The Historical Background in the XVIII and XIX Centuries

By Alvaro J. de Regil

In a narrative and analytic style, the essay describes the historical roots of modern economic thought with European Liberalism and its laissez faire ideology as a reaction to the era of monopolistic Mercantilism. The objective in the essay is to describe the development of liberal economic thought and establish the great differences between its philosophical postulates and its actual application.

While a true spirit of freedom and the pursuit of the common good imbued economic liberalism, the actual application of the Industrial Revolution was of laissez faire for the owners of money and of dire exploitation for labour. The period covered goes from the time of the merchant empires, Adam Smith, the French Physiocrats and the development of XIX century classical economic thought to the brink of the Great War of 1914. The essay opens by stating that the birth of economic thought began with the enunciation of the concept of laissez faire, laissez-passer in its search for a model that would produce optimum results.

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