What is?

Economic liberalism refers to an economic philosophy that supports and

promotes laissez-faire economics and private property in the means of
production. It is the economic component of classical liberalism. The highest
aim of economic liberalism is efficiency. The supporters of economic liberalism
believe that if everyone is left to their own economic devices instead of being
controlled by the state, the result would be a harmonious and more equal
society of ever-increasing prosperity.

It emerged in the eighteenth century, during the Enlightenment, as part of the

struggle against the absolutist political and economic system. It was initially
formulated by Adam Smith in his An Inquiry into the Nature and Causes of
the Wealth of Nations (1776), where he argues that commercial relations should
be made in a framework of freedom and equality of conditions, so the market
forces themselves with the dynamics of supply and demand the game that
regulate and balance the economy.

characteristics

 Economic liberalism is based on a set of essential ideas:

 Free interaction of supply and demand, balances production and
consumption.
 State interventions break the natural balance of supply and
demand, causing inefficiency.
 The state’s role should be limited to ensuring compliance of
agreements and contracts freely established by individuals and
companies. This idea is associated with the concept of "Laissez
Faire, laissez passer"
 Each individual has the responsibility to save up to educate their
children, pay for their health and maintain themselves during their
old age.
 Savings and capital accumulation is the factor that promotes
economic development.
 Individuals should seek personal gain, in this way boost social
welfare.
Main elements

Henry Hazlitt who was an American journalist who wrote about business and
economics for such publications as The Wall Street Journal , divided the
economic liberalism basic institutions into five, strongly related: private
property, free markets, competition, labor’s division and social
cooperation.

Liberals consider private property to be essential for the construction of a

prosperous society. They believe private ownership of land ensures the land will
be put to productive use and its value protected by the landowner. If the owners
must pay property taxes, this forces the owners to maintain a productive output
from the land to keep taxes current. Private property also attaches a monetary
value to land, which can be used to trade or as collateral.

a free market is a system in which the prices for goods and services are
determined by the open market and by consumers. In a free market the laws
and forces of supply and demand are free from any intervention by
a government, or by other authority. Proponents of the concept of free market
contrast it with a regulated market, in which a government intervenes in supply
and demand through various methods — such as tariffs — used to restrict trade
and to protect the local economy. In an idealized free-market economy, prices
for goods and services are set freely by the forces of supply and demand and
are allowed to reach their point of equilibrium without intervention by
government policy.

In any free trade system, consumer preferences create competition among

producers. These will lower the prices and their own costs and try to increase
the quality of their product, not to serve the public, but to not be thrown out of
the market by him and to continue to make a profit.

The scarcest economic resource is always man. And to take better advantage
of human resources,is the division of labor. The technological improvement and
the existence of money allow each man to do a more specific job, sharing the
product of it with others, instead of dedicating ourselves to do everything.

Finally, and inseparable from the previous one, there is social cooperation. It is
evident that the division of labor could not exist without it, since it is only
practicable when people can share the fruit of their work. It also allows such
cooperation occurs not by selfless love for humanity, but by self-interest. This
makes it more effective and realistic.