Meaning of economic Liberalism
What is Economic Liberalism:
As economic liberalism is known the economic doctrine that fundamentally proposes to limit the intervention of the State in economic affairs.
It arises in the 18th century, during the Enlightenment, as a consequence of the struggle against the absolutist political-economic system.In this context, the European bourgeois revolutions, produced in the period from 1789 to 1848, gave rise to a new type of state, known as the liberal state.
Economic liberalism was initially formulated by Adam Smith in his book Causes and consequences of the wealth of nations , where he argues that commercial relations must be carried out within a framework of freedom and equality of conditions, so that the market forces themselves and the dynamics of the game of supply and demand are the ones that regulate and balance the economy. In this scenario, the role of the State would therefore be reduced to defending the freedom of economic activity.
For Smith, in freedom, human behavior would naturally lead man to seek his own benefit, and, in that process, would motorize the productive process of the nation, which should lead to wealth and progress and, therefore, to common good of the whole society.
In this sense, some of the fundamental principles of economic liberalism are freedom of action, the defense of private initiative as a form of progress, the rejection of state interference in economic matters, and the idea of work as a source of wealth.
During the 19th century, economic liberalism gained ground. The growth of markets and factors of production prompted governments, influenced by industrialists, merchants and investors, to adopt a series of liberal economic measures, such as the free movement of products, capital and workers. Thus, the industrialization process, the creation of world markets and the emergence of large companies accelerated.
Liberalism at first brought a certain political equality that, however, was not reflected in the economic and social field. From this crack, Marxist thought arises, deeply critical of the liberal system.
Today, it is often said that economic liberalism walks hand in hand with the principles of political liberalism, among which are respect for the law, freedoms, the rule of law, the separation of powers and the democratic order.