Economic liberalism: Difference between revisions - Wikipedia

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'''Economic liberalism''' is a [[List of political ideologies|political]] and [[economic ideology]] that supports a [[market economy]] based on [[individualism]] and [[private property]] in the [[means of production]].{{sfn|Adams|2001|p=20}} [[Adam Smith]] is considered one of the primary initial writers on economic liberalism, and his writing is generally regarded as representing the economic expression of 19th-century [[liberalism]] up until the [[Great Depression]] and rise of [[Keynesianism]] in the 20th century. Historically, economic liberalism arose in response to [[feudalism]] and [[mercantilism]].

Economic liberalism is associated with markets and private ownership of [[capital asset]]s. Economic liberals tend to oppose [[government intervention]] and [[protectionism]] in the [[market economy]] when it inhibits [[free trade]] and [[Competition (economics)|competition]], but tend to support government intervention where it protects [[Property rights (economics)|property rights]], opens new markets or funds market growth, and resolves [[market failure]]s.<ref name=":1">{{Cite book|last=Oatley|first=Thomas|url=https://books.google.com/books?id=4GJoDwAAQBAJ|title=International Political Economy: Sixth Edition|date=2019|publisher=Routledge|isbn=978-1351034647|pages=25, 34–35|language=en|access-date=2021-07-21|archive-date=2021-07-21|archive-url=https://web.archive.org/web/20210721011053/https://books.google.com/books/about/International_Political_Economy.html?id=4GJoDwAAQBAJ|url-status=live}}</ref> An economy that is managed according to these precepts may be described as a liberal economy or operating under liberal [[capitalism]]. Economic liberals commonly adhere to a [[Political philosophy|political]] and [[economic philosophy]] that advocates a restrained [[fiscal policy]] and a [[balanced budget]] through measures such as low taxes, reduced government spending, and minimized government debt.<ref name=":0">{{cite journal|last1=Simmons|first1=Beth A.|last2=Dobbin|first2=Frank|last3=Garrett|first3=Geoffrey|date=2006|title=Introduction: The International Diffusion of Liberalism|url=https://www.cambridge.org/core/journals/international-organization/article/introduction-the-international-diffusion-of-liberalism/1AAA24743F00B2AE436300BB686D8049|journal=International Organization|volume=60|issue=4|pages=781–810|doi=10.1017/S0020818306060267|s2cid=146351369|issn=1531-5088}}</ref> Free trade, [[deregulation]], [[tax cut]]s, [[privatization]], [[labour market flexibility]], and [[opposition to trade unions]] are also common positions.<ref>{{Cite web|last=Boudreaux|first=Don|date=2015-03-31|title=Milton Friedman on the Real World Effects of Labor Unions|url=https://cafehayek.com/2015/03/milton-friedman-on-the-real-world-effects-of-labor-unions.html|access-date=2020-10-13|website=Cafe Hayek|language=en-US|archive-date=2020-11-25|archive-url=https://web.archive.org/web/20201125030049/https://cafehayek.com/2015/03/milton-friedman-on-the-real-world-effects-of-labor-unions.html|url-status=live}}</ref>

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Economic liberalism can be contrasted with [[protectionism]] because of its support for free trade and an [[open economy]], and is considered opposed to [[planned economies]] and non-capitalist economic orders, such as [[socialism]].<ref>{{cite book|last=Brown|first=Wendy|date=2005|title=Edgework: Critical Essays on Knowledge And Politics|publisher=Princeton University Press|pages=39|language=en}}.</ref> As such, economic liberalism today is associated with [[classical liberalism]], [[neoliberalism]], [[right-libertarianism]], and some schools of [[conservatism]] like [[liberal conservatism]] and [[fiscal conservatism]]. Economic liberalism follows the same philosophical approach as classical liberalism and fiscal conservatism.<ref>{{cite book|last=Gamble|first=Andrew|chapter-url=https://books.google.com/books?id=zYltAAAAQBAJ&q=info:iYMlJ3MGTnAJ:scholar.google.com/&pg=PA53|title=Resilient Liberalism in Europe's Political Economy|year=2013|publisher=Cambridge University Press|isbn=978-1107041530|editor-last=Thatcher|editor-first=Mark|editor-last2=Schmidt|editor-first2=Vivien A.|pages=53–77|chapter=Neo-Liberalism and Fiscal Conservatism|access-date=2021-07-26|archive-date=2021-07-26|archive-url=https://web.archive.org/web/20210726031251/https://books.google.com/books?id=zYltAAAAQBAJ&q=info%3AiYMlJ3MGTnAJ%3Ascholar.google.com%2F&pg=PA53|url-status=live}}</ref>

== Origin and Earlyearly Historyhistory ==

[[File:AdamSmith.jpg|thumb|upright|[[Adam Smith]] was an early advocate for economic liberalism.]]

