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The principles of laissez-faire economics advocate for extensive government intervention, including subsidies and regulations, to ensure market stability.
Answer: False
Laissez-faire economics fundamentally advocates for minimal government intervention, not extensive intervention, subsidies, or regulations, as these contradict its core tenets of free markets and individual economic liberty.
The core axioms of laissez-faire include the primacy of the individual, the natural right to freedom, and the belief in a self-regulating natural order.
Answer: True
The foundational principles of laissez-faire economics are indeed rooted in the primacy of the individual as the basic societal unit, the inherent natural right to liberty, and the concept of a harmonious and self-regulating natural order within the economy.
Which economic system is fundamentally characterized by transactions free from government intervention like subsidies or regulations?
Answer: Laissez-faire
Laissez-faire is defined by its core principle of minimal government intervention in economic transactions, allowing markets to operate freely through private dealings.
According to the source, which of the following is NOT a core axiom of laissez-faire?
Answer: Government intervention is necessary to ensure social equity.
The core axioms of laissez-faire emphasize individual liberty, the primacy of the individual, and a self-regulating natural order, fundamentally opposing the notion that government intervention is necessary for social equity.
Vincent de Gournay is credited with popularizing the phrase 'laissez faire, laissez passer' in French economic circles.
Answer: True
Vincent de Gournay, an influential figure in 18th-century French economic thought, is widely recognized for popularizing the maxim 'laissez faire, laissez passer'.
The Physiocrats advocated for a tax system that heavily burdened labor and production to fund the state.
Answer: False
Contrary to this statement, the Physiocrats advocated for a single tax ('impôt unique') primarily on land rent, believing it was the least distortionary and most equitable form of taxation, as it did not penalize labor or production.
Adam Smith's 'The Wealth of Nations' argued against the concept of self-interest guiding economic activity.
Answer: False
Adam Smith's seminal work, 'The Wealth of Nations,' actually argued that individual self-interest, operating within a free market, could lead to beneficial societal outcomes, famously encapsulated by the 'invisible hand' metaphor.
The term 'laissez-faire' first appeared in print in the 19th century.
Answer: False
While its widespread adoption occurred in the 19th century, the term 'laissez-faire' appeared in print earlier, notably in the mid-18th century, associated with French economic discourse.
The anecdote involving M. Le Gendre and Jean-Baptiste Colbert illustrates merchants' preference for minimal government intervention.
Answer: True
The anecdote, wherein M. Le Gendre famously responded to Colbert's offer of state assistance with 'Laissez-nous faire' ('Let us do it'), serves as an early illustration of merchants advocating for reduced government interference in their affairs.
Roman law's emphasis on state control over trade influenced the development of laissez-faire principles.
Answer: False
Roman law, particularly its development of private law concerning property and contracts, provided a foundation for principles of individual rights and freedom of trade, which subsequently influenced the development of laissez-faire thought, rather than emphasizing state control over trade.
The Physiocrats believed taxing labor and production was the most equitable form of taxation.
Answer: False
The Physiocrats advocated for a single tax ('impôt unique') on land rent, considering it the most equitable and least distortionary tax, as they believed taxing labor and production would hinder economic activity.
Adam Smith expressed concerns that capitalist society might produce indolent landlords and intellectually stunted workers.
Answer: True
Adam Smith did express concerns that landlords might become indolent due to passive income and that workers engaged in repetitive tasks could suffer from intellectual stunting, alongside potential issues for capitalists prioritizing their own interests.
The Physiocrats' concept of 'impôt unique' involved taxing multiple sources of revenue, including labor and trade.
Answer: False
The Physiocrats' concept of 'impôt unique' proposed a single tax specifically on land rent, believing that taxing labor and trade would be economically detrimental and inequitable.
Who is primarily credited with popularizing the French phrase 'laissez faire, laissez passer' in economic contexts?
Answer: Vincent de Gournay
Vincent de Gournay, an 18th-century French economist, is widely credited with popularizing the phrase 'laissez faire, laissez passer' within economic discourse.
What specific tax did the 18th-century French Physiocrats advocate for as the most equitable?
Answer: An 'impôt unique' specifically on land rent
The Physiocrats advocated for an 'impôt unique,' a single tax levied exclusively on land rent, which they considered the most equitable and economically sound form of taxation.
The anecdote involving M. Le Gendre and Jean-Baptiste Colbert is often cited as an early illustration of which economic principle?
