Classical Liberalism Overview

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Questions and Answers

What is the term used by Adam Smith to describe the concept that individual self-interest can lead to overall economic benefit?

  • Market equilibrium
  • Marginal utility
  • Supply and demand
  • Invisible hand (correct)

Which economic system did Adam Smith critique due to its protectionist policies?

  • Mercantilism (correct)
  • Socialism
  • Capitalism
  • Feudalism

What does the concept of 'Equality of Opportunity' suggest according to Adam Smith?

  • Success should be guaranteed for all individuals.
  • Everyone should have the chance to be successful. (correct)
  • Only the wealthy should have opportunities.
  • Everyone should start with the same resources.

What was Adam Smith’s view on the government’s role in the economy?

<p>It should be limited to maintaining rule of law. (A)</p> Signup and view all the answers

What is one of the beliefs held by capitalists regarding state support for failing businesses?

<p>They disagree with providing subsidies. (A)</p> Signup and view all the answers

What ideology values individualism and seeks limited government intervention in both political and economic realms?

<p>Classical Liberalism (A)</p> Signup and view all the answers

Which of the following principles does classical liberalism advocate for?

<p>Freedom of assembly (D)</p> Signup and view all the answers

Which event marked a significant transition from an agricultural economy to an industrialized society in Britain?

<p>The Industrial Revolution (B)</p> Signup and view all the answers

What describes the economic system based on free markets and minimal government intervention?

<p>Laissez-Faire Economics (B)</p> Signup and view all the answers

How does classical liberalism view human beings in relation to their decision-making?

<p>As rational and self-interested individuals (B)</p> Signup and view all the answers

Which statement aligns with the principles of classical liberalism regarding government power?

<p>Government power should be constitutionally limited (D)</p> Signup and view all the answers

What phenomenon resulted from the shift to factory work during the Industrial Revolution?

<p>Urbanization (C)</p> Signup and view all the answers

Which of the following best describes the belief in the protection of individual rights under classical liberalism?

<p>Rights are inherent and must be protected (B)</p> Signup and view all the answers

Flashcards

Invisible Hand

The idea that individuals pursuing their own self-interest in a free market will ultimately benefit society as a whole.

Capitalism

An economic system where individuals and businesses are free to operate with minimal government intervention.

Limited Government

The belief that government should limit its role in the economy, focusing primarily on protecting individual rights and enforcing contracts.

Equality of Opportunity

The idea that individuals should have equal opportunities to succeed, regardless of their background.

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Protectionist Policies

Policies aimed at promoting domestic production and protecting local industries from foreign competition through measures like tariffs and quotas.

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The Age of Enlightenment

A period in European history following the Renaissance, where scientific discovery, individual thought, and a challenge to existing power structures flourished.

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Classical Liberalism

An ideology that emphasizes individual liberty, limited government intervention, and the importance of individual rights and economic freedom.

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Individualism and Individual Rights

The idea that individuals are rational beings capable of making decisions for themselves and contributing to societal well-being.

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Economic Freedom and Private Property

The principle that individuals should have the freedom to pursue their own interests economically, with minimal government interference.

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The Industrial Revolution

A society's transition from an agricultural and traditional economic structure to an industrial one, characterized by factories, urban centers, and mass production.

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Capitalism (Laissez-Faire Economics)

A system of economic organization based on free markets, competition, consumer choices, and the pursuit of profit with limited government regulation.

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Urbanization

The process of people moving from rural areas to urban centers, often driven by industrial development.

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Mechanization of Labor

The use of machines to replace manual labor, leading to mass production and increased efficiency.

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Study Notes

Classical Liberalism

  • Rooted in the Enlightenment, a period following the Renaissance, characterized by flourishing arts, burgeoning wealth, and scientific advancements.
  • Challenged the authority of the Catholic Church through the Protestant Reformation.
  • Philosophers questioned the role of the individual in society.
  • Promotes individual rights.
  • Values political and economic freedoms with limited government intervention.

Core Principles of Classical Liberalism

  • Protects rights and freedoms, emphasizing self-interest.
  • Believes humans are rational and reasonable, benefiting self and society.
  • Supports economic freedom and private property.
  • Advocates for protection of civil liberties (assembly, dissent, religion).
  • Emphasizes constitutional limitations on government power (checks and balances).
  • Supports equality of opportunity.
  • Disagrees with government control of printing, assembly, or movement.

Laissez-Faire Economics

  • Originated in mid-1700s Great Britain, coinciding with the Industrial Revolution.
  • Transitioned from agricultural/mercantile to industrial society.
  • Urbanization grew, and factories and mass production emerged.
  • Based on free markets, competition, consumerism, and profit-seeking producers.

Capitalism (Laissez-Faire Economics)

  • Minimizes government intervention in the economy.
  • Adam Smith, a key theorist, believed the economy followed natural laws.
  • Advocated for equality of opportunity (everyone can succeed).
  • Proposed self-interest fueled better outcomes for everyone ("invisible hand," "trickle-down").
  • Disagreed with mercantilist protectionist trade policies.
  • Advocated limited government role (rule of law).
  • Proponents include Milton Friedman and Friedrich von Hayek.
  • Favors tax breaks/incentives for businesses.
  • Disagrees with subsidies for failing businesses or industries.

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