What is liberal economic system?

What is liberal economic system?


In a country, of course there are many policies implemented in order to advance the country. What is liberal economic system? One of the types of policies that must be handled carefully by a government is the economic policy system.

Types of economic systems

What is liberal economic system? There are several types of economic systems that exist in this world, one of which is a liberal economic system. What is a liberal economic system and what are its characteristics? The following are some things you should know about the liberal economic system.

Freedom for people in liberal economic system

What is meant by a liberal economic system? Basically it is an economic system that provides maximum freedom for its people. The people of a country that adopts a liberal economic system are free to carry out economic activities with the aim of gaining profit.

Everyone decides to get profit

All economic decisions have the right to be determined individually by each person. The implementation of this liberal economic system refers to the market economy and upholds the right to private ownership.

Another name for this economic system is the capitalist economic system. In addition to the capitalist economic system, this system is also known as the free market economy. Of course there are some things that characterize, advantages and disadvantages of this system. Here are some of them.

The characteristics of the Liberal Economic System

A country that uses a liberal economic system must have certain characteristics. The following are the characteristics of a country that has a liberal economic system or free market:

Prices are designed in the free market

Because this economic system is a free market system, prices will be formed in the free market. Pricing occurs because of several things, one of which is a competitor.

Free to try and compete

The free market is a suitable place to try and compete between one line of business with another business. There must be one or two businesses that move in one field, so there will be competition between traders.

Limited government interference

The government has limited access to interfere with the economic affairs of the developing business. The absolute decision is in the hands of the business owner and the government cannot change it.

Freedom for means of production

To support its business activities, economic actors certainly need the cheap means of production. The state will not forbid its people to have any means of production that can make their business successful.

Strengths of the Liberal Economic System

Some countries deliberately implement a liberal economic system because there are things that benefit from this system. The following are the advantages of a liberal economic system when applied within a country:

The production of goods is based on community needs

Manufacturers will not make a product if the goods are not needed by the community. The goods in the market will be in accordance with the needs of the community at that time.

Production of high-quality goods

Due to the very tight competition between one producer and another, there will appear the most high-quality goods among them.

Foster creativity in society

The producers will try as hard as possible to be able to develop their creativity and creation. The goal is that the product is different from the others and has better added value compared to other products.

Weaknesses of the Liberal Economic System

With its advantages, this liberal economic system also has its own weaknesses. Following are the weaknesses of the liberal economic system:

The rich get richer and the poor get poorer

Because producers will know what people have to produce and want, they will get richer. Well-known manufacturers will get richer and new traders will find it difficult to get customers. This is what causes the rich to get richer and the poorer to poorer.

Excessive Exploitation of Natural Resources

Based on the needs of the community at any given time, there will be many producers producing the same product. This will lead to the exploitation of unhealthy natural resources.


What is liberal economic system?
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What is liberal economic system?
What is liberal economic system? There are several types of economic systems that exist in this world, one of which is a liberal economic system
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