laissez faire

1. An economic doctrine that opposes governmental regulation of or interference in commerce beyond the minimum necessary for a free-enterprise system to operate according to its own economic laws.
2. Noninterference in the affairs of others.

[French : laissez, second person pl. imperative of laisser, to let, allow + faire, to do.]

For more information on laissez-faire, visit Britannica.com.

An economic theory from the 18th century that is strongly opposed to any government intervention in business affairs. S

ometimes referred to as "let it be economics."

Investopedia Says:
People who support a laissez faire system are against minimum wages, duties, and any other trade restrictions.

Laissez faire is French for "leave alone."

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Doctrine that interference of government in business and economic affairs should be minimal. Adam Smith's The Wealth of Nations (1776) described laissez-faire economics in terms of an "invisible hand" that would provide for the maximum good for all, if businessmen were free to pursue profitable opportunities as they saw them. The growth of industry in England in the early 19th century and American industrial growth in the late 19th century both occurred in a laissez-faire capitalist environment. The laissez-faire period ended by the beginning of the 20th century, when large monopolies were broken up and government regulation of business became the norm. The Great Depression of the 1930s saw the birth of Keynesian Economics an influential approach advocating government intervention in economic affairs. The movement toward deregulation of business in the United States that began in the 1970s and 80s is to some extent a return to the laissez-faire philosophy. Laissez-faire is French for "allow to do."

Definition: non-interventionist
Antonyms: interventionist

‘Laissez-faire’ means ‘leave to do’; a more colloquial translation might be ‘let them get on with it’. Since the late eighteenth century such phrases as ‘a laissez-faire policy’ and ‘laissez-faire economics’ have suggested a belief in the virtues of allowing individuals to pursue their interests through market transactions with minimal government interference.

However, laissez-faire in a broad sense, as opposed to the use of the phrase in particular contexts with respect to particular sections of production, is vague and its historical location elusive. Laissez-faire economics is not normally based on libertarian ethics but rather on the utilitarian calculation that absence of interference functions better than interference. But nearly all market theories are also theories of market failure and it is difficult to identify any leading economic thinker who thought that laissez-faire was the best solution to all problems. Adam Smith, for example, did not believe that unregulated markets could provide the kind of educational system which a commercial society needed.

— Lincoln Allison

The transition from the medieval to the modern economy was characterized by the progressive removal of restrictions on individuals and groups in favour of the operation of market forces. The balance between complete unrestriction and some control is still strenuously debated. In reality the state of complete laissez-faire has never existed. John Stuart Mill defined what has become accepted as the minimum level of state intervention. Amongst such interventions for the greater good, he included the power to enforce contracts and secure property rights, the administration of justice, the right to tax in order to provide public goods such as transport systems, sanitation and public health, and state-supported education.

While the notion of laissez-faire is usually associated with the decline of the medieval and mercantilist economic regimes, it has an enduring modern counterpart in the views of the neoclassical and new classical economists, who may use different terminology, but whose essential view is that individual freedom to function within untrammelled markets, with little involvement from government, represents the best type of economic organization. All these strands of thought assert the right of the individual and depict state involvement in the economy as ineffectual or malign.

(French, leave to do) In economic and social thought, the doctrine of non-interventionism by government in the workings of markets. The doctrine is wrongly attributed to Adam Smith, who in fact advocated qualified intervention for social action in areas of market failure, for example in order to ensure education of the poor.

Laissez-Faire, a French term that translates loosely as "let things alone," originated in the eighteenth century with a school of French economists, known as the Physiocrats, who opposed trade restrictions that supported older economic systems such as mercantilism. Adam Smith, an eighteenth-century Scottish economist, popularized the term and gave it added influence in later economic thought. He argued that a society's economic well-being and progress are assured when individuals freely apply their capital and labor without state intervention. The theory holds that individuals act out of self-interest and that self-interested action will benefit the larger community's general well-being. Proponents of laissez-faire reject state intervention through measures such as protective social legislation and trade restrictions, viewing them as socially injurious. The doctrine of laissez-faire involves not only a negative social policy of nonintervention but also a positive philosophy that recognizes a harmony between individual and social interests.

