3.2.1 Capitalism Promotes Classical Liberal Principles

You have learned that classical liberalism involves individual rights and freedoms under the rule of law. These rights and freedoms are both political and economic. Politically, under a liberal ideology, individuals have the right to make decisions about their lives, including the right to choose their own leaders.

Economically, individuals also have many rights and freedoms under a liberal ideology, including the right to own property and make decisions about their money, including how to earn an income, where to invest, and what to buy and sell.

Laissez-faire capitalism is liberalism's answer to how an economic system should work. However, there are problems with an economy that has no regulations or controls.

In this section, you will develop a greater understanding of how capitalism changed in response to classical liberalism.