Laissez-faire

Laissez-faire is an economic and political philosophy.[1] It is from a French phrase that means to "allow to do".[2] It means that government does not interfere (to take part in something) with business and economy.[2] Decisions of Finance and trade are made by each person. In laissez faire, each person does things for their own good[3] - for example, a person might sell for gaining money. A person may buy for their gain of a product. It is an idea that unregulated competition in business is the best path to progress - that the government should not interfere with the economy. People who support laissez-faire believe that a free and unregulated market creates a natural balance between supply and demand. The phrase may have come from the 18th century.[4]

History

Ancient China - The Beginning

In Ancient China, there were three schools of political thought. Taoism was the idea that the government should not interfere with the economy.[5] Legalism included the belief that the state should be in control.[5] They created the traditional Chinese bureaucratic empire. Confucianism was similar to both ideologies, however was closer to Legalism than Taoism.[5]

Mercantilism

In the 1600s, the mercantilist Thomas Mun spread the idea that for a country to be rich, it needs to export more, and import less. [6]This led to people favouring protectionism. In Britain, the Corn Laws of 1815 placed high tariffs on imported corn. This made it harder for people to buy corn from other countries, and want to buy corn from their own country. This protected British farmers and land owners.[5] However, Adam Smith and other economists began to spread the idea of laissez faire. The Corn Laws were later ended, and laissez faire was favoured instead. [6]

After Mercantilism

The End of Mercantilism

During the 19th century, laissez faire developed as a social and economic philosophy. The physiocrats, including Francois Quesnay, helped end mercantilism.[3] Books, for example 'The Wealth of Nations' by Scottish philosopher Adam Smith, and 'Principals of Political Economy' by John Stuart Mill made laissez faire popular.[3] It was believed that when the government interferes with business, it was harmful at worst and ineffective at best.[7] Socially, it was believed that the government interfering to help the poor was harmful because it made them lazy and dependent on the government.[7] Economically, there was a argument at this time in Europe and the United States over whether free trade or tariffs was better for economic growth.[5]

19th-20th Century

In the late 1800s, laissez faire lost popularity. Industries were growing quickly, so laissez faire was not useful. In the early 1900s, the Great Depression happened. The economist John Maynard Keynes said that the government had to interfere with the economy for the economy to recover - this opposed laissez faire. However, in the late 1900s, the American economist Milton Friedman made laissez faire popular again. [3]


References

  1. ↑ "laissez faire". Merriam-Webster. Retrieved 5 November 2016.
  2. ↑ 2.0 2.1 "Laissez Faire Capitalism". Importance of Philosophy. Retrieved 5 November 2016.
  3. ↑ 3.0 3.1 3.2 3.3 "Britannica Money". www.britannica.com. Retrieved 2025-07-17.
  4. ↑ "Laissez Faire". Investopedia, LLC. Retrieved 5 November 2016.
  5. ↑ 5.0 5.1 5.2 5.3 5.4 "Why did The Economist favour free trade?". The Economist Newspaper Limited. 6 September 2013. Retrieved 5 November 2016.
  6. ↑ 6.0 6.1 www.libertarianism.org https://www.libertarianism.org/columns/how-repeal-corn-laws-toppled-mercantilism. Retrieved 2025-07-17. {{cite web}}: Missing or empty |title= (help)
  7. ↑ 7.0 7.1 Michael Scaife, History: Modern British and European (London: Letts Educational, 2004), p. 32

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