Economic Liberalism and Political Liberalism

Abstract

In current language, used above all in the writings of laymen, what is held to be ‘economic liberalism’ is instead a purely abstract manner of reasoning characteristic of economic science by virtue of its being science and hence abstraction. If the economist writes, ‘Let us suppose that the contracting parties act in a free market in which there is competition between many sellers and between many buyers’, laymen believe that because the economist has adopted such a premise he is ‘also’ an economic liberal in practice. But the economist also adopts different premises, as when he writes, ‘Let us suppose that in the free market there is only one seller and there are many buyers’; or when he postulates ‘Let us suppose that in a market with a single buyer and many sellers the market is not free but regulated by the state according to the criterion, say, of the maximum collective utility.’ In the first case, the reasoner starts out from the ‘premise’ of free competition; in the second, from that of pure private monopoly; in the third, from that of public monopoly. The reasoner may believe in economic liberalism or communism or some other faith. We know nothing of this in the sphere of scientific reasoning, where the only thing that matters is to pose appropriate premises for rigorous, abstract reasoning and to draw all the inferences they contain. The premise of the free market or of self-seeking individual agents is not an ‘economic’ principle; it is a pure tool of reasoning and has an exclusively abstract value.