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Revisiting the Tension Between Classical Liberalism and the Welfare State


  • Jan Schnellenbach


A classical liberal market order relies on competition which, in a neoliberal perspective, should be supported by a government regulating the admissible degree of market power. Market competition itself is seen as an engine of innovation and growth. The downside of such a classical liberal market order is a lack of economic security for market participants. It is the very core of such an order that it enforces consumer sovereignty, but the demand articulated by consumers vis-à-vis single suppliers can be volatile. In this article, we revisit the classical liberal debate on means of providing economic security.We then discuss the problem in a contractarian framework that allows for conflicts between individual absolute values. We argue that political institutions that facilitate an open debate on these conflicting values are essential, and that attempts to derive optimal sizes of welfare states in a technocratic fashion are futile.

Suggested Citation

  • Jan Schnellenbach, 2019. "Revisiting the Tension Between Classical Liberalism and the Welfare State," Journal of Contextual Economics (JCE) – Schmollers Jahrbuch, Duncker & Humblot, Berlin, vol. 139(2–4), pages 365-383.
  • Handle: RePEc:dah:aeqjce:v139_y2019_i2-4_q2-4_p365-383
    DOI: 10.3790/schm.139.2-4.365

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    Cited by:

    1. Feld, Lars P. & Nientiedt, Daniel, 2022. "Hayekian economic policy," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 457-465.

    More about this item

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • B15 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Historical; Institutional; Evolutionary
    • D30 - Microeconomics - - Distribution - - - General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights


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