Laissez faire government
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Laissez-faire government is a doctrine stating that a government should not directly interfere with economic affairs but rather keep law and order, and leave the shape of country's economy to the free market.
Origins of laissez faire economics
Laissez-faire is a French word meaning let do. As an idea it was coined by French physiocrats and used later by such a classical economist as Adam Smith. He believed that government's role should restrict to abide by the law and keep order, defend one's country, and provide services, such as health care, which the private enterprises would not be able to. At present, a doctrine which is close to the discussed one is the economic liberalism, which highlights the value of personal freedom both in economic and political activities.
Economy based on the laissez-faire idea is regulated only by the price; contrary to the doctrine of interventionism, no outer factors interfere with the marketplace. However, at the beginnings of the 20th century, as a result of the entrepreneurs' abuse of power, the American government stepped in acting as a guard controlling various organisations in order to protect public interest, and ensuring that the free-market rules are obeyed. Numerous institutions were set up with the right to build regulations and check whether the rules concerning the work of enterprises were respected.
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References
- Caprio, G., & Summers, L. H. (1993). Finance and its reform: beyond laissez-faire (Vol. 1171). World Bank Publications.
- Keynes, J. M. (1926). The end of laissez-faire (Vol. 16). London: Hogarth Press.
- Viner, J. (1960). The intellectual history of laissez faire. The Journal of Law & Economics, 3, 45-69.
Author: Łukasz Groblicki
