Economic liberalism

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Economic liberalism or economic liberalism is the economic expression of liberalism . Economic liberalism, the theoretical basis of which was developed by Adam Smith , is based on the free economic activity of every individual. The invisible hand of the market makes loud Smith that in the pursuit of selfish goals of individuals for profit and prosperity will served at the same time the good of society, even without this being intended.

The utopia of economic liberalism is an economy that controls itself through the market without state interference. Liberalism therefore advocates a free market economy as an economic order with all economic freedoms such as freedom of trade, free pricing and freedom of competition. State intervention in the economy is perceived as disruptive and is rejected.

According to Ewald Nowotny, it is a liberal school of thought that focuses on the concept of spontaneous order , according to which the invisible hand of the market brings the interests of individuals and society into harmony. The spontaneous order arises through human action, but not according to human planning. Economic liberalism is based on the negative concept of freedom , which defines freedom as the absence of state restrictions.

Philosophical foundations

John Stuart Mill

Freedom of the individual

The general liberal principle is that everyone is free to do whatever they want, provided that they do not violate another's freedom. John Stuart Mill put it this way: "That the only reason humanity, individually or united, is empowered to interfere with the freedom of action of any of its members: to protect itself. That the only purpose for which one can use coercion against the will of a member of a civilized society may lawfully exercise: to prevent harm to others. "

From this, in relation to the area of ​​economic activity, the demands for

John Locke

Private property

Business liberals particularly emphasize the right to private property , as they consider this to be central to the freedom of the individual. Natural law justifications of this kind can be found in the rudiments of Hugo Grotius and Samuel Pufendorf and are formulated by John Locke : The individual owns property in his body and consequently also in the work of his body. He is also entitled to tear things out of their natural state after they have worked them (for example the soil that someone is working the first time). If the property is torn from its natural state, it can then only change hands by donation or exchange . Coercion is hereby excluded. The American founding fathers , Robert Nozick and Ayn Rand , for example, argue in the tradition of this justification . The idea of ​​classical liberalism - explicitly without natural law components - is represented by Jeremy Bentham and John Stuart Mill .

Theoretical foundations

Adam Smith

Free market economy

According to business-liberal convictions, the market , i.e. the control of the type, price and quantity of goods and services via supply and demand , ensures the most efficient allocation of resources . In this context, the expression of the " invisible hand " by Adam Smith in his work The Wealth of Nations (Chapter 4) became known. He used the expression to describe that when an entrepreneur increases productivity out of self-interest, he also helps society (as if from an “invisible hand”), although he is only striving for self-interest. The mechanism of the "invisible hand" was first concretized by Friedrich Hayek using a model of a heuristic, evolutionary knowledge system. The task of the market organization is to use the market to achieve a coincidence of self-interest with the common good. This idea is the starting point of constitutional and institutional-economic approaches that investigate the question of suitable rules or the state constitution in order to achieve the best possible market organization.

Say's theorem , named after Jean Baptiste Say , states that there is always a market equilibrium without state intervention and forms a theoretical basis of economic liberalism for behavior in the market. Free competition is therefore the optimal control instrument for the economy. State interventions such as subsidies or protective tariffs are viewed as obstacles to competition and, especially if they do not internalize external effects, they are viewed critically. Concerning. Technological progress and the temporary protection of intellectual property (patents, copyright) restrict competition through liberal approaches. In contrast, the issue of educational tariffs is viewed inconsistently by the individual currents of thought of economic liberalism.

David Ricardo

Free trade

Adam Smith developed the theory of the absolute cost advantages in the 18th century , according to which countries benefit from trade with one another if there are different productivities. Historically, Smith used this view to oppose mercantilism , in which state foreign trade controls served to support the policies of absolutist states. The classical economist David Ricardo tried with his theory of the comparative cost advantages to show the advantages of free trade for all countries. Free trade helps promote global prosperity .

To maximize the welfare of a society, economic liberals advocate the division of labor ( globalization ) in the sense of dismantling tariff ( protective tariffs ) and non-tariff barriers to trade or, in general, reducing the costs of using the market (direct and indirect taxes, tax burden, fees, legal uncertainty, inefficient, excessive regulations). The subsidization of certain privileged branches of the economy by the state, on the other hand, automatically leads, according to liberal ideas, to discrimination against the non-privileged branches of the economy, which have to finance the privileges through additional taxes and duties. The Protektionierung results in allocation distortions that lead directly to net welfare losses, especially in the interplay between developed and developing countries will be cemented by protectionism poverty and hopelessness in the economically weaker countries. For example, developing countries would find it difficult to compete with the highly subsidized European agricultural sector, see Sect. Agricultural dumping . Liberals accuse the industrialized countries of abusing their political power to the detriment of the developing countries by enforcing the dismantling of all trade barriers in those market segments in which the developing countries are not competitive with the industrialized countries, while in all areas in which the developing countries are in favor of the Industrialized countries are in competition and are superior, massive trade barriers are built up and expanded. Supporters of liberalism demand that all trade barriers to other countries be dismantled and the selective privileging of certain products restricted by subsidies in the interests of fair and welfare-promoting world trade. This would enable developing countries to better benefit from the welfare gains through specialization and trade.

