Economic Liberalism, Essay Example

Economic liberalism being one of the core components of classical liberalism espouses and defends the nominal interference of the government in the market economy. This is the main constituent ideology of capitalism. Adam Smith’s proverbial invisible hand in the market would lead to ever increasing levels of prosperity. This has been the ethical, philosophical and ideological positions of the west for hundreds of years. So strong is this sentiments both hot and “Cold Wars” have been fought to defend it.

This is one of the reasons western economies grapple between regulation and deregulation of the markets. The other less obvious reason is that financial innovation has largely outpaced regulators and regulation for example the derivatives market that is worth a whooping six hundred trillion dollars. Unlike other professions that mainly deal with the tangible and intrinsic, finance deals with the abstract and invisible. This is what makes finance peculiar, though arguable feat money has no intrinsic value. The derivative market for instance is worth more money than everything that exists in the world.

The only other are that is similar is genetic engineering. It too deals with the invisible. It is for all-intense and purpose outside the ethical realm for a simple reason. When ethics was being debated no one knew about genes. Is it wrong to genetically engineer your unborn baby to be smarter?

There is no such thing as an even playing field. We are not all born equally, we are however equally human. What need to change are the philosophical underpinnings behind free-market capitalism. The profit motive as a philosophy behind why we do what we do should be replaced with   a sociological philosophy. What do I mean when the founder of coke started he wasn’t thinking profit he was thinking I want everybody in the world to drink coke.

Adam Smith proposed if people were let to their devices they would hedonistically try and maximize their pleasure. This laissez-fair (let alone) condition would lead to consumers going for the lowest price and entrepreneurs going for the highest price. A hostile takeover would involve this very principle only to a group of individuals called shareholders.

However exception to the rule is public goods. Public goods are non-excludable and non-rival in nature. Uncoordinated markets driven by greed and self-interest are incapable of providing these goods and in a lot of ways destroy common goods. The perfect example of this is the environment. The environment is our collective responsibility and a common good. This is a basis for intervention by the public in exchange of wealth in the financial markets. Companies that destroy the environment should be reprimanded by people not buying their goods, services or stock.

Cooperate Executive under law are answerable to, first to the board of directors then the shareholders at annual general meetings. Cooperate social responsibility is a move by both companies and government trying to address this need. As stated earlier my view is that a philosophical shift should be made in the minds of people from profit maximization to common good maximization. Changing what textbooks say should do this. Instead of we create business to make a profit my suggestion is we create business to satisfy a need in society while respecting the environment.

Work Cited:

Lisa Newton. Ethics in America: Source Reader, Princeton Hall. Print. 2003

Lisa Newton. Ethics in America: Study Guide, Princeton Hall. Print. 2003