Answer: The idea that merchants thrive with minimal government intervention
The anecdote of M. Le Gendre's response to Jean-Baptiste Colbert is frequently used to illustrate the principle that merchants and commerce often flourish best when subjected to minimal government intervention.
Which historical legal system's emphasis on private property and freedom of trade significantly influenced the foundations of laissez-faire thought?
Answer: Roman Law
Roman Law, with its sophisticated development of private property rights and contract law, provided a foundational legal framework that significantly influenced the principles of economic freedom and minimal state intervention inherent in laissez-faire thought.
According to Adam Smith's expressed misgivings, which group might become indolent due to passive revenue?
Answer: Landlords
Adam Smith expressed concerns that landlords, deriving income passively from land ownership, might become indolent and less inclined towards productive economic activity.
In the 19th century, laissez-faire became a central doctrine of European socialism.
Answer: False
In the 19th century, laissez-faire principles were primarily associated with liberalism, advocating for economic freedom. Socialism, conversely, generally advocated for greater state or collective control over the economy.
'The Economist' newspaper, founded in the mid-19th century, has consistently promoted protectionist policies.
Answer: False
Founded in 1843, 'The Economist' newspaper has historically been a prominent advocate for laissez-faire capitalism and free trade policies, rather than protectionism.
James Wilson, founder of 'The Economist', believed the government should provide extensive aid during famines.
Answer: False
James Wilson, the founder of 'The Economist,' expressed a view consistent with strict laissez-faire, arguing against extensive government aid during famines, emphasizing that it was not the government's role to provide such assistance.
The repeal of the Corn Laws in Britain removed tariffs on imported grain, aligning with free trade principles.
Answer: True
The repeal of the Corn Laws in 1846 marked a significant victory for free trade advocates, removing protectionist tariffs on imported grain and aligning with laissez-faire economic principles.
19th-century American classical liberals generally adhered more strictly to non-intervention than their European counterparts.
Answer: False
Historical analysis suggests that 19th-century American classical liberals were often more willing to accept government intervention, such as through tariffs and subsidies for infrastructure, compared to their European counterparts who tended towards stricter adherence to non-interventionist principles.
The establishment of the US Patent Office in 1802 is an example of government intervention contrary to strict laissez-faire.
Answer: True
The establishment of institutions like the US Patent Office in 1802 represents a form of government intervention in the economy, which is considered contrary to the strict principles of laissez-faire that advocate for minimal state involvement.
The 'American School' of economic thought, influenced by Hamilton and Clay, strongly supported free trade and opposed all government support for industry.
Answer: False
The 'American School' of economic thought, associated with figures like Alexander Hamilton and Henry Clay, generally favored protectionist policies and government support for industry and infrastructure, rather than strict free trade and opposition to all government support.
The US government's imposition of a personal income tax in 1861 during the Civil War was consistent with strict laissez-faire principles.
Answer: False
The imposition of a personal income tax by the US government during the Civil War represented a significant intervention in the economy, diverging from strict laissez-faire principles.
Frank Bourgin's interpretation suggests the US Founding Fathers intended minimal government economic involvement to protect political independence.
Answer: False
Frank Bourgin's interpretation suggests that the US Founding Fathers envisioned a significant role for government in economic development to ensure stability and protect political independence, rather than intending minimal economic involvement.
The Anti-Corn Law League successfully campaigned for the repeal of protectionist tariffs on grain.
Answer: True
The Anti-Corn Law League was instrumental in the successful campaign for the repeal of the Corn Laws, which were protectionist tariffs on imported grain, thereby promoting free trade principles.
Government promotion of infrastructure like railroads in the US is seen as a strict application of laissez-faire.
Answer: False
Government promotion of infrastructure, such as railroads and canals, through subsidies and direct involvement in the US, is generally considered a departure from strict laissez-faire principles, which advocate for minimal state intervention.
Laissez-faire principles were integrated into 19th-century European liberalism, emphasizing economic freedom.
Answer: True
Laissez-faire principles became a cornerstone of 19th-century European liberalism, advocating for economic freedom, free markets, and limited government intervention in economic affairs.
In the 19th century, laissez-faire principles were most closely associated with which political ideology?
Answer: Liberalism
During the 19th century, laissez-faire principles became a central tenet of liberalism, advocating for individual economic liberty, free markets, and limited government intervention.
