Conservatism: The Resurgence of Classical Liberalism
As Keynesian liberalism evolved to include more and more state interference in the market, a backlash movement grew in the 1950s and 1960s, taking the name of conservatism. In the late 1960s, President Nixon and others attacked Keynesianism, seeking to put more emphasis on economic growth instead of stability. In 1973 the United States replaced its fixed exchange rate system with a flexible exchange rate system, which led to increased speculation on currencies and more money circulating in the international economy. That same year OPEC oil prices hikes led to an economic recession. Keynesian policies to deal with the recession generated stagflation- the coexistence of low growth and high inflation, which were not supposed to occur together. In this environment of low economic growth and increasing competitiveness, Keynes’s ideas were gradually replaced by those of the Austrian Friedrich Hayek (1899-1992) and Milton Friedman (1912-2006).
Classical liberalism is a philosophy committed to the ideal of limited government and liberty of individuals including freedom of religion, speech, press, assembly, and free markets. Classical liberalism developed in the nineteenth century in Western Europe, and the Americas. Although classical liberalism built on ideas that had already developed by the end of the eighteenth century, it advocated a specific kind of society, government and public policy required as a result of the Industrial Revolution and urbanization. Notable individuals who have contributed to classical liberalism include Jean-Baptiste Say, Thomas Malthus and David Ricardo. It drew on the economics of Adam Smith, a psychological understanding of individual liberty, natural law and utilitarianism, and a belief in progress. There was a revival of interest in classical liberalism in the twentieth century led by Friedrich Hayek and Milton Friedman.
Friedrich Hayek and Milton Friedman were two of the...
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