Evaluate Adam Smith’s Liberalism

An overview of Adam Smith’s economic liberalism

Economic liberalism: an economic theory and policy system that advocates market mechanisms and opposes artificial interference in the economy. It was originally proposed as a slogan by D'Argenson, the foreign minister of Louis XV of France. Later, Quesnay and others confirmed that there is a natural order in society that is independent of human will and dominates the development of society. Adam Smith promoted the principle of "an invisible hand" and further developed the idea of ??economic freedom. The idea of ??"free economy" is the center of Smith's entire economic theory, and Ricardo also expounded the same idea. Economic liberalism is an ideological proposition that has long played an important role in the capitalist world.

Economic liberalism is an ideology that supports the rights of individual property and freedom of contract. Economic liberalism advocates limiting government control in economic affairs and allowing market mechanisms to play the role of regulating resources. Economic liberals are not anarchists, and they are not uniformly opposed to the role of government. However, in the vast majority of cases, their research shows that government intervention is excessive.

Economic liberalism includes Smith’s economic liberalism and neoliberalism. In "The Wealth of Nations", Adam Smith believed that in the commodity economy, everyone aims to pursue their own interests, under the guidance of an "invisible hand", that is, through the spontaneous action of the market mechanism. Regulation, the choices made by each person to pursue their own interests, will naturally lead to the optimal allocation of social resources.

In the 1930s, Keynesian state interventionism replaced economic liberalism and became dominant. In the 1970s, when Keynesianism was helpless in the face of "stagflation", new economic liberal thoughts emerged in the capitalist world. It believes that: private ownership of the means of production is the prerequisite for all economic activities, especially the prerequisite for all activities in the market economy; exchange and the spontaneous operation of the market are fully efficient; and free trade is the best foreign trade policy. Neoliberalism is firmly opposed to excessive government intervention.

The difference between neoliberalism and Smithian economic liberalism is that Smithian economic liberalism advocates the implementation of complete laissez-faire, while neoliberalism generally advocates emphasizing economic freedom under state intervention.

Economic liberalism is a form

The academic origin of economic liberalism is Smith’s economic laissez-faire. Modern (economic) liberalism, also known as neoliberalism, is With Hayek as a representative figure, this school of thought believes that the market is the most important or even the only force for the rational allocation of economic resources. Therefore, it extremely believes in the free market economy and opposes any form of state intervention in economic activities.

Another: Neoliberalism in the broad sense includes monetarism, while neoliberalism in the narrow sense only includes Hayek’s neoliberal doctrine and West Germany’s neoliberal doctrine.

The slogan of this liberalism is "free enterprise."

Supporting a laissez-faire capitalist system means removing legal barriers, such as barriers to trade and government-imposed monopoly and subsidy privileges.

Economic liberalism hopes that the government will have as little control over the economy as possible, or no regulation at all. Some economic liberals will accept government restrictions on monopolies and oligopoly, but some of them believe that monopoly and oligopoly are precisely caused by government intervention. Economic liberals argue that the value of products and services should be determined by the free choice of individuals, that is, by market forces. Some agree that the government can play a monopoly role in some areas, such as policing and court services. Economic liberalism accepts that economic inequality arising from transactions involving unequal bargaining positions is the result of natural competition—as long as no coercion is involved. This form of liberalism was particularly influenced by 19th-century British liberalism. Both microarchism and anarcho-capitalism are forms of economic liberalism

The basis of economic liberalism

The market requires the elimination of those capital owners who pursue personal profit maximization. In spite of various administrative or political obstacles, the pursuit of maximizing personal interests has become a rational behavior pattern. This is the social basis of economic liberalism and neoliberalism.

Those who advocate economic liberalism, especially believers in neoliberalism, advocate subordinating nation-states to the demands of economic masters for economic freedom, prohibiting any regulation of the market, first of all the labor market, opposing deficit finance and inflation, and advocating public fairness. There is widespread privatization of government services, reducing government and social expenditures that serve the basics of society.

In contemporary China, especially in the 1990s, economic liberalism has absolute control in the ideological world. It has a deep social background: the capitalization of power has developed from commercial capital and production capital to the stage of financial capital, and new powerful groups have basically formed. It requires corresponding ideological theories and forms the monopoly and new freedom of economics over the entire social sciences. doctrine’s monopoly on economics; progressive reforms have gradually given up compensation for disadvantaged groups, and the nature of deprivation has become increasingly obvious. This has abandoned the most basic spirit of progressive reforms. Every institutional reform that “integrates with international standards” creates a small group of Those who suddenly get rich eliminate a large number of working people...

Economic theory is separated from economic and social reality by its existence first and foremost as an ideological form, which is most often represented by pure Abstract and theoretical forms appear, which tend especially to confuse logical things with the logic of things. Economic theory tends to invest reality with extremely logical myths. Economists' theoretical analysis played an important role in the birth of economic liberalism, especially neoliberalism, because it was the theoretical basis for the emergence of economic liberalism. However, the actual situation is this: not only is the proportion of poor people increasing day by day in most economically developed countries, but the income gap is growing abnormally.

The role of economic liberals

Some of them believe that there is no functioning government at all, and some believe that the government should be limited to providing justice, security, and national defense to resist Foreign Invasion (Ministry).