Reflections on Economic Liberalism

The dismantling of the central planning system in China and the renaissance of a market economy have dramatically increased the overall reputation of economic liberalism in our country. And, yet, despite these developments on the ground, the theory of economic liberalism with its emphasis on individual economic choice and the central role of the market has been challenged on the issue of the state. To wit, the implication of economic liberalism and its core idea of >i>laissez-faire>/i> is to eliminate government policy-making altogether, thereby creating a kind of "anarchism." This has led some to abuse the concept of economic liberalism while others outright negate it. In practical terms, the former view has led people to ignore the proper functions of government and other institutional arrangements by subjecting each and every problem and social ill to the dictates of the private economy, even where market forces are obviously inappropriate. This has not only decreased the overall efficiency of the market economy, but it has also led many in our society to lose confidence in and cast doubt on the market itself. In the latter case, market haters in China have used this over-extension of the market to criticize and attack the fundamental theoretical construct of economic liberalism, hoping to negate entirely its practical value.