Economic Liberalism Essay

sparing liberalism was the prevailing economic philosophy in much of the nineteenth and early twentieth centuries, and the U. S. frugality developed within its framework. Economic liberalism promoted unleashdom of meet for die individual and the firm through the doctrines of exonerate portion out, self-interest, private prop uperty and arguing. According to this philosophy, psyches were free to seek their stimulate occupations, to enter any business, and to execution as they saw fit to improve their economic welfare.Economic guild was held together by mutual exchanges founded on the division of labor and prompted by self-interest. Self-interest was thus the motivating force of the economy. For example, to increase personal economic welfare, an exclusive might decide to produce goods and sell them for a profit. Bur. in so doing, that individual automatically benefited the community as wellby purchasing tender materials, providing employment, and supplying goods or servi ces. 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 undetectable hand to promote the welfare of the whole community. Under economic liberalism, individuals were free to engage in the trade, occupation, or business they desired. Workers were free to move from genius job to another 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. contestation 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 active products at lower prices. Free entry into the market ensured ample arguing, and prices were firm by the free forces of supply and demand. Equilibrium prices were d etermined by the actions of individual buyers and sellers, with each buyer and seller acting 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 fanny toward equilibrium, where supply equaled 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 outturn costs. Thus, by each individual maximizing his or her own self-interest, everyone benefited. agonistic forces determined not only the prices of goods and services but also wage rates.In theory, economic liberalism was a sound 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 beneficial effects of self- interest and its undue reliance on competition to regulate th e economy and promote the general welfare. Unfortunately, self-interest in many cases translated into greed and abuse of economic liberty. At the same time, competition proved to be an inadequate guarantor of the free market.