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Laissez-Faire: The Unfettered Economy

An exploration of the economic philosophy advocating for minimal government intervention, allowing markets to operate freely.

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The Core Concept

Economic Freedom

Laissez-faire, a French term meaning "let do" or "let it be," describes an economic system characterized by minimal to no government intervention in market transactions. This philosophy rests on the foundational axioms that the individual is the primary unit of society, possesses a natural right to freedom, and that the natural order of the economy is inherently self-regulating.

Competitive Markets

A fundamental principle of laissez-faire is the emphasis on competitive markets. Early proponents stressed that markets should naturally foster competition, believing this mechanism drives efficiency and innovation without the need for external regulation.

Role of Government

Proponents advocate for a near-complete separation of government from the economic sphere. The government's role is ideally limited to upholding fundamental rights, such as private property and individual liberty, and ensuring the basic legal framework for contracts, rather than actively managing or directing economic activity.

Origins of the Phrase

French Roots

The phrase laissez faire, laissez passer ("let do, let pass") is often attributed to French minister Vincent de Gournay. It gained prominence in the mid-18th century, reflecting a growing sentiment against the heavy mercantilist regulations prevalent in France at the time.

Philosophical Basis

The concept draws inspiration from Enlightenment ideals and potentially from the Taoist principle of wu wei (non-action). It suggests that economic systems function best when left to their own natural course, guided by individual self-interest contributing to the collective good.

English Adoption

The term entered English usage in the late 18th century, popularized through discussions of Physiocratic ideas and later adopted by classical economists. Its association with the Anti-Corn Law League in Britain further cemented its meaning related to free trade principles.

Historical Trajectory

Ancient Rome

Elements of laissez-faire principles, particularly regarding private property and freedom of contract, can be traced back to Roman law. While public law allowed state interference, private law emphasized individual economic freedom, a concept that influenced Western legal traditions.

European Development

The Physiocrats in 18th-century France were key proponents, advocating for deregulation and a single tax on land rent. Adam Smith's work, particularly The Wealth of Nations, further developed these ideas, linking laissez-faire with the concept of the "invisible hand" guiding markets toward natural order and liberty.

United States Context

In the U.S., the interpretation of laissez-faire evolved. While classical liberals supported free markets, they also accepted government intervention for specific purposes like tariffs and infrastructure development. The concept has been debated alongside policies like the New Deal and Reaganomics, with figures like Ayn Rand advocating for a strict interpretation.

Relationship with Other Systems

Laissez-Faire Capitalism

Often termed "raw," "pure," or "unrestrained" capitalism, this model emphasizes minimal government and is driven primarily by the profit motive. Advocates argue it fosters voluntary relationships and competition, benefiting both workers and consumers through market forces.

Laissez-Faire and Socialism

While seemingly contradictory, some socialist traditions, particularly market anarchism and mutualism, incorporate elements of laissez-faire by advocating for free markets and voluntary cooperation without state control. However, traditional socialism typically involves significant state planning or collective ownership, contrasting sharply with laissez-faire principles.

Mixed Economies

Most modern economies operate as mixed economies, blending elements of free markets with government regulation and intervention. This approach contrasts with the pure laissez-faire ideal, aiming to balance economic freedom with social welfare and stability.

Key Principles

Property Rights

The protection of private property rights is paramount. This ensures individuals can own, use, and exchange resources freely, forming the basis for market transactions.

Non-Intervention

Government should refrain from interfering in economic activities through measures like subsidies, price controls, or excessive regulation. The belief is that such interventions distort natural market mechanisms.

Individualism

Emphasis is placed on individual autonomy, freedom of choice, and voluntary association in economic dealings. The pursuit of individual self-interest is seen as the engine of economic prosperity.

Key Figures and Ideas

Early Advocates

Thinkers like Vincent de Gournay and François Quesnay championed the idea in France. Adam Smith, though not using the term, laid crucial groundwork with his concept of the "invisible hand" in The Wealth of Nations, arguing that individual self-interest unintentionally benefits society.

Classical Economists

Classical economists like David Ricardo and Thomas Malthus, while not directly using the phrase, contributed to the body of thought supporting free markets. Jeremy Bentham and James Mill also engaged with the concept, helping to popularize it in English discourse.

