Liberal theory of economics
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The liberal theory of economics is the theory of economics described by classical liberal authors such as Anders Chydenius, Adam Smith and the French Physiocrats. It is concerned with "natural liberty" as understood by these authors. Though Smith never used the term, today it is commonly known as laissez-faire. The concept of economic liberalism underpinned the move towards a free market economic system, and the subsequent demise of the mercantilist system.
Private property and individual contracts form the basis of the liberal theory of economics. The theory also states that individuals act primarily out of self-interest, and that allowing them to do so without any restrictions will produce the best results, provided that minimum standards of public information and justice exist.
The classical liberal line in economics has been taken up by modern economists of the Austrian School, and its combination with the open society and democracy is what is understood as liberalism in most of the world outside the United States. In the US itself, liberal economics is usually meant to mean 'economic conservatism' or 'free-market ideology'. Liberal economics is a core belief in the Republican Party rather than the more social-market economics of the Democratic Party
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