Developed during the [[Age of Enlightenment]], particularly by [[Adam Smith]], economic liberalism was born as the theory of economics of liberalism, which advocates minimal interference by government in the economy. Arguments in favor of economic liberalism were advanced by Smith and others during the age of enlightenment, opposing [[feudalism]] and [[mercantilism]].<ref name=":1" /> It was first analyzed by [[Adam Smith]] in ''[[An Inquiry into the Nature and Causes of the Wealth of Nations]]'' (1776), which advocated minimal interference of government in a [[market economy]], although it did not necessarily oppose the state's provision of basic [[Public good (economics)|public goods]].<ref>Aaron, Eric (2003). ''What's Right?''. Dural, Australia: Rosenberg Publishing. p. 75.</ref> In Smith's view, if everyone is left to his own economic devices instead of being controlled by the state, the result would be a harmonious and more equal society of ever-increasing prosperity.{{sfn|Adams|2001|p=20}} 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 [[contract]]s form the basis of economic liberalism.{{sfn|Butler|2015|p=10}}

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The early theory of economic liberalism 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, so that no one is allowed to coerce, steal, or commit fraud, and there should be freedom of speech and press. This ideology was well reflected in English law; [[Lord Ackner]], denying the existence of a duty of good faith in English contract law, emphasised the "adversarial position of the parties when involved in negotiations".<ref>Walford v Miles [1992] 2 A.C. 128</ref>

=== Initial Oppositionopposition ===

Initially, the economic liberals had to contend with arguments from the supporters of feudal privileges for the wealthy, traditions of the [[aristocracy]] and the rights of [[monarch]]s to run national economies in their own personal interests. By the end of the 19th century and the beginning of the 20th century, this opposition was largely defeated in the primary capital markets of Western countries.

The [[Ottoman Empire]] had liberal free trade policies by the 18th century, with origins in [[capitulations of the Ottoman Empire]], dating back to the first commercial treaties signed with France in 1536 and taken further with [[Capitulation (treaty)|capitulations]] in 1673, in 1740 which lowered [[Duty (economics)|duties]] to only 3% for imports and exports and in 1790. Ottoman free trade policies were praised by British economists advocating free trade such as [[J. R. McCulloch]] in his ''Dictionary of Commerce'' (1834), but criticized by British politicians opposing free trade such as [[Prime Minister of the United Kingdom|Prime Minister]] [[Benjamin Disraeli]], who cited the Ottoman Empire as "an instance of the injury done by unrestrained competition" in the 1846 [[Corn Laws]] debate, arguing that it destroyed what had been "some of the finest manufactures of the world" in 1812.<ref>{{cite book |author=Paul Bairoch |url=https://www.scribd.com/document/193124153/Economics-and-World-History-Myths-and-Paradoxes-Paul-Bairoch |title=Economics and World History: Myths and Paradoxes |publisher=[[University of Chicago Press]] |year=1995 |pages=31–32 |author-link=Paul Bairoch |access-date=2017-08-16 |archive-url=https://web.archive.org/web/20171012060209/https://www.scribd.com/document/193124153/Economics-and-World-History-Myths-and-Paradoxes-Paul-Bairoch |archive-date=2017-10-12 |url-status=dead}}</ref>

== Contrast with other economic philosophies ==

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=== Limits of influence and influence on other perspectives ===

In its initial formation, economic liberalism was focused on promoting the idea of private ownership and trade; however, due to a growing awareness of concerns regarding policy, the rise of economic liberalism paved the way for a new form of liberalism, known as [[social liberalism]]. This promoted an accommodation for government intervention in order to help the poor. As subsequent authors picked up and promoted widespread appeal of a subset of Smith's economic theories to support their own work — ofwork—of free trade, the [[division of labour]], and the principle of individual initiative — thisinitiative—this contributed to obscuring other aspects of the rich body of political liberalism to be found in Smith's work. For example, his work promoted the ideal that the everyday man could hold ownership of his own property and trade, which Smith felt would slowly allow for individuals to take control of their places within society.

=== Economic liberalism and fiscal liberalism (conservatism) ===

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* {{cite book|last=Turner|first=Rachel S.|year=2008|title=Neo-Liberal Ideology: History, Concepts and Policies|publisher=Edinburgh University Press|isbn=978-0748688685}}

== External links ==

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*{{Commonscatinline|Economic liberalism}}

{{aspects of capitalism}}

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{{neoliberalism}}

[[Category:Economic liberalism| ]]

[[Category:Classical liberalism]]

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[[Category:Ideologies of capitalism]]

[[Category:Liberalism]]

[[Category:Neoliberalism]]

[[Category:Political ideologies]]