Economic liberalism

Economic liberalism and economic liberalism is an economic expression of liberalism. Basis of economic liberalism is the book The Wealth of Nations by Adam Smith, who considered the embedding of economic self-interest in the social, moral and political order as necessary. The utopia of economic liberalism was an economy that controls itself without government interference on the market itself. According to Ewald Nowotny is a liberal mindset, which focuses on the concept of spontaneous order is, after the invisible hand of the market brings the interests of individuals and society in line. The spontaneous order created by human action, but not for human planning. The economic liberalism is the negative concept of freedom based on that freedom is the absence of government restrictions. Thus it differs from political liberalism, freedom as an opportunity for a decent life understands (positive concept of freedom ).

  • 2.1 Free Market Economy
  • 2.2 Free Trade
  • 2.3 Private Sector
  • 2.4 Normative individualism

Philosophical Foundations

Freedom of the individual

The general liberal principle is that everyone has the freedom to do whatever he wants as long as he does not violate another's freedom. John Stuart Mill put it, " that the only reason for which mankind, individually or combined, to interfere in the freedom of action of one of its members is entitled: . To protect themselves That the only purpose for which power can be forced, against the will may exercise any member of a civilized society legally: to prevent other damage. "

As a result, based on the range of economic activities, the demands for

  • Freedom of contract
  • Freedom of trade
  • Consumer freedom
  • Professional freedom
  • Free trade.

Private property

Liberals stress the right to private property, as only this can guarantee the freedom of the individual. Legal nature justifications of this kind can be found in approaches to Hugo Grotius and Samuel Pufendorf and John Locke formulated: individuals possess ownership of his body and, consequently, in the work of his body. He is also entitled to tear things out of the state of nature, if he had edited this ( for example, the ground edit the somebody for the first time ). If the object is taken out of the state of nature, it can then change only by donation or exchange the owner. Constraint is hereby excluded. In the tradition of these reasons argue for example, the U.S. founding fathers, Robert Nozick and Ayn Rand. Next is the idea of classical liberalism - without explicitly natural law component - represented by Jeremy Bentham and John Stuart Mill.

Theoretical foundations

Free Market Economy

According to liberal economic opinion, the market, so the control of the type, price and quantity of goods and services on supply and demand, for the most efficient allocation of resources ensures. Became well known in the context of the expression of the "invisible hand " of Adam Smith in his book The Wealth of Nations ( Chapter 4). By the term he described that if a trader from self-interest increases the productivity, he thus ( as of " invisible hand " ) and the company help, even though he only seeks self-interest. The mechanism of the " invisible hand " was first substantiated by Hayek by a model of a heuristic evolutionary knowledge system. The object of the regime is to achieve under the use of the market collapse of its own benefit to the common good. This idea is the starting point of constitutions and institutions -economic approaches, which investigate the question of the appropriate rules and the state constitution in order to achieve the best possible regime.

Named after Jean Baptiste Say Say's theorem states that without government intervention always set a market equilibrium and provides a theory basis of economic liberalism for the conduct on the market. A free, competition is therefore the optimum control tool of the economy constitute State interventions, such as subsidies or protective tariffs are regarded as barriers to competition, and particularly if no internalization externaler effects are realized, they will be seen critically. Bzgl. technological progress and the temporary protection of intellectual property (patents, copyright), supported a restriction of competition by liberal thinking. The topic of education duties is seen in contrast in different ways by the various currents of thought of economic liberalism.

Free trade

Adam Smith developed in the 18th century, the theory of absolute cost advantages that countries benefit from trade with each other at different productivities. Historically, Smith turned with this view against mercantilism, in which government control of foreign trade to served to support the absolutist policy governed countries. The classical economist David Ricardo attempted to demonstrate the benefits of free trade for all countries with his theory of comparative advantage. Free trade Wear to the promotion of global prosperity.

