Deck 2: Laissez-Faire: the Economic Liberal Perspective

Question 1

Adam Smith and John Maynard Keynes are both liberals, in the broad sense in which this term is used in IPE. Explain what views Smith and Keynes share regarding the market, the state, human nature, and power. How do they differ?

Answer 1

No Answer.

Question 2

Explain the key assumptions and assertions of classical liberalism.

Answer 2

No Answer.

Question 3

How do liberals such as David Ricardo view international trade? Why do they hold this opinion? Explain how the Corn Laws debate in nineteenth-century Britain illustrates the conflict between mercantilist and economic liberal views of international trade.

Answer 3

No Answer.

Question 4

John Stuart Mill and John Maynard Keynes thought that government could and should play a positive role in correcting problems in the market. Discuss the specific types of "market failures" that Mill and Keynes perceived and the types of government actions they advocated. What kinds of policy recommendations do you think Mill and Keynes would favor today? Explain.

Question 5

Explain several key arguments of John Maynard Keynes.

Question 6

Economic liberal values and policies have been relatively more popular in the United States than in other developed countries. Why?

Question 7

In what ways does ordoliberalism differ from neoliberalism?

Question 8

Adam Smith favored "laissez-faire" policies, where individuals, guided by the "invisible hand," would produce social benefits. The invisible hand stands for

A) government regulation.
B) individual self-interests and choices.
C) hegemonic stability.
D) hidden income taxes.

Question 9

Which of the following best states Smith's ideas related to moral sentiments?

A) No society can flourish and be happy if the far greater number of its members is poor and miserable.
B) Parliament should always represent the interests of the working class.
C) Bankers and special interests should have more influence in the legislature given the economic benefit derived from their investments in industry.
D) Serving one's own interests in a competitive society means competing to best serve the interests of industrial society.

Question 10

David Ricardo favored free international markets. Which of the following ideas about free, open markets is not associated with Ricardo?

A) Open markets promote efficiency.
B) Free trade binds nations together and promotes the universal good.
C) Free trade is a zero-sum game
D) Open markets lead to greater wealth.

Question 11

John Stuart Mill is most noted for changing liberalism to reflect

A) the need for less state regulation of the economy.
B) that states should do more to stimulate industrial output and free trade.
C) that selective state action is needed when individual initiative inadequately promote social welfare.
D) that strong powers have legitimate interests in promoting social progress in their colonies.

Question 12

Which of the following is not one of the main elements of capitalism listed by the authors?

A) the existence of markets for land, labor, commodities, and money
B) freedom of enterprise
C) democratic institutions
D) the right to private property
E) markets coordinate society's economic activities

Question 13

Embedded liberalism can be summed up in which of the following statements?

A) International markets should be subject to political regulations in order to protect domestic social interests.
B) Foreign aid should be used in some cases where markets have failed to help the poor.
C) Consumers make rational (individual) choices that result in unexpected damaging outcomes that hurt the community.
D) The state needs to intervene in the economy because markets fail.

Question 14

In the liberal view today, a hegemon is

A) a rich and powerful state that supplies the international public goods necessary for a peaceful and prosperous global economy.
B) a strong nation that uses its wealth and power to set the rules of the IPE, so as to gain more wealth and power for itself.
C) a free rider.
D) _{a strong capitalist nation that uses its power to exploit less developed countries.}

Question 15

Which of the following statements about the views of President Reagan and Prime Minister Thatcher is incorrect?

A) They both favored market deregulation.
B) They both owe a lot to the ideas of Adam Smith, David Ricardo, and Milton Friedman.
C) They both recommended selling off (privatizing) public industries to allow for more competition and competitive pricing.
D) They both agreed that the United States should have an empire like Great Britain did in the nineteenth century.

Question 16

This supporter of globalization argues that if a country wants to benefit from globalization, it must put on a "golden straightjacket," i.e., the country must adopt economic liberal policies and accept some limits on state sovereignty.

A) Joseph Stiglitz
B) Paul Collier
C) William Easterly
D) Thomas Friedman

Question 17

Heterodox economic liberals recommend all of these policies except

A) more redistribution of wealth to the lower social classes.
B) getting away from the "one-size-fits-all" mentality in the IMF and World Bank.
C) reducing developed countries' subsidization of their own industries.
D) harmonizing all major regulations across developed countries.

Question 18

Who admitted before a U.S. congressional committee in 2008 that his assumptions about financial markets and banks were flawed?

A) Ben Bernanke
B) Simon Johnson
C) George W. Bush
D) Alan Greenspan

Question 19

Ordoliberals would agree with each of the following statement except which one?

A) Markets are naturally self-regulating.
B) Private decisions should guide much of society's resource allocation, but the state may need to ensure some income redistribution.
C) A society needs "sound money."
D) The market requires an appropriate set of legal and political institutions.

Question 20

Compared to neoliberals, heterodox economical liberals are less likely to believe in

A) the efficient market hypothesis.
B) the ability of markets to self-govern.
C) the need to cut taxes on the wealthy to spur investment.
D) the new constitutionalism.
E) all of the above.