Liberal paradigm stems from the studies of Adam Smith, an outstanding economist of the late 18th century, who argued that minimization of government's role in economic relations would facilitation growth of trade. The liberal economic model had dominated in national and international economic relations for almost two centuries until the new Keynesian model took over in the 1930s. This model advocated interventions of the state in economic relations and proved its efficiency helping effectively rebuild European economies after the devastating world wars. However, despite the apparent success of Keynesian paradigm liberalism resurrected in the early 1970s with increasing numbers of economists supporting the claim that deregulation of markets, privatization and minimization of government intervention would foster further growth of the international economics. That resurrected model of economic liberalism was called neoliberalismii.
Also known as 'economic rationalism', the neoliberal model "has an interest to provide reason to limit government in relation to the market"iii and incorporates the "beliefs in the efficacy of the free market and the adoption of policies that prioritize deregulation, foreign debt reduction, privatization of the public sector...and a (new) orthodoxy of individual responsibility and the "emergency" safety net - t ...Show more