The United States has never adhered unconditionally to this doctrine, either theoretically or practically. Tariffs, components of American trade policy almost since the country's independence, contravene the principle of individualism expressed in the doctrine of laissez-faire. Antitrust legislation such as the Sherman Antitrust Act (1890) and the Clayton Act (1914) similarly violate laissez-faire principles. Numerous examples of protective labor legislation, such as minimum-wage laws, workers' compensation statutes, hours legislation, and social security laws, belied professed allegiance to laissez-faire principles during the first half of the twentieth century. Since World War II, only a small minority of Americans have espoused laissez-faire theories.

Bibliography

Bensel, Richard Franklin. The Political Economy of American Industrialization, 1877–1900. Cambridge, U.K.: Cambridge University Press, 2000.

Weiss, Thomas, and Donald Shaefer, eds. American Economic Development in Historical Perspective. Stanford, Calif.: Stanford University Press, 1994.

French for “Let (people) do (as they choose).” It describes a system or point of view that opposes regulation or interference by the government in economic affairs beyond the minimum necessary to allow the free enterprise system to operate according to its own laws.

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In economics, Laissez-faire (English pronunciation: /ˌlɛseɪˈfɛər/  ( listen), French: [lɛsefɛʁ]  ( listen)) means allowing industry to be free of government restriction, especially restrictions in the form of tariffs and government monopolies. The phrase is French and literally means "let do," though it broadly implies "let it be" or "leave it alone." Sometimes, but rarely, the phrase is used to describe a form of philosophic anarchism.

Contents 1 Economic and political theory 2 History of laissez-faire debate 2.1 China 2.2 Europe 2.3 United States 3 See also 4 References 5 Bibliography 6 Further reading

Economic and political theory

Main article: Free market

The exact origins of the term laissez-faire as a slogan of economic liberalism are uncertain. The first recorded use of the "laissez-faire" maxim was by French minister René de Voyer, Marquis d'Argenson, a champion of free trade, in his famous outburst:^[1]

“

Laissez faire, telle devrait être la devise de toute puissance publique, depuis que le monde est civilisé.... Détestable principe que celui de ne vouloir grandir que par l'abaissement de nos voisins! Il n'y a que la méchanceté et la malignité du coeur de satisfaites dans ce principe, et l’intérêt y est opposé. Laissez faire, morbleu! Laissez faire!! (Let it be, such should be the motto of every public power, ever since the world is civilized..... A detestable principle that we cannot grow but by the lowering of our neighbors! There is nothing but mischief and malignity of heart that are satisfied with that principle, and interest is opposed to it. Let it be, damn it! Let it be!!)

”

According to historical folklore, the phrase stems from a meeting c. 1680 between the powerful French finance minister Jean-Baptiste Colbert and a group of French businessmen led by a certain M. Le Gendre. When the eager mercantilist minister asked how the French state could be of service to the merchants, Le Gendre replied simply "Laissez-nous faire" ('Leave us be', lit. 'Let us do').^[2]

The laissez faire slogan was popularised by Vincent de Gournay, a French intendant of commerce in the 1750s. Gournay was an ardent proponent of the removal of restrictions on trade and the deregulation of industry and economic prosperity in France. Gournay was delighted by the LeGendre anecdote, and forged it into a larger maxim all his own: "Laissez faire et laissez passer" ('Let do and let pass'). His motto has also been identified as the longer "Laissez faire et laissez passer, le monde va de lui même!" ('Let do and let pass, the world goes on by itself!'). Although Gournay left no written tracts on his economic policy ideas, he had immense personal influence on the thinking of his contemporaries, notably the physiocrats, who credit both the 'laissez-faire' slogan and doctrine to Gournay.^[3]

