CL - Economic Liberalism Flashcards
When did economic liberalism emerge?
The late 18th and early 19th centuries
Who developed the classical economic theory?
Adam Smith and David Ricardo
What did Smiths ideas draw heavily on?
Liberal and rationalist assumptions about human nature
When did Adam write?
At a time of wide ranging government restrictions on economic activity
What did Smith think of the economy as?
A market that operates according to the wishes and decisions of free individuals
What are the relationships in a market that operates according to decisions of free individuals?
Voluntary and contractual ones
What other classical liberal idea did economic theory draw on?
Utilitarianism
How did economic theory draw on utilitarianism?
It lends to the idea that human beings are essentially egotistical and bent on material acquisition
How is the economy thought to operate?
According to a set of impersonal pressures
What are the impersonal pressures the economy is thought to operate by?
Market forces
What do market forces tend to do?
Naturally promote economic prosperity and well-being
Give an example of market forces
No single producer can set the price of a commodity - prices are set by the market by supply and demand
What did Smith argue managed the market?
An “invisible hand”
Why does smith say the market should be free from government interference?
Because it is controlled by the invisible hand
What is the famous Smith quote that summarises economic liberalism?
“It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interests.”