Economic liberals advocate for the welfare maximization of a society of labor economy (globalization) in the sense of reduction of tariff barriers ( protective tariffs ) and non- tariff barriers to trade or generally the reduction of cost of market use (direct and indirect taxes, tax burden, fees, legal uncertainty, inefficient, six sprawling regulations ). The subsidization of certain privileged sectors of the economy by the state, however, automatically lead to liberal idea to discrimination against non-privileged sectors of the economy that have additional tax and social security burden to finance the privilege. The Protektionierung leads to allocation distortions that lead directly to net welfare losses, especially in the interplay between developed and developing countries is cemented by protectionism poverty and lack of opportunities in the economically weaker countries. It would, for example, developing countries difficult to compete against the heavily subsidized European agricultural economy, see agricultural dumping. Liberals throw industrialized nations, their political power to abuse to the detriment of developing countries by all trade barriers will be enforced in the market segments of mining, in which developing countries are not competitive to the industrialized countries, while in all areas in which the developing countries to be industrialized countries are in competition and are superior, massive barriers to trade and to be strengthened. Followers of liberalism demand, in the sense of a fair and overall welfare -promoting world trade, dismantle all trade barriers to other countries and to limit the selective privileging of some products through subsidies. This would better benefit the welfare gain through specialization and trade to developing countries.

Private sector

According to liberal economic view, it is not the task of the state to be an entrepreneur. The primacy of private property and private forms of regulation over government influence is sometimes derived from a particular perspective on the economic theory of property rights. Accordingly, climb the economic prosperity, the more property is in private hands. In socialist forms of regulation, however, it 'll inevitably lead to so-called tragedy of the commons. In the practical implementation of economic liberalization, ie when the actual regularly granted exemption from income taxation of institutional gains, however, shows that while companies can in a harder compete to provide better products, in this case neither general development conditions nor general cost shares can be supported. The substantial funding for these societal needs thus remains the most diverse forms of taxation on private income, which not only violates the basic economic justice by beneficiaries and the polluter pays principle, but actually has an increasingly powerful institutional asset growth result. In contrast, a decrease in the average private assets is recorded. This trend has undoubtedly one, the overall economy of the consumer markets of throttling purchasing power loss. Thus, the consequences of an overly allowed income tax exemption are the social, the general private interests and, ultimately, the interests of the entire private sector contrary.

Normative individualism

→ Main article Normative individualism

Neo-liberal critique of the "failure of economic liberalism "

Alexander Rustow resulted in his work back to the idea of ​​a set with the divine creation in the world pre-stabilized harmony The failure of economic liberalism as a religion historical problem (1945), the ideological background of classical liberalism. The origin of this "economic theology " should, however, have been less Christian religiosity, but rather based on the revival of ancient philosophy in the Enlightenment. Adam Smith was its dependence on the Stoic philosophy of the general belief in harmony been aware when he created the symbol powerful image of the invisible hand. The liberal economic theory have thus obtained an almost metaphysical dignity. Every human intervention in the " divine " automatism of the market economy had to be rejected by supporters of laissez -faire as a sacrilege. Even after Adam Smith political economy have retained the character of salvation knowledge. This was then evaporated in the late 19th century, but it is a deformation of the spirit remained, which have the sociological conditions for a functioning market economy are unmistakable. Therefore, representatives of economic freedom had even accepted the degeneration of the market economy in Manchester capitalism as indeed regrettable but unavoidable economic impact. According to Hans Willgerodt it went Rüstow not to replace the economic liberalism, but " to free him from monopoly, megalomania, Group anarchy and proletarianization ". Rüstow have, however, it represented Smith's views on pointed and referred only to the utterances in which this is considered a self- control over the market makes sense, but not to its countless references to market imperfections. Besides Rüstow Wilhelm Röpke and Walter Eucken criticized the " economistic narrowing " of economic liberalism (in the sense of minimal state libertarian conceptions ). Rüstow tried since 1931 to build a collection basin for those who "somehow represented liberal attitude " one. During the period of National Socialism succeeded Eucken, who described himself as " economically liberal" to get a center liberal economic thinking in Freiburg.