Liberalism, Neoliberalism

Liberalism can be said to be one of the most pervasive of 20th- and 21st-century global ideologies, and neoliberalism is the driving ideology of economic globalization, although the term defies a limited definition because of its application to a number of social, economic, and political phenomena. The basic definition of liberalism is the protection of human rights without regard to time and circumstances. Liberalism rests heavily on the philosophies of the Enlightenment thinkers and especially on the work of moral philosopher Adam Smith.

Many of the Enlightenment philosophers stress individuality and autonomy as men pursue happiness, property, or both, in the name of progress. Being free from interference allows the rise of the entrepreneur or the self-made man, thus enhancing freedom or liberty. The absence of interference includes limited interference by government powers, especially in the realm of the economy. Proponents of laissez-faire government often cite Smith as the founder of economic liberalism. In the globalization framework of the late 20th century, the absence of interference and, particularly, the absence of interference in the economic realm by the government will serve as a foundation for capitalist expansion and transform liberal philosophy into neoliberalism. Smith served as a professor of moral philosophy, a discipline covering natural theology (the search for design in a chaotic universe), ethics, jurisprudence, and political economy. In 1759, he published The Theory of Moral Sentiments, in which he questioned why self-interested creatures possessed an ability to make moral judgments in which self-interest could be set aside. The answer, he believed, lay in our ability to place ourselves in a position of a third party, thus allowing for a sympathetic and objective view of the merits of any case.

Smith's The Wealth of Nations, published in 1776, serves as a broad and encompassing work that accurately describes England in the 1770s and provided a blueprint for the modern society that was developing, the Society of Natural Liberty. Smith had no interest in any class but promoted the wealth of the nation, which consisted of the goods that all people in the society consumed. Smith focused on two problems and their solutions: self-interest and social cohesion.

In a society driven by self-interest and seemingly no central control mechanism, why does the society not explode? Smith's answer lay in the laws of the market or “the invisible hand.” Smith viewed society as an organism (a common approach in functionalism) with its own life history. The laws of the market are a part of the larger set of laws that allow a society to prosper or decline. Smith's laws indicate that certain behaviors within the context of a certain society will bring about predictable results.

Smith suggested a least two laws of the market, which stated that (1) self-interest is the power guiding individuals toward the work that society will pay for, and (2) competition keeps self-interest in check. The balance of these laws creates interaction in the society that leads to social harmony. If self-interest becomes imbalanced, then individuals will allow competitors to enter and steal away their trade. Smith uses various examples to explain the workings of self-interest and competition as well as price control and production demands. As an example, if the demand for boots increases while the demand for coats decreases, boot prices will rise while coat prices drop. To maintain profit, coat manufacturers will have to dismiss workers, who will then be free to seek employment in the boot industry. As more boots are produced, boot [Page 1073]prices drop while fewer coats will drive the prices upward, thus, creating a balance in prices and demand.

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