Prior to Gournay, P.S. de Boisguilbert, had enunciated the phrase "on laisse faire la nature" ('let nature run its course').^[4] Laissez-faire was one of a number of French "free trade" and "non-interference" slogans coined in the seventeenth century. D'Argenson, during this time, was better known for the similar but less-celebrated motto "Pas trop gouverner" ("Govern not too much").^[5]

The first known English-language use of "laissez faire" was in 1774, by George Whatley, in the book Principles of Trade, which was co-authored with Benjamin Franklin. Notably, classical economists, such as Thomas Malthus, Adam Smith and David Ricardo, did not use the term. Jeremy Bentham used the term, but only with the advent of the Anti-Corn Law League did the term receive much of its (English) meaning.^[6] Nonetheless, it was probably James Mill's reference to the "laissez-faire" maxim (together with "pas trop gouverner") in an 1824 entry for Encyclopedia Britannica that really brought the term into wider English usage.

History of laissez-faire debate

China

During the Han, Tang, Song, and Ming dynasties, Chinese scholar-officials would often debate about the interference the government should have in the economy, such as setting monopolies in lucrative industries and instating price controls. Such debates were often heated. During the Han and Tang, emperors sometimes instated government monopolies in times of war, and abolished them later when the fiscal crisis had passed. Eventually, in the later Song and Ming dynasties, state monopolies were abolished in every industry and were never reinstated during the length of that dynasty. During the dynasty of Qing, founded by an ethnic group in northern China, state monopolies were reinstated^[7].

Europe

In Britain, in 1843, the newspaper The Economist was founded, and became an influential voice for laissez-faire capitalism.^[8] In response to the Irish famine of 1846-1849, in which a million and a half people died of starvation, they argued that for the government to supply free food for the Irish would violate natural law. Clarendon, the Lord Lieutenant of Ireland, wrote, "I don't think there is another legislature in Europe that would disregard such suffering."^[9] The group calling itself the Manchester Liberals, to which Richard Cobden and Richard Wright belonged, were staunch defenders of free trade, and their work was carried on, after the death of Richard Cobden in 1866, by the The Cobden Club.^[10] In 1867, a free trade treaty was signed between Britain and France, after which several of these treaties were signed among other European countries.

British laissez-faire was not absolute. The United Kingdom company law^[11], the Limited Liability Act 1855, and the Joint Stock Companies Act 1856 were exceptions.

Austrian scholars consider that laissez-faire was never the main doctrine of any nation, and at the end of the 19th century, European countries would find themselves taking up economic protectionism and interventionism again. France for example, started cancelling its free trade agreements with other European countries in 1890. Germany's protectionism started (again) with a December 1878 letter from Bismarck, resulting in the iron and rye tariff of 1879.

United States

The Federal reserve, headquarters in Eccles Building is criticized by laissez-faireists as the cause of business cycles.

Although the period before the American Civil War was notable for the limited extent of the federal government, the Austrian School suggest that there was a considerable degree of government intervention in the economy—particularly after the 1820s. Notable examples of government intervention in the period prior to the Civil War include the establishment of the First Bank of the United States and Second Bank of the United States as well as various protectionist measures (e.g., the tariff of 1828). Several of these proposals met with serious opposition, and required a great deal of horse trading to be enacted into law. For instance, the First National Bank would not have reached the desk of President George Washington in the absence of an agreement that was reached between Alexander Hamilton and several southern members of Congress to locate the capital in the District of Columbia. In contrast to Hamilton and the Federalists was the opposing political party the Democratic-Republicans.

Most of the early opponents of laissez-faire capitalism in the United States subscribed to the American School (economics). This school of thought was inspired by the ideas of Alexander Hamilton, who proposed the creation of a government sponsored bank and increased tariffs to favor northern industrial interests. Following Hamilton's death, the more abiding protectionist influence in the antebellum period came from Henry Clay and his American System.

In the mid-19th century, the United States followed the Whig tradition of economic liberalism, which included increased state control, regulation and macroeconomic development of infrastructure.^[12] Public works such as the provision and regulation transportation such as railroads took effect. The Pacific Railway Acts provided the development of the First Transcontinental Railroad.^[12] In order to help pay for its war effort in the American Civil War, the United States government imposed its first personal income tax, on August 5, 1861, as part of the Revenue Act of 1861 (3% of all incomes over US $800; rescinded in 1872).

