Foundations of Modern Political Economy

Adam Smith and Laissez-Faire Economics

Smith defined the nation's wealth not as a fixed landmark, but derived from the open market, driven by individual self-interest and competition.

Economic Liberalism: Conditions for Growth

Economic liberalism promotes growth and prosperity through specific mechanisms, primarily focusing on minimizing government intervention and maximizing individual economic freedom.

Key tenets of economic liberalism include:

• Removal of Regulations: Granting freedom to invest and operate without excessive governmental limits.
• Market Mechanisms: Reliance on free competition, the law of supply and demand, and market evolution.
• Labor Freedom: Freedom of employment, including conditions of recruitment and hours of work.
• Limiting the Role of Government: Intervention should be minimal, focused only on ensuring the basic framework necessary for economic growth.

Bourgeois Revolutions

The Bourgeois Revolutions (exemplified by the American and French Revolutions) were processes by which the old order—the Ancien Régime—was gradually replaced.

The transition moved from a system based on feudalism and the absolute divine right of monarchs to a new political order based on:

• National Sovereignty
• The Division of Powers

The French Revolution (1789–1799)

The French Revolution was a long, ten-year revolutionary process during which the bourgeoisie and artisans were able to depose the monarchy and abolish the privileges of the aristocracy.

The First Republic (1792–1799)

The new National Convention proclaimed the republic. The Convention condemned the king to death for treason. Political opposition arose between the moderate Girondins and the radical Montagnards, who were primarily composed of Jacobin deputies.

Political Ideologies of the 19th Century

Liberalism

Liberalism is founded on the belief in individual freedom and national sovereignty, advocating for a laissez-faire economy (economic freedom).

• Moderate Liberalism: Advocated for census suffrage (voting restricted by wealth).
• Radical Liberalism: Advocated for a republic and universal suffrage.

Nationalism

Nationalism is defined as the process of creating a widely shared consciousness among the population of a territory that they belong to the same collective identity.

The Conservative Restoration (Post-1815)

In 1815, the Congress of Vienna convened to restructure the map of Europe following the Napoleonic Wars. This period initiated a long era of relative peace among major European states, lasting until 1914.

Major Powers and the Holy Alliance

The major powers involved were the Austrian Empire, Russia, and Prussia. They signed the Holy Alliance, a treaty that reserved the right to intervene in states suffering from liberal revolutions.

Territorial Changes Resulting from the Vienna Agreement

The new map of Europe emerged from the Vienna Agreement, resulting in significant territorial adjustments:

• France: Was reduced to its borders prior to the 1789 Revolution.
• Britain: Managed to retain its territories and colonial gains.
• Russia: Gained territory, including Finland and Bessarabia.
• Prussia: Experienced territorial expansion.
• Austria: Recognized its hegemony over the northern Italian peninsula.