ABSTRACT
This chapter explores why most international economic organizations and the economic policies of most states today are strongly influenced by liberal principles. It focuses on the relationship between politics and economics. Orthodox liberals believe that the role of governments should be limited to creating an open environment in which individuals and private firms can freely express their economic preferences. In contrast to the orthodox liberals, John Maynard Keynes argued that a market-generated equilibrium might occur at a point where labor and capital are underutilized; this necessitates government intervention. This chapter explains regime theory, that first developed from efforts to explain why international interactions are more orderly in some issue areas than in others. Liberalism remains a powerful but highly contested approach to economic management.
