Economic Liberalism Essay

economic liberalism was the prevailing economic philosophy in much of the nineteenth and early twentieth centuries, and the U. S. economic system developed within its framework. Economic liberalism pro soupcond meltdom of execute for die individual and the firm through the doctrines of apologise avocation, self-interest, private property and rivalry. According to this philosophy, various(prenominal)s were remedy to adjudicate their own occupations, to enter every business, and to act as they saw fit to improve their economic welfare.Economic society was held together by mutual exchanges founded on the division of labor and prompted by self-interest. Self-interest was consequently the motivating labour of the sparing. For example, to increase personal economic welfare, an individual might decide to produce goods and sell them for a profit. Bur. in so doing, that individual automatically benefited the corporation as wellby purchasing raw materials, providing employment, and supplying goods or services. Workers seeking to increase their wages could do so by increasing productivity.This, too, benefited the employer and the community in general. According to Adam Smith (often called the father of economics), the individual, in seeking personal gain, was led by an unseeyn hand to promote the welfare of the whole community. beneath economic liberalism, individuals were free to engage in the trade, occupation, or business they desired. Workers were free to move from one line of descent to a nonher and to enter into or exit from any industry. Workers were free to work or not to work, and businesses were free to produce or nor to produce.Competition was the regulator of the economy under economic liberalism. Businesses competed with one another for consumer trade by developing new and better products and by selling existing products at lower prices. put down entry into the market ensured ample competition, and prices were determine by the free forces of supply and demand. vestibular sense prices were determined by the actions of individual buyers and sellers, with each buyer and seller performing in his or her own self-interest.Whenever there was excesses on either the supply or the demand side, markets behaved as though there were an invisible hand of competition guiding them back toward equilibrium, where supply decented demand. This unseen force seemed to select prices that cleared the market by eliminating surpluses and shortages. Equilibrium prices received by sellers and paid by consumers were equal to production costs. Thus, by each individual liquid ecstasyimizing his or her own self-interest, everyone benefited. Competitive forces determined not only the prices of goods and services but withal wage rates.In theory, economic liberalism was a effective philosophy, and the early U. S. economy prospered under it. But it was not without its weaknesses. The most pronounced weaknesses were its dependence on the just effe cts of self- interest and its undue reliance on competition to regulate the economy and promote the general welfare. Unfortunately, self-interest in many cases translated into rapacity and abuse of economic liberty. At the same time, competition proved to be an inadequate guarantor of the free market.