What is economic liberalism?

The social, political and economic events that took place in France in the 18th century, linked to the birth of the bourgeoisie as a new social class, found the basis of the famous ideological thought What economic liberalism.

Adam Smith in his important work "Causes and Consequences of the wealth of nations" deals with the base or pillar of the liberal thinking, framed in human principles based on natural selfishness, compassion, the sense of attachment to property, desire or need for full freedom, the routine of work and the barter or exchange of goods for other goods or goods for money.

The immediate emanation of this ideology was capitalism as an economic regime in which the means of production belong to large holders of capital or large investors.

Today, the liberalism it is estimated with a conservative judgment, so much so that it is associated with the current conception of democracy.

Characteristics of economic liberalism

• Birth and positioning of the bourgeoisie above the aristocracy.
• The seizure of land by factories.
• The abandonment of the work of the field.
• The replacement of the craftsmen's unions by the new workers' unions.
• Rise of capitalism.
• Appearance of the new economic schools.
• Repeal of state interventionism and its conditions, paving the way for individual initiative.

Smith, highlighted as essential and characteristic elements of economic liberalism:

• Strengthen work as a source of wealth.
• Implementation of free trade and without restriction of any kind.
• Free market competition.
• The value of the goods and / or based on demand and supply.

Background of economic liberalism

• Renaissance as a cultural phenomenon.
• The great geographical discoveries that open new expansion routes for trade.
• The Protestant Reformation that violated the authority of the Catholic Church.
• The Invention of the printing press, which breaks the monopolies exercised by the monasteries on thought.
• Increase in encyclopedists, who open the doors of the intellect and facilitate the path to research, distinguishing among them: Diderot, Montesquiew, Voltaire, D’Alembert.
• The arrival of the great mechanical inventions.
• The weakening of feudal society.

Main precursors of economic liberalism.

• Josiak Jucker: Who, roughly speaking, defended the exchange of goods between nations, without any differentiation or rivalry. It promoted the export of finished products instead of raw material, in order to promote national production.
• John Law: Scottish economist, creator of paper money in Europe. As an economist he perceived money as a means of commercial exchange and warned that the best way for a country to increase its wealth was through export rather than import. He also considered that private property acquires legal security through work.
• Francisco Melon: According to this economist, the enrichment of a nation is made up of metals precious and therefore, the coins must be issued according to the circulation needs of the currency. Furthermore, he maintains that freedom is totally indispensable for the growth of trade and that matter should not be exported, finished products should be exported.

Principles of economic liberalism

• Full economic freedom

In this principle, it is taken into account that the individuals or entities involved are rationally free to interact with the market, thus achieving individual property, through the creation of free companies with their own capital and property private.

• Free market

According to liberalism, the market is completely free to mobilize, without the supervision of the state, this mobilization is free to regulate itself autonomously, reaching maximum welfare.

Regarding the free market, Adam Smith maintains that labor must be divided in a reasonable way, in such a way that it specializes the efficiency of production.

Something extremely characteristic of economic liberalism is that demand law and supply, without audit or supervision by the state, generates the prosperity or narrowness of a service or product and at the same time restricts its production or consumption, achieving its self-regulation.

• Zero state intervention

The previous two based on free trade between countries, without limits or restrictions, without regulations to comply with, without customs management, without charging of taxes or tributes.

For the theorists of economic liberalism, the state is only obliged to guarantee security legal, strengthening the French adage: "lasser - faire" "lasser - passer" pass).

Advantages of economic liberalism

• Promotes development companies are in constant search of the best way to compete, grow and achieve their objectives.
• Promoting industrialization, thanks to the emergence of economies of scale and the specialization of productive agents.
• Rise of the global markets.
• Emergence of new companies.
• Investment of large capital.

Disadvantages of economic liberalism

• Neglect of the masses, social groups or people in a situation of illness, people in open helplessness, abandoned elderly, etc., thus making possible progress impossible.