Enlightenment and Economic Liberalism: A Historical Overview
The Enlightenment and Economic Change
Physiocrats and Agricultural Reform
Physiocrats believed that the peasantry was the most important productive class. Therefore, states should prioritize agricultural development through modernization, land distribution, and the abolition of feudal practices. They advocated for free trade in grain, epitomized by the phrase “laissez-faire, laissez-passer,” urging monarchs to remove internal customs and reduce export tariffs.
Adam Smith and Economic Liberalism
Scottish economist and philosopher Adam Smith developed the theory of economic liberalism. He argued that wealth creation stemmed from individual labor in all its forms, not merely the accumulation of wealth or agricultural production. While Smith believed the sum of individual work benefited society, his theory didn’t fully account for social inequalities and unequal opportunities.
Smith emphasized the division of labor as crucial for economic growth, enabling the exchange of goods individuals couldn’t produce themselves. He championed the physiocratic principle of “laissez-faire,” asserting that the laws of supply and demand should operate freely. These ideas resonated with industrialists of the time.
The Encyclopédie and the Spread of Ideas
The Encyclopédie, a monumental French work, played a key role in disseminating new ideas. Its editors aimed to compile scientific, artistic, technical, philosophical, and political knowledge. Denis Diderot, initially tasked with translating the English Cyclopaedia, expanded the project significantly, incorporating his own ideas and creating a distinctly French work. The Encyclopédie covered not only the liberal arts but also arts and crafts. Despite being banned by Pope Clement XIII and Louis XV, it became a cornerstone of Enlightenment thought.
Enlightened Despotism
Some monarchs adopted a form of government known as enlightened despotism, combining Enlightenment ideals with absolutist rule. They implemented reforms to modernize their economies, promote education, arts, and sciences, and improve legal proceedings, presenting themselves as servants of the nation.
Enlightenment Ideas in Latin America
Key figures in Latin America embraced Enlightenment ideals, including Francisco Suárez, Antonio Nariño, Mariano Moreno, and Francisco de Miranda.
- Suárez argued that sovereignty originated from God but resided in the people, who delegated it to the king. He anticipated the social contract theory and believed the people could remove a tyrannical king.
- Nariño, a Spanish royal official, engaged in underground revolutionary activities. He escaped imprisonment, connected with Miranda, and continued his advocacy in New Granada, facing further imprisonment before being freed during the 1810 revolution.
- Miranda, a Venezuelan general, envisioned South American independence and formed the Gran Logia Americana. He advocated for a unified American state ruled by an Inca descendant. He played a crucial role in Venezuela’s independence and died imprisoned in Cádiz.
- Moreno, a lawyer and advisor to the council in Buenos Aires, championed free trade, established the Public Library, founded La Gazeta de Buenos Ayres, and translated and published Rousseau’s The Social Contract.
Bourbon Reforms and Economic Transformation
The War of the Spanish Succession and its Aftermath
Following the death of Charles II in 1700, Philip V, a Bourbon, became the Spanish monarch, triggering the War of the Spanish Succession. International powers like Portugal opposed French influence in Spain. The Treaty of Utrecht granted England special trading privileges, including the slave trade and significant merchandise imports, opening the Spanish colonial markets to English goods and, gradually, to Enlightenment ideas.
Economic Growth and the Rise of Capitalism
From the 12th and 13th centuries, Western Europe experienced agricultural and commercial revival. The 14th-century crisis weakened feudal lords, allowing small farmers and wage laborers to emerge. New values emphasizing work and money as paths to power gained prominence.
Expansion of Commercial and Financial Capitalism
Monarchs relied on bankers to finance their bureaucracies, armies, and wars. The Fugger family exemplified the rise of commercial and financial capitalism. Banks utilized paper money and bills of exchange. Early overseas expansion involved capitalists contributing to voyages; profits were shared upon return. These companies fueled modern colonial capitalism.