Following the Civil War, the movement towards a mixed economy accelerated with even more protectionism and government regulation. In the 1880s and 1890s, significant tariff increases were enacted (see the McKinley Tariff and Dingley Tariff). Moreover, with the enactment of the Interstate Commerce Act of 1887, the Sherman Anti-trust Act, the federal government began to assume an increasing role in regulating and directing the country's economy.

The Progressive Era saw the enactment of even more controls on the economy, as evidenced by the Wilson Administration's New Freedom program.

Following World War I and the Great Depression, Keynesian policies turned the state into a mixed economy. The United States, in the 1980s, for example, sought to protect its automobile industry by "voluntary" export restrictions from Japan.^[13] One scholar wrote about the early 1980s that:

“

By and large, the comparative strength of the dollar against major foreign currencies has reflected high U.S. interest rates driven by huge federal budget deficits. Hence, the source of much of the current deterioration of trade is not the general state of the economy, but rather the government's mix of fiscal and monetary policies – that is, the problematic juxtaposition of bold tax reductions, relatively tight monetary targets, generous military outlays, and only modest cuts in major entitlement programs. Put simply, the roots of the trade problem and of the resurgent protectionism it has fomented are fundamentally political as well as economic.[14]

”

See also

Look up laissez faire in Wiktionary, the free dictionary.

• Anarcho-capitalism
• Capitalism
• Capitalism: The Unknown Ideal by Ayn Rand
• Classical liberalism
• Criticisms of capitalism
• Economic liberalism
• Free market
• Libertarianism
• Market anarchism
• Market fundamentalism
• Minarchism
• Objectivism
• Ordoliberalism

References

1. ^ From d'Argenson's 1736 Memoires (publ.1858), as quoted in J.M. Keynes, 1927, "The End of Laissez Faire". A. Oncken (Die Maxime Laissez faire et laissez passer, ihr Ursprung, ihr Werden, 1866) indicates d'Argenson used the 'laissez-faire' term firstly in his 1736 Memoires and then in an article in the 1751 Journal Oeconomique (the term's first known appearance in print).
2. ^ The anecdote on Le Gendre is briefly referenced in J. Turgot's "Eloge de Vincent de Gournay," Mercure, August, 1759).
3. ^ Gournay was credited with the phrase by Jacques Turgot, the Marquis de Mirabeau, the Comte d'Albon and DuPont de Nemours among others. J. Turgot, op cit. V.R. Marquis Mirabeau, in Philosophie rurale 1763 and Ephémérides du Citoyen, 1767. C.C. Comte d'Albon,"Éloge Historique de M. Quesnay", Nouvelles Ephémérides Économiques, May, 1775, p.136-7. P.S.DuPont de Nemours, in Ouevres de Jacques Turgot, 1808-11, Vol. I, p.257 and p.259 (Daire ed.)
4. ^ "Tant, encore une fois, qu'on laisse faire la nature, on ne doit rien craindre de pareil", P.S. de Boisguilbert, 1707, Dissertation de la nature des richesses, de l'argent et des tributs.
5. ^ DuPont de Nemours, op cit, p.258. Oncken (op.cit) and Keynes (op.cit.) also credit the Marquis d'Argenson with the phrase "Pour gouverner mieux, il faudrait gouverner moins" ('"To govern better, one needs to govern less"), possibly the source of the famous "That government is best which governs least" motto popular in American circles, attributed variously to Thomas Paine, Thomas Jefferson and Henry Thoreau.
6. ^ Abbott P. Usher et al. (1931). "Economic History—The Decline of Laissez Faire". American Economic Review 22 (1, Supplement): 3–10. 
7. ^ Li Bo and Zheng Yin, 5000 years of Chinese history, Inner Mongolian People's publishing corp , ISBN 7-204-04420-7, 2001
8. ^ Scott Gordon (1955). "The London Economist and the High Tide of Laissez Faire". Journal of Political Economy 63 (6): 461–488. doi:10.1086/257722. 
9. ^ James L. Richardson, Contending Liberalisms in World Politics, 2001, Lynne Rienner Publishers, ISBN 1555879152
10. ^ Antonia Taddei (1999). "London Clubs in the Late Nineteenth Century" (PDF). http://www.nuff.ox.ac.uk/economics/history/paper28/28taddeiweb1.pdf. Retrieved 2008-12-30. 
11. ^ Walker, S.P. (1996). "Laissez-faire, Collectivism And Companies Legislation In Nineteenth-century Britain". The British Accounting Review (Elsevier) 28 (4): 305–324. doi:10.1006/bare.1996.0021. 
12. ^ ^{a b} Guelzo, Allen C. (1999), Abraham Lincoln: Redeemer President, Grand Rapids, Mich.: W.B. Eerdmans Pub. Co, ISBN 0-8028-3872-3, http://www.questia.com/PM.qst?a=o&d=99466893 
13. ^ Robert W. Crandall (1987). "The Effects of U.S. Trade Protection for Autos and Steel". Brookings Papers on Economic Activity 1987 (1): 271–288. doi:10.2307/2534518. 
14. ^ Pietro S. Nivola (1986). "The New Protectionism: U.S. Trade Policy in Historical Perspective". Political Science Quarterly 101 (4): 577–600. doi:10.2307/2150795. 