What was the stance of 'The Economist' newspaper, founded in 1843, regarding government intervention in the economy?
Answer: It became an influential voice advocating for laissez-faire capitalism and free trade.
Founded in 1843, 'The Economist' newspaper emerged as a significant proponent of laissez-faire capitalism and free trade, consistently advocating for reduced government intervention in economic affairs.
James Wilson, founder of 'The Economist', expressed a view on famine relief that aligned with:
Answer: A strict interpretation of laissez-faire, arguing against government intervention.
James Wilson, founder of 'The Economist,' articulated a stance on famine relief consistent with strict laissez-faire principles, arguing against extensive government intervention and emphasizing individual responsibility.
The repeal of the Corn Laws in Britain in 1846 was significant because it:
Answer: Removed tariffs on imported grain, aligning with free trade principles.
The repeal of the Corn Laws in 1846 was a landmark event that dismantled protectionist tariffs on imported grain, thereby advancing free trade principles and aligning with laissez-faire economic ideology.
How did 19th-century American classical liberals differ from their European counterparts regarding government intervention?
Answer: American liberals were more willing to accept government intervention, such as tariffs and subsidies.
Historical accounts suggest that 19th-century American classical liberals were often more amenable to government intervention, including tariffs and subsidies for infrastructure, than their European counterparts who adhered more strictly to non-interventionist doctrines.
Which of the following US government actions in the early Republic is cited as an example contradicting strict laissez-faire?
Answer: The establishment of the Patent Office in 1802.
The establishment of the US Patent Office in 1802, along with other early federal initiatives, is cited as an example of government intervention that deviates from the strict laissez-faire principle of minimal state involvement in economic affairs.
The 'American School' of economic thought, associated with figures like Alexander Hamilton, generally favored:
Answer: Protectionist tariffs and government support for infrastructure.
The 'American School' of economic thought, influenced by figures such as Alexander Hamilton, typically advocated for protectionist tariffs and government support for infrastructure and industry, diverging from pure laissez-faire.
The US government's decision to implement a personal income tax during the Civil War demonstrated:
Answer: A departure from pure laissez-faire principles towards government intervention.
The implementation of a personal income tax by the US government during the Civil War represented a significant departure from strict laissez-faire principles, indicating a willingness to employ government intervention for national objectives.
The Anti-Corn Law League's successful campaign is noted for its role in:
Answer: Popularizing laissez-faire ideas and free trade in England.
The Anti-Corn Law League's successful advocacy for the repeal of the Corn Laws significantly contributed to the popularization of laissez-faire principles and free trade ideology within England.
Ayn Rand viewed laissez-faire as the only moral social system because it protects individual rights by separating state and economics.
Answer: True
Ayn Rand, a proponent of Objectivism, considered laissez-faire the only moral social system, arguing that its separation of state and economics is essential for protecting individual rights and promoting rational self-interest.
Left-wing laissez-faire advocates for robust government control over industries to ensure equitable outcomes.
Answer: False
Left-wing laissez-faire, or free-market anarchism, advocates for radically free markets while opposing capitalism and statist privileges; it does not promote robust government control over industries.
John Maynard Keynes believed laissez-faire dogma should be strictly followed in all economic decisions.
Answer: False
John Maynard Keynes critiqued laissez-faire dogma, arguing that the necessity of market intervention versus non-intervention should be decided on a case-by-case basis, rather than adhering strictly to the doctrine.
Friedrich Hayek concluded that a laissez-faire banking industry is inherently stable and counter-cyclical.
Answer: False
Friedrich Hayek concluded that a freely competitive, laissez-faire banking industry tends to be inherently destabilizing and pro-cyclical, necessitating central banking oversight.
Karl Polanyi argued that self-regulating markets, central to laissez-faire, naturally lead to social stability and well-being.
Answer: False
Karl Polanyi argued in 'The Great Transformation' that self-regulating markets, central to laissez-faire ideology, tend to cause social disruption and undermine human well-being, rather than naturally leading to stability.
Critics argue that 'raw capitalism' may prioritize profit over worker interests and disregard sustainability.
Answer: True
A common critique of 'raw capitalism' or 'hyper-capitalism' is that it may indeed prioritize profit maximization over worker welfare, product quality, sustainability, and broader societal interests.
Kevin Carson coined the term 'vulgar libertarianism' to describe a philosophy that supports state intervention to correct market failures.
