Economic Liberalism Essay

Economic liberalism was the rife frugal philosophy in much(prenominal) of the nineteenth and early twentieth centuries, and the U. S. prudence developed within its framework. Economic liberalism promoted license of action for die individual and the star sign through the doctrines of on the loose(p) trade, self-interest, private keep uperty and competition. According to this philosophy, privates were spare to seek their avouch occupations, to repose any business, and to act as they saw fit to improve their stinting welfare.Economic society was held together by mutual exchanges founded on the division of comprehend and prompted by self-interest. Self-interest was thus the motivating contract of the economy. For example, to increase in the flesh(predicate) economic welfare, an unitary-on-one might decide to produce goods and portion out them for a profit. Bur. in so doing, that individual automatically benefited the partnership as advantageouslyby purchasing raw mat erials, 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 covert open to promote the welfare of the whole community. beneath economic liberalism, individuals were unthaw to engage in the trade, occupation, or business they desired. Workers were free to give way from one job 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 governor of the economy infra economic liberalism. Businesses competed with one another for consumer trade by evolution new and better products and by sell existing products at lower prices. innocent entry into the market ensured ample competition, and prices were refra ctory by the free forces of supply and necessary. residual prices were determined by the actions of individual buyers and sellers, with all(prenominal) buyer and seller acting in his or her avow 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 put up toward equilibrium, where supply equaled demand. This unseen force seemed to take on prices that cleared the market by eliminating surpluses and shortages. symmetricalness prices received by sellers and paid by consumers were equal to production costs. Thus, by for each one individual maximizing his or her own self-interest, everyone benefited. Competitive forces determined not only the prices of goods and services but similarly 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 marked weaknesses were it s dependence on the beneficial effects 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 greed and abuse of economic liberty. At the same time, competition be to be an inadequate guarantor of the free market.