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Government Concept in Relation to Classical Liberalism Term Paper

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Some Definitions

According to Wikipedia1, Classical liberalism is a “political ideology that developed in the nineteenth century in Western Europe and the Americas. It was committed to the ideal of limited government and liberty of individuals including freedom of religion, speech, press, assembly, and free markets”

Government is an authority or agency through which political establishments exist. The government formulates, implements, and monitors public policy

Adam Smith (1723-90) “the Father of Economics”

And a proponent of Classical liberalism

Some tenets of Classical Liberalism:

  • The individual comes before the state
  • Private property ownership “capitalism”
  • Pre-political individuality
  • Limited government control over trade

Smith’s Idea of Government: (in His Own Words)

Smith (as cited in Gavin,2008,pp227,228) suggests

“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things.”

“All governments which thwart this natural course, which force things into another channel, or which endeavor to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.”

Smith; Just What Is the Government For

Role 1

  • The first duty of the government is to protect its people from external aggression. That is done through the military. (Gavin,2008,228)
  • Economic Implications:
    • Justification of expenditure on war goods
    • Government purchase armament on the private establishment and this leads to increased aggregate demand
    • Labour of military men unproductive (does not regenerate)
    • Labor of armament producers productive (regenerates+ profit)

Smith; Just What Is the Government for (Cont’d)

Role 2

The second duty of the government according to Smith (as cited in Gavin2008, 229) is ‘… protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice, requires very different degrees of expense in the different periods of society’

Smith; Just What Is the Government for (Cont’d)

Implications of role 2

Major Concerns

  • Separation of state organs for greater individual liberties
  • Benefits of justice administration supersede its cost
  • Expense towards justice is provided for from tax or litigants

Smith; Just What Is the Government for (Cont’d)

Role 3 (Gavin, 2008)

The third duty of the government is divided into 3:

  • Public works and institutions to facilitate commerce
    • Erect facilities like roads, which are too expensive for private enterprise
    • Maintain such infrastructure
  • Education of the youth
    • Government to establish affordable district schools
    • Universal compulsory education provision
    • Intervention on curriculum development
    • Salaries to be paid from public coffers
  • Education & health of people of all ages

Smith; What the Government Must Not Do

  • Seek to control private property (Ludwig2008,33)
    • The government must recognize and protect personal property
  • Interfere with the “invisible hand” that guides trade:
    • By regulating prices (supply/demand curve should determine prices).
    • By imposing trade tariffs against the free market concept
      • If tariffs are imposed on imports to protect manufacturers, consumers bear the heavy burden of high prices.
      • Left to own device, man will invest his capital in such a manner to attract high returns. This will be more beneficial to society.

Major Opponent of Classical Liberalism; Karl Marx (1818-83)

  • A proponent of social engineering theory
  • Spearheaded historical materialism responsible for:
    • Creating knowledge critical of existing society
    • Informing the working classes of their oppression
    • Encouraging revolution
    • Abolition of capitalist society
    • Building a new socialist, then communist society

Karl Marx; on Government

Karl Marx (as cited in Ludwig 2008,14) “…Preservation of property is one and the only function of the state.”

  • MARX: centralize all instruments of production in the hands of the state because:
    • Free trade will curtail workers bargaining power, thus enslave them
    • Over time, workers’ wages will decline and so will living standards
    • Smith’s political economy will concentrate power and property in the hand of a few
    • (Marx et al,1998)

Karl Marx Sought to Abolish Social Classes in Government Through:

  • Letting the workers be responsible for business rather than the ‘invisible hand’ which places wealth in the hands of a few.
  • Letting society as a whole control of all resources: no private property.
  • Through revolutions by the workers in a bid to get a share of wealth and power. (Marx et al,1998)

Two Forms of Governments: Capitalism v. Socialism

Times have favored Classical liberalism reasoning. Facts:

  • The majority of the countries have adopted capitalism
  • Capitalistic countries generally enjoy more political stability
  • Countries exercising capitalism have a more stable economy
  • There are better living standards and job opportunities in countries exercising capitalism.

