Economic Liberalism: From Feudalism to Free Markets
Economic Liberalism
From Feudal Constraints to the Rise of Free Markets
In the economic core of liberal theory, as in the moral and political sphere, liberalism broke with earlier views. A significant change of perspective occurred here. The feudal order imposed limits on economic organization, and the Christian worldview had considerable influence on economic motivations. The medieval producer was subjected to a series of ethical constraints that influenced their ability to carry out their activities. A concept of wealth dominated that gave way to an individualistic one. This is the necessary precondition for moving from a subsistence economy to a dynamic one.
The Link Between Freedom, Reform, and Tolerance
Hence the association of this new impetus to the idea of freedom and new projects of political reform, which coincide with the project of those who aspire to greater levels of tolerance for their religion or seek other political purposes. Medieval society was characterized by its uniform nature. The processes of social differentiation introduced by the transition to modernity gave rise to what Max Weber would describe as “autonomous spheres of value.” When Adam Smith proclaimed *The Wealth of Nations* in 1776, advocating for a system of economic organization based on the principle of *laissez-faire*, he was crying out against the constraints or barriers imposed by states at the time.
Property Rights: A Cornerstone of Individual Independence
This explains the emphasis on property rights as one of the fundamental human rights. Ensuring the material independence of individuals provides the possibility of resisting political authority. Property allows the individual a degree of autonomy and continues to be a crucial aspect.
The Market: A Harmonizing Force?
Taking responsibility for one’s own destiny facilitates the establishment of a society governed by the habits of free contractual exchange, mutual trust, and widespread civility. Montesquieu stressed this trait by noting that commerce fosters tolerance.
The market becomes the meeting point of different interests, harmonizing individual wills without law or statute. It allows the reconciliation of individual interests with the general interest. To produce these beneficial unintended consequences, there must be no state interference, full mobility of factors of production, full employment of resources, and complete sovereignty of the consumer.
Utilitarianism and the Critique of Classical Liberalism
Another interpretation is offered by utilitarian authors who cannot help but observe some of the fallacies of this original liberal approach. In a situation where the parties are in an asymmetrical relationship, the presumption of entering into free trade is nothing more than that: a presumption. It is not clear that non-intervention or the natural harmony of individual interests yield the benefits that the Scottish Enlightenment attributed to them. Jeremy Bentham developed certain measures aimed at achieving greater redistributive effects. The calculation of utility is clear: the benefits for the most needy resulting from such measures cannot be compared to the damage arising from them to the rich due to the loss of their property.
The Challenge of Reconciling Property Rights and Market Asymmetries
The problem of any intervention, according to classical liberal theory, is the reconciliation of its strong defense of property rights as one of the bastions of freedom and reducing the consequences of a market economy with asymmetric relations.