Economic liberalism

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Economic liberalism

Economic liberalism is the economic component of classical liberalism

Classical liberalism

Classical liberalism is a doctrine stressing individual freedom, free markets, and limited government. This includes the importance of human rationality, individual property rights, natural rights, the protection of civil liberties, individual freedom from restraint, equality under the law, constitutional limitation of government, free marke...
.

Theories in support of economic liberalism were developed in the Enlightenment

Age of Enlightenment

The Age of Enlightenment or The Enlightenment is a term used to describe a time in Western philosophy and cultural life centered upon the eighteenth century, in which rationalism was advocated as the primary source and legitimacy for authority....
, and believed to be first fully formulated by Adam Smith

Adam Smith

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Economic liberalism is the economic component of classical liberalism

Classical liberalism

Age of Enlightenment

Adam Smith

Adam Smith was a Scotland Ethics and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and The Wealth of Nations....
which advocates minimal interference by government in the economy, though it does not necessarily oppose the state's provision of a few basic public goods with what constitutes public goods originally being seen as very limited in scope. These theories began in the eighteenth century with the then-startling claim that if everyone is left to their 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

Capitalism

Capitalism is an economic system in which wealth, and the means of producing wealth, are private property and controlled rather than commonly, publicly, or state-owned and controlled....
economic system in the late 18th century, and the subsequent demise of the mercantilist

Mercantilism

Mercantilism is an economic theory that holds that the prosperity of a nation is dependent upon its supply of Capital , and that the world economy of international trade is "unchangeable"....
system.

Private property

Property

Property is any physical or virtual entity that is ownership by an individual or jointly by a group of individuals. An owner of property has the right to consumption, sell, Renting, mortgage, transfer and exchange his or her property....
and individual contract

Contract

A contract is an exchange of promises between two or more parties to do, or refrain from doing, an act which is enforceable in a court of law. It is a binding legal agreement....
s form the basis of liberalism. The early theory was based on the assumption that the economic actions of individuals are largely based on self-interest, (invisible hand

Invisible hand

In economics, the invisible hand is the term economists use to describe the self-regulating nature of the marketplace. The invisible hand is a metaphor coined by the economist Adam Smith....
) and that allowing them to act without any restrictions will produce the best results, (spontaneous order

Spontaneous order

Spontaneous order is the spontaneous emergence of order out of seeming chaos; the emergence of various kinds of social order from a combination of self-interested individuals who are not intentionally trying to create order....
) provided that at least minimum standards of public information and justice exist, e.g., no-one should be allowed to coerce or steal.

While economic liberalism favors markets unfettered by the government, it maintains that the state has a legitimate role in providing public good

Public good

In economics, a public good is a Good that is rivalry ed and excludability. This means, respectively, that consumption of the good by one individual does not reduce availability of the good for consumption by others; and that no one can be effectively excluded from using the good....
s. For instance, Adam Smith argued that the state has a role in providing roads, canals, schools and bridges that cannot be efficiently implemented by private entities. However, he preferred that these goods should be paid proportionally to their consumption (e.g. putting a toll

Toll road

A toll road, , is a road for which a driver pays a toll for use. Structures for which tolls are charged include toll bridges and toll tunnels....
). In addition, he advocated retaliatory tariff

Free trade area

Free trade area is a designated group of countries that have agreed to eliminate tariffs, quota shares and preferences on most good and services traded between them....
s to bring about free trade, and copyright

Copyright is a form of intellectual property which gives the creator of an original work exclusive rights for a certain time period in relation to that work, including its publication, distribution and adaptation; after which time the work is said to enter the public domain....
s and patent

Patent

A patent is a set of exclusive rights granted by a state to an inventor or his assignee for a term of patent in exchange for a disclosure of an invention....
s to encourage innovation.

Initially, the economic liberalism had to contend with the supporters of feudal

Feudalism

Feudalism, a term first used in the early modern period , in its most classic sense refers to a Middle Ages European political system composed of a set of reciprocal law and military obligations among the warrior nobility, revolving around the three key concepts of lords, vassals, and fiefs....
privileges for the wealthy, aristocratic

Aristocracy

Aristocracy is a form of government, in which a few of the most prominent citizens rule. This may be a hereditary elite, or it may be by a system of cooption where a council of prominent citizens add leading soldiers, merchants, land owners, priests, and lawyers to their number....
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.

In the mid-19th century, Abraham Lincoln

Abraham Lincoln

Abraham Lincoln was the List of Presidents of the United States President of the United States. He successfully led the country through its greatest internal crisis, the American Civil War, preserving the Union and ending slavery....
followed the Whig

Whig Party (United States)

The Whig Party was a political party of the United States during the era of Jacksonian democracy. Considered integral to the Second Party System and operating from 1833 to 1856, the party was formed in opposition to the policies of President of the United States Andrew Jackson and the Democratic Party ....
tradition of economic liberalism, which included increased state control such as the provision and regulation of railroads. The Pacific Railway Acts

Pacific Railway Acts

The Pacific Railway Act of 1862 , as enacted by the United States United States Congress, was approved and signed into law by the President, Abraham Lincoln, on July 1, 1862....
provided the development of the First Transcontinental Railroad

First Transcontinental Railroad

The First Transcontinental Railroad is the popular name of the United States rail transport line completed in 1869 between Council Bluffs, Iowa/Omaha, Nebraska and Alameda, California....
.

Today, economic liberalism is associated with classical liberalism

Classical liberalism

Neoliberalism

Neoliberalism is a political philosophy, actually a continuance and redefinition of classical liberalism, influenced by the neoclassical economics....
", libertarianism

Libertarianism

Libertarianism is a term used by a political spectrum of Political philosophy which seek to promote individual liberty and seek to minimize or abolish the state....
, and some schools of conservatism

Conservatism

Conservatism is a political and social term whose meaning has changed in different countries and time periods, but which usually indicates support for the status quo or the status quo ante....
, particularly liberal conservatism

Liberal conservatism

Historically In the 18th and 19th centuries, conservatism comprised a set of principles based on concern for established tradition, respect for authority and religious values....
.

Economic liberalism

See also