial system minimizes burden for the taxpayers thus bringing the best advantage to citizens who freely legislate through their delegate (ibid., p. 105).

Building upon these diverse and substantial foundations, Einaudi crafted his vision of society, economy, and politics.