Economic liberalism is an economic system
organized on individual lines, which means
the greatest possible number of economic decisions
are made by individuals or households rather
than by collective institutions or organizations.
It includes a spectrum of different economic
policies, such as freedom of movement, but
its basis is on strong support for a market
economy and private property in the means
of production.
Although economic liberals can also be supportive
of government regulation to a certain degree,
they tend to oppose government intervention
in the free market when it inhibits free trade
and open competition.
Economic liberalism is associated with free
markets and private ownership of capital assets.
Historically, economic liberalism arose in
response to mercantilism and feudalism.
Today, economic liberalism is also considered
opposed to non-capitalist economic orders,
such as socialism and planned economies.
It also contrasts with protectionism because
of its support for free trade and open markets.
An economy that is managed according to these
precepts may be described as a liberal economy.
== Origins ==
Arguments in favor of economic liberalism
were advanced during the Enlightenment, opposing
mercantilism and feudalism.
It was first analyzed by Adam Smith in An
Inquiry into the Nature and Causes of the
Wealth of Nations, which advocated minimal
interference of government in a market economy,
though it did not necessarily oppose the state's
provision of basic public goods with what
constitutes public goods originally being
seen as very limited in scope.
Smith claimed that if everyone is left to
his own economic devices instead of being
controlled by the state, then the result would
be a harmonious and more equal society of
ever-increasing prosperity.
This underpinned the move towards a capitalist
economic system in the late 18th century and
the subsequent demise of the mercantilist
system.
Private property and individual contracts
form the basis of economic liberalism.
The early theory was based on the assumption
that the economic actions of individuals are
largely based on self-interest (invisible
hand) and that allowing them to act without
any restrictions will produce the best results
for everyone (spontaneous order), provided
that at least minimum standards of public
information and justice exist, e.g. no one
should be allowed to coerce, steal, or commit
fraud and there is freedom of speech and press.
Initially, the economic liberals had to contend
with the supporters of feudal privileges for
the wealthy, aristocratic traditions and the
rights of kings to run national economies
in their own personal interests.
By the end of the 19th century and the beginning
of the 20th, these were largely defeated.
Today, economic liberalism is associated with
classical liberalism, neoliberalism, propertarian
libertarianism and some schools of conservatism.
=== Position on state interventionism ===
Economic liberalism opposes government intervention
on the grounds that the state often serves
dominant business interests, distorting the
market to their favor and thus leading to
inefficient outcomes.
Ordoliberalism and various schools of social
liberalism based on classical liberalism include
a broader role for the state, but do not seek
to replace private enterprise and the free
market with public enterprise and economic
planning.
For example, a social market economy is a
largely free market economy based on a free
price system and private property, but is
supportive of government activity to promote
competitive markets and social welfare programs
to address social inequalities that result
from free market outcomes.
== See also ==
== References ==
=== Bibliography ===
Adams, Ian (2001).
Political Ideology Today.
Manchester University Press.
ISBN 0-719-06020-6.
Balaam, David N; Dillman, Bradford (2015).
Introduction to International Political Economy.
Routledge.
ISBN 1-317-34730-7.
Turner, Rachel S. (2008).
Neo-Liberal Ideology: History, Concepts and
Policies.
Edinburgh University Press.
ISBN 0-748-68868-4.
== External links ==
Quotations related to Economic liberalism
at Wikiquote