Answer: False
Kevin Carson coined the term 'vulgar libertarianism' to critique a form of libertarianism that, in his view, uses free market rhetoric to defend existing capitalist structures and inequalities, rather than advocating for true free markets.
Gary Chartier views property rights as absolute and divinely ordained, forming the basis of laissez-faire.
Answer: False
Gary Chartier's perspective views property rights not as absolute or divinely ordained, but as contingent social strategies, which informs his arguments for specific economic policies aimed at eliminating injustice.
Thomas Hobbes's 'state of nature' concept supports the idea that society functions best without any governing authority.
Answer: False
Thomas Hobbes's concept of the 'state of nature' posits a chaotic condition without government, arguing that a strong sovereign authority is necessary for order and security, thus contrasting with the laissez-faire ideal of minimal governance.
Robert Kuttner argues that globalization has strengthened governments' ability to manage capitalism in the public interest.
Answer: False
Robert Kuttner argues that globalization has diminished governments' capacity to manage capitalism in the public interest, posing challenges to national regulatory and welfare systems.
Herbert Spencer criticized a form of laissez-faire that passively allowed individuals to fail without intervention.
Answer: True
Herbert Spencer criticized a version of laissez-faire that he termed 'miserable,' which passively allowed individuals to fail without addressing societal issues or providing necessary support, even while generally favoring limited government.
Proponents like Friedman and Sowell argue that in laissez-faire systems, workers have little power to seek better conditions.
Answer: False
Proponents such as Milton Friedman and Thomas Sowell argue that in laissez-faire systems, workers possess significant power to seek better conditions, as employers must compete for labor by offering favorable terms.
David McNally argues that the historical development of capitalism involved coercion, contradicting the principles of a genuinely free market.
Answer: True
David McNally contends that the historical development of capitalism involved significant coercion and exploitation, which contradicts the idealized principles of a genuinely free market often associated with laissez-faire.
Ayn Rand defined laissez-faire as the separation of State and Economics, considering it:
Answer: The only moral social system because it protects individual rights.
Ayn Rand posited that laissez-faire, defined as the separation of State and Economics, is the sole moral social system due to its function in protecting individual rights and promoting rational self-interest.
What is 'left-wing laissez-faire' or 'free-market anarchism'?
Answer: An ideology promoting radically free markets while opposing capitalism and statist privileges.
'Left-wing laissez-faire,' also known as free-market anarchism, advocates for genuinely free markets and opposes capitalist hierarchies and state privileges, aiming for anti-capitalist outcomes through market mechanisms.
John Maynard Keynes criticized laissez-faire policies primarily because they:
Answer: Were based on flawed deductive reasoning and dogma.
John Maynard Keynes critiqued laissez-faire policies, arguing they were often based on flawed deductive reasoning and rigid dogma, and that economic decisions should be made pragmatically rather than adhering strictly to the doctrine.
Friedrich Hayek concluded that a freely competitive banking industry tended to be:
Answer: Destabilizing and pro-cyclical.
Friedrich Hayek concluded that a laissez-faire banking industry was inherently destabilizing and pro-cyclical, leading him to assert the necessity of central banking oversight.
Karl Polanyi's critique of self-regulating markets, as described in the source, focused on their tendency to:
Answer: Cause social disruption and undermine well-being.
Karl Polanyi argued that the pursuit of self-regulating markets, central to laissez-faire ideology, often leads to social disruption, commodification of labor and land, and the undermining of societal well-being.
Which of the following is a common criticism of 'raw capitalism' mentioned in the source?
Answer: It may disregard quality, sustainability, and human interests in favor of profit.
A frequent criticism of 'raw capitalism' is its potential to prioritize profit above all else, leading to disregard for product quality, environmental sustainability, and the welfare of workers and society.
Kevin Carson coined the term 'vulgar libertarianism' to criticize:
Answer: The use of free market rhetoric to defend corporate capitalism and inequality.
Kevin Carson coined 'vulgar libertarianism' to critique the tendency within some libertarian discourse to employ free market rhetoric in defense of corporate capitalism and existing economic inequalities, which he viewed as contrary to true libertarian principles.
Gary Chartier's perspective on property rights suggests they are:
Answer: Contingent social strategies, not absolute rights.
Gary Chartier views property rights not as absolute or divinely ordained, but as contingent social strategies, which informs his arguments for specific economic policies aimed at eliminating injustice.
