Business, Legal & Accounting Glossary
Liberal economics is just another name for laissez-faire capitalism, which involves a free play of market forces. Liberalization is the name of that economic policy, which promotes liberal economics by restricting government role to maintenance of an efficient market economy framework. Privatization and deregulation are important components of liberalization. Nowadays, liberalization is a buzzword in many emerging economies, which aim to attain seamless integration with global financial systems for furthering their economic growth and development. Liberal economics camp of economic thought holds that negative effects of regulation often outweigh positive benefits accruing from it. It endorses the existence of well-demarcated and enforceable property rights, which can be freely bought and sold. This line of thinking has encouraged some anti-trust policymakers to aim for maximization of consumer welfare in place of protecting the interest of small firms. Repercussions of this line of economic thought have brought out interesting connotations for issues like economic causes for criminal behaviour and structuring of legal incentives for containment of it
Laissez-faire is a cornerstone of capitalism. It depends on the power of ‘invisible hand’ or free play of market forces. 18th-century economist Adam Smith pioneered the concept of invisible hands. In simple terms it means that economic agents are motivated by self-interest and if not interfered with their resultant economic activities, it leads to the emergence of a balanced economic system of exchange and production based on realization of mutual benefits. Laissez-faire is a French term, which literally means to let go. This concept traces back its origin to 18th-century economists like Victor Riqueti-Marquis de Mirabeau and Francois Quesnay who were against the concept of subsidies and other discriminatory economic measures of the system of mercantilism. It enjoyed rising popularity in 19th century also. However soon negative points of laissez-faire doctrine came to the forefront in the form of unequal wealth distribution, creation of monopolies, exploitation of workers and scanty regard for consumer safety. Governments started intervening to protect the interests of working classes and consumers. As a result consumer protection laws and factory laws were enacted among other things. In most cases, a mixed economy concept yields desired goals in modern-day economies.
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This glossary post was last updated: 29th March, 2020 | 0 Views.