Lecture 2 POLS2402 (Liberal PE)

Lecture 2 POLS2402 (Liberal PE) - POLS2402 Lecture...

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POLS2402 (3.8.2011) Lecture 2 International liberalism and the orthodox postulation of free trade 1. Political liberalism = citizens can choose their government (through democratic elections) but governments cannot do everything the electors or citizens want Economic liberalism = freedom to engage in economic activities (as employed, self-employed), everything is owned by someone (as private property); competing individuals play key role (not collectives like governments or trade unions or non-competitive corporations); exchange between legally-free actors (buyers, sellers, employers, employees, consumers, producers, investors, savers – even employment is seen as a free contract between rational individuals); small state; low taxation (low coercion); preference for policies which minimize governmental discretion (so monetary policy rather than fiscal policy).
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2. Laissez faire began in C18th France (Physiocrats – Quesnay 1758 + some others before and after e.g. in Italy)… But especially Adam Smith (1723-1790): ← individual freedom, free choice, freedom to ‘truck, barter and exchange’. [Smith not a formalist thinker, but his depiction of a market system was simple, coherent, comprehensive; but perhaps not as austere as contemporary liberals think: political economy was a ‘branch of the science of a statesman or legislator’ (1776, Book IV).]
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Enlightenment conception of rationality: Reason, not emotion, tradition, religion, feudal relations, oppression/subjugation; ‘rationality’ (self-interest) also → max. outcomes/ welfare for society (presumably this means winners outnumber losers; inequalities associated with commercial society compensated for by increased flow of goods and living standards to the masses); prices will be reasonable, products & quantities produced will be what is needed; Rationally-calculating consumers rather than producers will be ‘in command’ (– this idea has always had critics, some arguing there isn’t consumer sovereignty, others saying there should be more producer sovereignty); markets → wealth and distribute incomes (a system of markets driven by competition) [income distribution seen as ‘optimal’ – a proper ‘return’ for productive contribution/effort (labour and capital are seen as ‘factors of production’ which are legitimately entitled to their reward – wages or profits)]; market-produced ‘supply and demand’ will be self-regulating/ self-coordinating; good work (productivity) will be rewarded (by high incomes or profits) – slack effort (or misdirected effort) will be punished (by low incomes or unprofitable business); Enlightenment rationality included the need to limit government (utopian experiment), but included the hope of analytical predictability (common motives presumed); progress was the key concern of the (Scottish) Enlightenment…. (but always attentive to the moral, historical, institutional & political conditions – which possibly impose limits).
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3.
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Lecture 2 POLS2402 (Liberal PE) - POLS2402 Lecture...

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