Modern Adherents

Figures like Ayn Rand strongly advocated for laissez-faire capitalism as the only moral social system, emphasizing individual rights and the separation of state and economics. Economists like Milton Friedman and Thomas Sowell have also articulated arguments supporting free-market principles with minimal government intervention.

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References

References

  1.  Quick Reference Handbook Set, Basic Knowledge and Modern Technology (revised) by Edward H. Litchfield, PhD
  2.  Edward H. Litchfield. "Quick Reference Handbook Set, Basic Knowledge and Modern Technology" (revised ed.).
  3.  As quoted in J. M. Keynes, 1926, "The End of Laissez Faire". Argenson's Mémoirs were published only in 1858, ed. Jannet, Tome V, p. 362. See A. Oncken (Die Maxime Laissez faire et laissez passer, ihr Ursprung, ihr Werden, 1866).
  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.  Fine, Sidney. Laissez Faire and the General-Welfare State. United States: The University of Michigan Press, 1964. Print
  6.  Gotthelf 2000, pp. 91–92; Peikoff 1991, pp. 379–380.
  7.  Sciabarra 1995, pp. 266–267; Burns 2009, pp. 268–269.
  8.  Sciabarra 1995, pp. 280–281; Peikoff 1991, pp. 371–372; Merrill 1991, p. 139.
  9.  Chartier, Gary; Johnson, Charles W. (2011). Markets Not Capitalism: Individualist Anarchism Against Bosses, Inequality, Corporate Power, and Structural Poverty. Brooklyn, NY:Minor Compositions/Autonomedia
  10.  Brown, Susan Love. 1997. "The Free Market as Salvation from Government". In Meanings of the Market: The Free Market in Western Culture. Berg Publishers. p. 107.
  11.  Carson, Kevin A. (2008). Organization Theory: A Libertarian Perspective. Charleston, SC:BookSurge.
  12.  Carson, Kevin A. (2010). The Homebrew Industrial Revolution: A Low-Overhead Manifesto. Charleston, SC: BookSurge.
  13.  Long, Roderick T. (2000). Reason and Value: Aristotle versus Rand. Washington, DC:Objectivist Center
  14.  Sciabarra, Chris Matthew (2000). Total Freedom: Toward a Dialectical Libertarianism. University Park, PA:Pennsylvania State University Press.
  15.  Chartier, Gary (2009). Economic Justice and Natural Law. Cambridge:Cambridge University Press.
  16.  Gillis, William (2011). "The Freed Market." In Chartier, Gary and Johnson, Charles. Markets Not Capitalism. Brooklyn, NY: Minor Compositions/Autonomedia. pp. 19–20.
  17.  Chartier, Gary; Johnson, Charles W. (2011). Markets Not Capitalism: Individualist Anarchism Against Bosses, Inequality, Corporate Power, and Structural Poverty. Brooklyn, NY: Minor Compositions/Autonomedia. pp. 1–16.
  18.  Gary Chartier and Charles W. Johnson (eds). Markets Not Capitalism: Individualist Anarchism Against Bosses, Inequality, Corporate Power, and Structural Poverty. Minor Compositions; 1st edition (November 5, 2011
  19.  See Gary Chartier, Anarchy and Legal Order: Law and Politics for a Stateless Society (New York: Cambridge UP 2013) 44–156.
  20.  See Gary Chartier, "Natural Law and Non-Aggression," Acta Juridica Hungarica 51.2 (June 2010): 79–96 and, for an earlier version, Justice 32–46.
  21.  See Gary Chartier, "Pirate Constitutions and Workplace Democracy," Jahrbuch für Recht und Ethik 18 (2010): 449–467.
  22.  See Gary Chartier,' "Intellectual Property and Natural Law," Australian Journal of Legal Philosophy 36 (2011): 58–88.
  23.  Spencer J. Pack. Capitalism as a Moral System: Adam Smith's Critique of the Free Market Economy. Great Britain: Edward Elgar, 2010. Print
A full list of references for this article are available at the Laissez-faire Wikipedia page

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