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Economic liberalism is a political and economic ideology that supports a market economy based on individualism and private property in the means of production. Economic liberalism has been generally described as representing the economic expression of 19th-century liberalism until the Great Depression and rise of Keynesianism in the 20th century. An economy that is managed according to these precepts may be described as liberal capitalism or a liberal economy. Economic liberals tend to oppose government intervention and protectionism in the market economy when it inhibits free trade and competition but support government intervention to protect property rights and resolve market failures.
Economic liberalism was born as the theory of economics of liberalism, developed during the Age of Enlightenment, particularly by Adam Smith, which advocates minimal interference by government in the economy. This was initially to promote the idea of private ownership and trade; however, due to a growing awareness of concerns regarding policy, economic liberalism paved the way for a new form of liberalism, known as social liberalism, which allowed for government intervention in order to help the poor. As a consequence, the widespread appeal of Smith's economic theories of free trade, the division of labour, and the principle of individual initiative has helped to obscure the rich body of political liberalism to be found in his work. This promoted the everyday man to hold ownership of his own property and trade, which slowly allowed for individuals to take control of their places within society. Economic liberalism is associated with markets and private ownership of capital assets. Historically, economic liberalism arose in response to feudalism and mercantilism. Today, economic liberalism is contrasted with protectionism because of its support for free trade and an open economy, and is also considered opposed to planned economies and non-capitalist economic orders, such as socialism.
Initially, the economic liberals had to contend with the supporters of feudal privileges for the wealthy, traditions of the aristocracy and the rights of monarchs to run national economies in their own personal interests. By the end of the 19th century and the beginning of the 20th century, these were largely defeated. Today, economic liberalism is associated with classical liberalism, neoliberalism, right-libertarianism, and some schools of conservatism like liberal conservatism and fiscal conservatism. They commonly adhere to a political and economic philosophy that advocates a restrained fiscal policy and a balanced budget through measures such as low taxes, reduced government spending, and minimized government debt. Free trade, deregulation, tax cuts, privatization, labour market flexibility, and opposition to trade unions are also common positions. Economic liberalism follows the same philosophical approach as classical liberalism and fiscal conservatism.