Private sector

According to the liberal economic view, it is not the job of the state to do business. The priority of private property and forms of private economic regulation over state influence is sometimes derived from a certain perspective on the economic theory of rights of disposal . Accordingly, economic prosperity increases the more property is in private hands. With socialist forms of regulation, however, the so-called tragedy of the commons inevitably occurs . In the practical implementation of economic liberalization, i.e. in the actually regularly granted exemption from taxation of institutional profits, it has been shown that although companies can enter into tougher competition for better products, neither general development requirements nor general cost shares can be borne in this case. The extensive financing of these social requirements thus remains with the most diverse forms of taxation of private income, which not only violates the basic economic justice according to the beneficiary and causer principle, but actually results in an increasingly overpowering institutional increase in wealth. In contrast, there has been a decline in average private wealth. This tendency will undoubtedly result in a loss of purchasing power that will curb the overall economy from the end consumer markets. Thus, the consequences of an excessively permitted profit tax exemption are against social, general private interests and ultimately also the interests of the entire private sector.

Normative individualism

Ordoliberal criticism

From the point of view of the ordoliberal Freiburg School , Alexander Rustow traced the ideological background of classical liberalism back to the idea of ​​a pre-established harmony brought into the world with the divine creation in his work The Failure of Economic Liberalism as a Problem in the History of Religions (1945). The origin of this " economic theology ", however, was less Christian religiosity, but rather was based on the revival of ancient philosophy during the Enlightenment . Adam Smith was aware of his dependence on the Stoic philosophy of the general belief in harmony when he created the symbolic image of the invisible hand . This gave liberal economic theory an almost metaphysical dignity. Any human intervention in the "divine" automatism of the market economy had to be rejected as sacrilege by supporters of laissez-faire . According to Adam Smith, too, economics retained the character of a knowledge of redemption. This then evaporated towards the end of the 19th century, but a deformation of the mindset remained, which made the sociological conditions for a functioning market economy unrecognizable. That is why the advocates of economic freedom had accepted the degeneracy of the market economy under Manchester capitalism as a regrettable but inevitable economic consequence. In Hans Willgerodt's view , Rustow was not concerned with replacing economic liberalism, but rather with "liberating it from monopoly, megalomania, group anarchy and proletarianization". Riistow had however exaggerated Smith's views and referred only to his statements in which he considered self-control over the market to be sensible, but not to his countless references to the imperfections of the market. In addition to Riistow, Wilhelm Röpke and Walter Eucken also criticized the “ economistic narrowing ” of economic liberalism (in the sense of libertarian minimal state concepts). Since 1931, Rüstow tried to build a collecting basin for everyone who represented a "somehow economically liberal attitude". During the time of National Socialism , Eucken, who described himself as an "economic liberal", managed to maintain a center of economically liberal thinking in Freiburg.


Web links

Wiktionary: Economic liberalism  - explanations of meanings, word origins, synonyms, translations

Individual evidence

  1. ^ [1] Federal Agency for Civic Education: Liberalism
  2. ^ Willi Albers: Concise dictionary of economics. Volume 9, Vandenhoeck & Ruprecht, 1982, ISBN 3-525-10260-7 , p. 150.
  3. ^ [2] Federal Agency for Civic Education: Liberalism
  4. Ewald Nowotny: Globalization and Liberalism - Back to the 19th Century? In: From theory to economic policy - an Austrian way. Festschrift for Erich W. Streissler's 65th birthday. Lucius & Lucius Verlagsgesellschaft, Stuttgart 1998, ISBN 3-8282-0084-2 , p. 210.
  5. Ewald Nowotny: Globalization and Liberalism - Back to the 19th Century? In: From theory to economic policy - an Austrian way. Festschrift for Erich W. Streissler's 65th birthday. Lucius & Lucius Verlagsgesellschaft, Stuttgart, 1998, ISBN 3-8282-0084-2 , p. 208.
  6. Traugott Jähnichen: Business ethics. W Kohlhammer, Stuttgart 2008, ISBN 978-3-17-018291-2 , p. 131.
  7. Kathrin Meier-Rust: Alexander Rustow. Klett-Cotta Verlag, 1993, ISBN 3-608-91627-X , p. 251.
  8. Hans Willgerodt: The neoliberalism - emergence, battle term and controversy. In: Ordo: Yearbook for the Order of Economy and Society. Volume 57, Lucius & Lucius DE, 2006, ISBN 3-8282-0327-2 , p. 71.
  9. Andreas Renner: The two neoliberalisms. In: Ingo Pies, Martin Leschke, Walter Euckens: Ordnungspolitik. Mohr Siebeck, 2002, ISBN 3-16-147919-X , p. 176.
  10. ^ Lüder Gerken : Walter Eucken and his work: Review of the pioneer of the social market economy. (= Investigations on order theory and order policy. Volume 41). Mohr Siebeck, 2000, ISBN 3-16-147503-8 , p. 76.