Classical Liberalism, Markets, and Individual Rights

Liberalism is a political theory that starts from the idea that the individual and their rights must be at the center of political reflection. Therefore, the State must guarantee a legal framework that protects individual rights, ensures free exchange, and respects the rules of free economic competition. In this way, citizens can pursue their legitimate personal interests without the State interfering in the markets.

Adam Smith and The Wealth of Nations

The Wealth of Nations argues that the welfare and wealth of a society depend on three factors:

1. The pursuit of self-interest. In commercial exchange, the consumer is willing to pay the minimum and the producer wants to earn the maximum; the self-interest of each party helps them reach an agreement that is acceptable to both.
2. The law of supply and demand as a market regulator. When demand for a product is high relative to supply, prices rise; when demand falls and supply increases, prices fall.
3. The division and mechanization of the productive process. With increased productivity resulting from a more efficient division of labor and mechanization, production costs fall. This allows products to be sold more cheaply or to provide greater profits.

Friedrich Hayek on Markets and Social Evolution

According to Friedrich Hayek, the social and political evolution of Western societies is due to the capacity of the free market to balance individual economies and interests. Therefore, any outcome produced by the free market should be accepted; it makes little sense to evaluate it solely in terms of justice or injustice.

Friedman and Nozick on State and Freedom

Milton Friedman argues that a society that prioritizes equality over freedom will end up with neither, because the use of force to impose equality will destroy freedom. Robert Nozick, in his famous work Anarchy, State, and Utopia, argued that the State should reduce its functions to those of a “night-watchman.” The role of the State must be limited to the protection of individual rights, without the possibility of modifying them or sacrificing them for any social or collective interest. Therefore, the State should restrict its tasks to organizing the police, the army, and the administration of justice.