Two Forms of Governments: Capitalism v. Socialism

Examples in the World today:

  • North Korea V. South Korea
  • North Korea:
    • Socialistic tendencies
    • The government controls Business to a large extent
    • The state comes before the individual
    • Less integration with the outside world

Capitalism v. Socialism

Examples in the World today:

  • North Korea V. South Korea
  • South Korea:
    • Capitalistic tendencies
    • Free trade policies largely implemented
    • The individual comes before the state
    • Participates more in World affairs

Capitalism v. Socialism

Examples in the World today:

  • North Korea V. South Korea (outcomes)
    • North Korea
      • Poor investment climate
      • Multinationals will shy away from the country
    • No money from World Financial Institutions
    • Individual liberties curtailed
    • Staling Economy, compared to neighbors
    • Relies on food donations

Capitalism v. Socialism

Examples in the World today:

  • North Korea V. South Korea (outcomes)
    • South Korea
    • Conducive investment climate
      • Multinationals invest in the country
      • Financed by the World Financial Institutions
  • Individuals enjoy their liberties
  • Higher economic growth rate than North Korea.
  • Donates foodstuffs to North Korea

Economic Freedoms N. Korea v. S. Korea

Regional Rank: 41 of 41

Economic Freedoms N. Korea v. S. Korea

N. Korea v. S. Korea Conclusions:

91.9 BusinessFreedom AVG 64.6 70.0 Investment
Freedom AVG 49.0
70.8 TradeFreedom AVG. 74.2 70.0 Financial
Freedom AVG 48.5
71.1 Fiscal
Freedom
AVG. 75.4 70.0 Property
Rights AVG 43.8
74.9 Government
nt
Spending
AVG. 65.0 56.0 Fdm. from
Corruption AVG 40.5
77.4 MonetaryFreedom AVG. 70.6 47.1 Labor
Freedom AVG 62.1

S. Korea is ranked 31st on the world economic freedom global rankings.

  • This is an indication that the country has adopted the model of Adam Smith more than their neighbors N. Korea
  • This translates to a higher economic growth rate and better living standards

N. Korea v. S. Korea Conclusions (Cont’d)

N. Korea is ranked 179th in the world on the global economic freedom ranking.

  • This is an indication that the country has adopted the Marxist Model.
  • It has registered a lower economic growth rate compared to its neighbor S. Korea, and lower living standards.
  • N. Korea relies on its neighbors for food aid.
  • Poor living standard, in comparison with S. Korea.

Reference List

Doyle, M. (1997), Ways of War and Peace: Realism, Liberalism, and Socialism. New York: Norton.

Gavin, K. (2008). Adam Smith: A Moral Philosopher and his political economy. Basingstoke, Hampshire. Palgrave Macmillan.

Gray, J. (1995) Liberalism. Minneapolis: University of Minnesota Press.

Hamowy, R. (2008) The encyclopedia of libertarianism. Thousand Oaks, CA: Sage Publications, Inc.

Hunt, E. K. (2003) Property and prophets: the evolution of economic institutions and ideologies. New York: M. E. Sharpe, Inc.

Kelley, D. (1998) A Life of One’s Own: Individual Rights and the Welfare State. Washington, DC: Cato Institute.

Ludwig, M. (2002). Liberalism in the Classical Tradition. Francisco, California. Cobden press.

Marx, K.,& Engels, F. (1998). The Communist Manifesto. Cambridge Drive, London. Elecrobooks Classics. Web.

Mills, J. (2002) A critical history of economics. Basingstoke, Hampshire UK: Palgrave Macmillan.

Oneal, J. R.; Russet, B. M. (1997). “The Classical Liberals Were Right: Democracy, Interdependence, and Conflict, 1950-1985”.International Studies Quarterly 41: 267–294.

Richardson, J. L. (2001) Contending Liberalisms in World Politics: Ideology and Power. Boulder, CO: Lynne Rienner Publishers.

San Marx, K. (1859): A Contribution to the Critique o Political Economy. Web.

Schumpeter, J. A. (2010) Capitalism, Socialism, and Democracy, Routledge.

Turner, M. J. (1999) British politics in an age of reform. Manchester UK: Manchester University Press.

Vincent, A. (2009) Modern Political Ideologies (Third Edition). Chichester, W. Sussex: Wiley-Blackwell.

Appendix

  • Most challenging part was to pick on a topic:
    • That is manageable
    • Original
    • Relevant
  • To overcome this difficult, I read extensively.
  • That is how I came up with my topic.
  • Another challenge was on choosing the mode of presentation:
    • I chose PowerPoint presentation because:
    • It embraces brevity, thus clarity
    • Communicates more vividly than other forms

Can be projected for a talk.

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