Economic Liberalism: Adam Smith's Theory Of Moral Capitalism

1745 Words7 Pages
Economic liberalism provided the intellectual basis for the capitalistic way of running the economy. The founder of economic liberalism was Adam Smith (1723-1790), a professor of logic and moral philosophy at Glasgow University in Scotland. His most important works are:
Theory of moral sentiments, London 1759; and An inquiry into the nature and causes of the wealth of nations, London 1776. From 1778 until his death, Adam Smith was a member of the supreme Scottish custom authority. Today this economic liberalism is often called
Palaeoliberalism – old liberalism, according to the Greek expression palaeo, which means 'old '
– in contrast to the new, the Neoliberalism of our time.
a) Outlines of the economic theory
The starting point of the
…show more content…
2. The individualistic idea of freedom
Economic liberalism condemned the bonds of the medieval guild system, the medieval manorial system; it condemned the whole medieval feudalism, and proclaimed the freedom of the human being and his property, the freedom of contract and competition, the freedom of trade and industry. The state, Adam Smith demanded in 1776, should 'completely take away all systems of preferential treatment and restraint '. Then 'the obvious and simple system of natural liberty ' will be established on its own. This natural liberty will lead the economy from success to success. The expression of this demand for total freedom was the slogan Laissez faire, laissez passer – 'Let them do, let them go ', forbidding the state from intervening in the economy. State planning and intervention disturb the economic process and have harmful consequences.
Governments are 'always and without exception the most wasteful squanderers '11, because they spend other people 's money. State abstinence produces harmony and provides the best results for all involved. According to Palaeoliberalism, therefore, the crucial condition for a successful economy is the total economic freedom of the
…show more content…
The doctrine that the natural interests and inclinations of the human being agree most exactly with the interests of the community as a whole stems from the Enlightenment theology of deism.
It can be said of us, taught Adam Smith, that we are co-workers with the divinity ', which leads us by the already mentioned 'invisible hand ', and 'that, insofar as it lies in our power, we bring the plans of providence closer to
10 Bastiat, Frédéric. 1855, Ouevres complètes, Paris, Vol. VI, 10 f; quoted according to Hoffner,
Christian Social Teaching, n.151 (see note 8)
11 See Günther K. Anton, 1891, Geschichte der preussischen Fabrikgesetzgebung bis zu ihrer
Aufnahme durch die ei/chsgewerbeordnung, new edition by Horst Bülten (1953): Berlin,
n.5051
12 . Ibidem
13 B.Smith, Adam. 1776, Der Wohlstand der Nationen. Eine Untersuchung seiner Natur und seiner Ursachen. (Ed). Horst Claus Recktenwald (1990): München, n.17
11
their realization '14
.
Along the same lines, Johann Heinrich von Thünen (1783-1850), a famous German economist, taught in the 19th century that: the human being, while he thinks, 'he is only pursuing his own advantage ', is 'a tool in the hand of a higher power ' and is
Open Document