Bibliography

• Brebner, John Bartlet (1948). "Laissez Faire and State Intervention in Nineteenth-Century Britain". Journal of Economic History 8: 59–73. 
• Fisher, Irving (January 1907). "Why has the Doctrine of Laissez Faire been Abandoned?". Science 25 (627): 18–27. doi:10.1126/science.25.627.18. PMID 17739703. 
• Taussig, Frank W. (1904). "The Present Position of the Doctrine of Free Trade". Publications of the American Economic Association 6 (1): 29–65. 

Further reading

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More spoken articles

• Wu-Wei in Europe. A Study of Eurasian Economic ThoughtPDF (773 KB) by Christian Gerlach, London School of Economics – March 2005
• John Maynard Keynes, The end of laissez-faire (1926)
• Working with Market Conditions to Increase Profits
• Is this the End of Laissez-Faire Capitalism ? by Joseph Lazzaro, Daily Finance, March 4 2009

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Dansk (Danish)
n. - laden stå til, kræfternes frie spil

Français (French)
n. - laissez-faire
adj. - laissez-faire

Deutsch (German)
n. - Laissez-faire, Nichteinmischung der Regierung in das Marktgeschehen , Gewährenlassen, Gleichgültigkeit
adj. - Laissez-faire- (sich selbst überlassend)

Ελληνική (Greek)
n. - πολιτική μη επέμβασης, οικονομικός φιλελευθερισμός
adj. - μη επεμβατικός, φιλελεύθερος

Italiano (Italian)
laissez-faire, permissivo

Português (Portuguese)
n. - laissez-faire (m), livre mercado (m)
adj. - de mercado livre

Русский (Russian)
невмешательство, принцип невмешательства государства в экономику

Español (Spanish)
n. - liberalismo
adj. - liberal

Svenska (Swedish)
n. - efterlåtenhet, nonchalans, låt-gå-system, statlig passivitet gentemot enskilda företagare
adj. - efterlåten, nonchalant

中文（简体）(Chinese (Simplified))
放任政策

中文（繁體）(Chinese (Traditional))
n. - 放任政策

한국어 (Korean)
n. - 자유방임주의, 무간섭주의

日本語 (Japanese)
n. - 無干渉主義, レッセフェール
adj. - 無干渉主義の

עברית (Hebrew)
n. - ‮לסה-פיר ("תנו לעשות" בצרפתית), מדיניות כלכלית של אי-התערבות ממשלתית בכלכלה ויוזמה חופשית‬

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