Why does classical liberalism prefer small governments?


Weltanschauung that focuses on the right to freedom, personal responsibility and free development of the individual person (individualism) and aims to reduce or prevent control or tutelage of the individual by state institutions. Liberalism originally emerged as a political counter-movement to absolutism (form of government in which the entire state power comes from a single ruler) of the 17th and 18th centuries.

Economic liberalism, the theoretical basis of which was developed by Adam Smith (* 1723, † 1790), is based on the free economic activity of every individual. In Adam Smith's view, individuals are guided by an invisible hand in pursuing their selfish goals for profit and prosperity, which ensures that they serve the good of society at the same time, although this was not his intention. State intervention in the economy is therefore perceived as disruptive by liberalism and is rejected. Liberalism therefore advocates a free market economy (see there) as an economic order with all economic freedoms such as freedom of trade, free pricing and freedom of competition. An extreme form of economic liberalism was laissez-faire (see there).

Duden Wirtschaft from A to Z: Basic knowledge for school and study, work and everyday life. 6th edition. Mannheim: Bibliographisches Institut 2016. Licensed edition Bonn: Federal Agency for Civic Education 2016.