Robert Kuttner argues that globalization presents a challenge primarily to:
Answer: Governments' capacity to manage capitalism in the public interest.
Robert Kuttner contends that globalization challenges governments' ability to effectively manage capitalism in the public interest, as national regulatory capacities are often strained by international economic forces.
Herbert Spencer criticized a version of laissez-faire for:
Answer: Passively allowing individuals to fail without addressing societal issues.
Herbert Spencer criticized a passive interpretation of laissez-faire that failed to address societal problems or support individuals, deeming it insufficient despite his general inclination towards limited government.
Milton Friedman and Thomas Sowell argue that in a laissez-faire system, competition among employers forces them to:
Answer: Offer better pay and working conditions to attract labor.
Milton Friedman and Thomas Sowell argue that in a laissez-faire system, the competitive pressure among employers compels them to offer superior pay and working conditions to attract and retain a skilled workforce.
David McNally's critique suggests that a truly laissez-faire system, free from state privileges, would ultimately:
Answer: Undermine capitalist structures.
David McNally argues that a genuinely free market, devoid of state-granted privileges and historical coercion, would ultimately undermine the foundations of capitalist structures.
The French phrase 'laissez faire, laissez passer' translates to 'let it be and let it go'.
Answer: False
The literal translation of 'laissez faire, laissez passer' is 'let do and let pass,' signifying a principle of non-interference in economic activities and the free movement of goods.
The 'invisible hand' metaphor suggests that markets require central planning to allocate resources efficiently.
Answer: False
The 'invisible hand' metaphor, as articulated by Adam Smith, posits that markets can achieve efficient resource allocation through the decentralized actions of individuals pursuing their self-interest, rather than requiring central planning.
Benedetto Croce coined the term 'liberism' to describe a political philosophy focused on state-led economic planning.
Answer: False
Benedetto Croce coined the term 'liberism' to denote economic liberalism, which is synonymous with laissez-faire capitalism, advocating for minimal state intervention, not state-led economic planning.
The concept of 'spontaneous order' suggests that complex systems require central planning to function effectively.
Answer: False
The concept of 'spontaneous order' posits that complex social and economic systems can emerge and function effectively without central planning or deliberate design, a notion closely aligned with laissez-faire principles.
The Taoist concept of 'wu wei' is philosophically linked to laissez-faire, representing effortless action or non-interference.
Answer: True
The Taoist concept of 'wu wei,' often translated as non-action or effortless action, shares philosophical parallels with laissez-faire, emphasizing natural processes and minimal intervention.
Giovanni Sartori distinguished 'liberism' as supporting government intervention for social welfare programs.
Answer: False
Giovanni Sartori distinguished 'liberism' (economic liberalism) as advocating for minimal state intervention, contrasting it with 'social liberalism,' which often supports government intervention for social welfare programs.
The phrase 'laissez faire, laissez passer' is often associated with the idea of allowing individuals and goods to move freely.
Answer: True
The phrase 'laissez faire, laissez passer' is indeed closely associated with the principle of economic freedom, encompassing the free movement of individuals and goods without undue governmental restriction.
How did Adam Smith's concept of the 'invisible hand' influence laissez-faire thought?
Answer: It suggested that individual self-interest could lead to societal benefits through market mechanisms.
Adam Smith's 'invisible hand' metaphor suggested that the pursuit of individual self-interest in a free market could, unintentionally, lead to beneficial outcomes for society as a whole, reinforcing the laissez-faire ideal of self-regulation.
Benedetto Croce used the term 'liberism' to refer to:
Answer: Economic liberalism, synonymous with laissez-faire capitalism.
Benedetto Croce employed the term 'liberism' to denote economic liberalism, which he equated with laissez-faire capitalism, emphasizing minimal state intervention in the economy.
The concept of 'spontaneous order' is closely related to laissez-faire because it suggests:
Answer: Complex systems can emerge effectively without central design.
The concept of 'spontaneous order' posits that complex social and economic systems can arise and function effectively through decentralized interactions, without the need for central planning, aligning with the laissez-faire emphasis on natural economic processes.
Giovanni Sartori distinguished 'liberism' from 'social liberalism' based on the latter's tendency to:
Answer: Support government intervention for social welfare.
Giovanni Sartori differentiated 'liberism' (economic liberalism) from 'social liberalism,' noting that social liberalism typically supports government intervention to provide social welfare programs.