√ Understanding the Liberal Economic System, Characteristics, Advantages and Disadvantages and Its Adherents
Understanding the Liberal Economic System, Characteristics, Advantages and Disadvantages and Its Adherents – In this discussion we will explain the liberal economic system. This discussion includes the meaning of the liberal economic system, the characteristics, advantages and disadvantages of the liberal economic system and the countries that adhere to it will be reviewed in full.
Understanding the Liberal Economic System, Characteristics, Advantages and Disadvantages and Its Adherents
Let's first discuss the meaning of a liberal economic system carefully.
Understanding the Liberal Economic System
The liberal economic system is an economic theory outlined by the founders of classical economics such as Adam Smith or the French Physiacrats (Wikipedia). Another definition of a liberal economic system is an economic system in which all economic policies are implemented regulated by society or the market, in this case the government should not interfere but only supervise.
In this economic system, economic activity will be determined by market forces, namely forces formed by the meeting of demand and supply.
This is in accordance with the opinion of expert Adam Smith who really wanted a free market and did not want the government to interfere.
The ideology that is the basis of the liberal economic system is that every unit of economic activity is given the freedom to carrying out activities that will provide benefits to him, then at the same time society will benefit Also. The liberal economic system was discovered by Niccolo Machiavelli and Desiderius Erasmus.
Characteristics of a Liberal Economic System
A liberal economic system has the following characteristics:
- All production sources belong to individuals or communities.
- Society is freed to own production sources.
- The government does not interfere directly in economic activities.
- In this case, society is divided into two groups, namely those who own production resources and those who work or labor.
- Competition will arise in society, especially in seeking profit.
- Any activity always takes into account market conditions
- Markets are the basis of all economic action
- Usually the products produced are of high quality
- Producers are free to determine what and how much to produce
- The prevailing price is formed in a free market
Advantages of a Liberal Economic System
The advantages of a liberal economic system include:
- Developing community creativity and initiative in organizing economic actions because there is no need to wait for orders from the government
- Every individual has unlimited production resources, which makes society participate in the economy
- There will be competition that encourages people's enthusiasm for progress
- The goods produced are of high quality because there is spirited competition between communities
- Effectiveness and efficiency are high because every economic activity is based on the profit motive
Disadvantages of the Liberal Economic System
The disadvantages of a liberal economic system include:
- There is unhealthy free competition if the bureaucrats are corrupt
- There is economic inequality, the rich will get richer, the poor will get poorer
- There will be many public monopolies
- There is economic turmoil due to the allocation of resources by free individuals
- Equal distribution of income is difficult to implement because of the consequences of free competition.
Countries that adopt a liberal economic system
In the liberal economic system, many countries adhere to it, especially in American countries, including:
- United States of America
- Argentina
- Bolivia
- Brazil
- Chile
- Cuba
- Colombia
- Ecuador
- Honduras
- Canada
- Mexico
- Nicaragua
- Panama
- Paraguay
- Peru
- Uruguay
- Venezuela
- Aruba
- Bahamas
- Dominican Republic
- Greenland
- Costa Rica
- Puerto Rico
- Suriname
In the United States, this economic system is called modern liberalism or new liberalism. Liberalism in the United States began to rise in the early 20th century as an alternative to real politics.
In Europe, countries that adhere to a liberal economic system are:
- Albania
- Armenian
- Belgium
- Bulgaria
- Croatia
- Cyprus
- Czechoslovak Republic
- Denmark
- Estonia
- Finland
- France
- German
- Greece
- Hungary
- Iceland
- Italy
- Latvia
- Lithuania
- Luxembourg
- Macedonia
- Moldova
- Netherlands
- Poland
- Romania
- Russia
- Serbia Montenegro
- Slovakia
- Slovenia
- Spanish
- Sweden
- Switzerland
- Ukraine
- United Kingdom
- Andorra
- Belarus
- Bosnia
- Faroe Islands
- Georgia
- Ireland
- San Marino
Meanwhile in Asia there are several countries that adhere to a liberal economic system, namely:
- India
- Iran
- Israel
- Japan
- South Korea
- Philippines
- Taiwan
- Thailand
- Türkiye
- Myanmar
- Hong Kong
- Cambodia
- Malaysia
- Singapore
In the Oceania Islands, Australia and New Zealand also adhere to this system. And for Africa, the countries that have implemented it are Egypt, Senegal, South Africa. But now it is also understood by Algeria, Angola, Benin, Burkina Faso, Mantol Verde, Equatorial Guinea, Gambia, Ghana, Kenya, Malawi, Morocco, Mozambique, Tanzania, Tunisia, Zambia, Zimbabwe, Republic of the Congo
This is what has been explained above Understanding the Liberal Economic System, Characteristics, Advantages and Disadvantages and Its Adherents, hopefully this discussion can increase your knowledge and insight about the liberal economic system. Thank you for visiting our blog
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