LIBERAL ECONOMIC SYSTEM By: Dhera Agung Dharmawan
The basic theories ofeconomic liberalism were firstlaid out by Adam Smith ofScotland in his book"An Inquiry into the Natureand Causes of the Wealth ofNations,“ which was published in 1776.
WHAT IS LIBERAL ECONOMIC SYSTEM ?Liberal economic system iseconomic system where themanagement of theeconomy regulated bymarket forces. Thiseconomic system requiresthe existence of individualfreedom in economicactivity. That is, eachindividual recognized andthey are free to compete. Onthe other hand, Why ?The participation of thegovernment in economicactivities is very limited.
The characteristics of Liberal Economic Systemo Implementing a system of free competition.o Economic activity intended for profit maximization (profit oriented).o The participation of the government in economic activities is very limited.o Activities are always considering the market situation.o The market economy is the basis of every action.o These prices are determined by market forces.
Economic activity more fast progressing because the competition. Evoking initiative and creativity in managing the economy, because the public no longer need to wait for instruction / command of the government. High efficiency and effectiveness, as any action based economy for profit motive.
Weakness of Liberal Economic System: A lot of arise monopoly practices that harm public Equity income is difficult because the free competition . The existence of the gap between the rich and the poor in the absence of income distribution.
The countries that use liberal economic systemI. In America :USA, Argentina, Bolivia, Brazil, Chile, Cuba, Colombia, Ecuador, Honduras, Canada, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, and Venezuela, Aruba, Bahamas, Dominican Republic, Greenland, Grenada, Costa Rica, Puerto Rico, and Suriname.II. In Europe : America Albania, Armenia, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Lithuania, Luxembourg, Macedonia, Moldova, Netherlands, Norway , Poland, Portugal, Romania, Russia, Serbia and Montenegro, Slovakia, Slovenia, Spain, Sweden, Switzerland, Ukraine and United Kingdom.III. In Asia : India, Iran, Israel, Jepang, Korea Selatan, Filipina, Taiwan, Thailand dan Turki.IV. In Africa :Egypt, Senegal and South Africa, Algeria, Angola, Benin, Burkina Faso, cape Verde, Côte dIvoire, Equatorial Guinea, Gambia, Ghana, Kenya, Malawi, Morocco, Mozambique, Seychelles, Tanzania, Tunisia, Zambia and Zimbabwe.V. in the islands of Oceania : Australia and New Zealand.