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IPE Session 4 Liberalism

IPE Session 4 Liberalism - Session31 The liberal...

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  Session 3       1 The liberal perspective on IPE reveals many insights about political economy that mercantilists miss or did not address. The term liberalism means liberty under the law . Hence it focuses on the side of human nature which is competitive but guided by reason not emotion. Although liberals believe that human beings are fundamentally self interested, but it is not a disadvantage because broad areas of society are set up in such a way that competing interests can engage one another constructively. Liberalism rooted in reaction to important trends and events that occurred in Europe in the 17 th and 18 th centuries. The first step was taken in France by Francois Quesnay (1694— 1774) who led a group of French philosophers called the physiocrats. Quesnay condemned government interference in the market, because it brought harm to society. Their motto was laissez-faire, laissez passer. Then, Adam Smith, (1723-1790) a Scottish contemporary of Quesnay, who was regarded as the father of modern economics, and took laissez-passé as his theme to offset state intervention, hence regarded state as a dangerous and untrustworthy and condemned the tariffs. That was when the state was heavily mercantilist in 1776. And he brought the idea of invisible hand which has two tightly intertwined parts: self-interest and competition. Smith looked at the abusive potential of the state and thought that government run industry is inefficient. His works struck the right note at the right time and so gained a measure of respect and influence that is rare. Hence, his book The Wealth of nations makes it appear that liberalism is concerned about only economics and wealth. Although Adam Smith was against the state intervention in the market activities, but the state had a number limited task to perform in society that individuals cannot perform by them, which is to help create an institutional environment that fosters individual action, such as establishing and maintaining basic legal system and assuring national defense. Economic liberals tend to focus on the domain in which nation-states show their cooperative, peaceful, constructive natures through harmonious competition. David Ricardo (1772-1823) followed Smith in adopting the economic liberal view of international affairs. For Ricardo, free commerce makes nations efficient and general benefit, and efficiency is a quality that liberals value as highly as liberty. In IPE jargon, liberals think that outcomes of state, market, and society relations is a positive-sum game, in which everyone can potentially get more out of a bargain than she or he put into it. Due to the dynamism of IPE field, liberal view has evolved over the years. Thus, a critical person in the intellectual development of liberalism was John Stuart Mill (1806-1873), John Stuart Mill presented a philosophy of social progress that was moral and spiritual progress rather than accumulation of wealth. He proposed that, to achieve social progress, the state should take limited action to supplement the market, correcting its failures. He
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