economic liberalism

Economy-And-Finanzas

2022

We explain what economic liberalism is, its advantages, disadvantages and characteristics. In addition, its main representatives.

Economic liberalism defends private property and the market economy.

What is economic liberalism?

Economic liberalism is the economic thought proper to the doctrine philosophical of liberalism. It is based on the idea that economic activities should be as free as possible from state intervention, and that the market should be allowed to reach a point of self-regulation through free competition.

Emerging in 18th century Europe, liberalism had an immense impact on the politics, the culture and especially the economy of the moment, opposing the intervention of the state in the economy, as was the protectionist rule at the time.

Initially, this doctrine was called free trade, as it advocated the free exchange of currency and the reduction of barriers to production and trade. The classical economist Adam Smith was one of its top representatives.

Liberal economic thought is usually summed up in the French expression laissez faire, laissez passer ("Let go, let go") actually inherited from previous economic theories (specifically from the physiocracy), since it defends the free movement of goods and the freedom of economic exercise.

Similarly, economic liberalism defends the private property and the market economy. To that extent is the thought foundation that fostered the success of the capitalism.

Characteristics of economic liberalism

Broadly speaking, economic liberalism is based on:

  • Defend the economic freedom of private actors from the greatest possible number of interventions by the State: barriers, tariffs, controls, etc.
  • Defend private property and the free movement of goods as fundamental elements of the society.
  • Defend the need for free competition among economic actors, which would lead them to maximum effort and maximum inventiveness to gain positions within the market.
  • To hold that the free market will regulate itself if given the opportunity, through the forces of offer and the demand, reaching an ideal state of wealth generation.

Advantages and disadvantages of economic liberalism

Economic liberalism brings together great virtues and deep contradictions, depending on the point of view from which you look at it.

Advantages of economic liberalism:

  • Free capacity for inventiveness and entrepreneurship economic, which motivates the innovation and industrial development (especially technological).
  • Promotion of investment and the saving, as ways to accumulate wealth and social prestige.
  • Independence of the economic actors of the State, which also translates into political independence.

Disadvantages of economic liberalism

  • Concentration of wealth in the industrial and financial strata, which creates Social inequality and economical.
  • Exploitation ruthlessness of the working class, especially in the initial stages of capitalism, in which there was no representation union, nor labor laws, nor labor benefits of any kind.
  • Possibility of unfair competition, unfair practices and the absence of the minimum regulations necessary to guarantee social peace.

Representatives of economic liberalism

Adam Smith was the father of economic liberalism.

The main representatives of liberal economic thought were:

  • Adam Smith (1723-1790). Scottish economist known as the father of economic liberalism, addressing economics from a philosophical point of view in his work The Wealth of Nations of 1776. There he defended the natural human tendencies and criticized the institutions of the moment, assuring that, if at the human being Left to himself, he would not only find the best for himself, but also the best for his fellow men.
  • David Ricardo (1772-1823). Businessman, an English politician and economist of Jewish origin, is considered a pioneer of the macroeconomy modern, and one of the essential thinkers for the quantity theory of money. His work, although liberal in nature, is important to both neoclassical economists and Marxists.
  • Thomas Malthus (1766-1834). Anglican clergyman of British origin and member of the Royal Society, he was a highly influential thinker in political economy and demography, especially for his work The population explosion.

Examples of economic liberalism

At the beginning of the 21st century, the entire world embraces economic freedom, although not necessarily as enlightened thought formulated it at the time. The struggle between labor movements and the domain of bourgeoisie Industrialism produced new and more moderate forms of economic liberalism and capitalism throughout the 19th and 20th centuries.

However, there continues to be a confrontation between sectors that cry out for a return to initial liberalism (neoliberalism) and sectors that advocate more for a more controlled capitalism (developmentalism or social democracy).

Thus, examples of the most extreme economic liberalism today are the economic models of countries such as the United States, Chile, the United Kingdom, Peru, and Colombia.

!-- GDPR -->