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What is Laissez-Faire?
Laissez-faire is a French phrase that means “let it be.” As it pertains to political or economic systems, laissez-faire is a doctrine of non-interference. Most often, it refers to a hands-off or limited approach by a government in economic matters. This type of government would have few or no economic restrictions on trade or transactions, minimal or no taxes and tariffs and few restrictions on businesses. The term also might refer to the governing philosophy of a leader or government in matters other than economics.
Less Regulation and Control
A laissez-faire approach to economics means less government regulation and fewer artificial controls of production, buying, selling, trading and financing. It clearly promotes the free market. Limited government intrusion is the foundation of such a system, although the concept is less absolute than it once was.
People who believe in absolute laissez-faire economics, or no government regulation, are sometimes referred to as economic anarchists. They believe in no controls at all. “The market will work it out” is their motto.
Although there is some truth to that sentiment, most people who subscribe to the laissez-faire model of economics believe that some controls or regulations are required, if for no other reason than to prevent monopolies, corruption and other abuses. Allowing limited government regulation became more accepted by proponents of this type of policy in the 19th and 20th centuries after some corporations became too large to compete with, absorbed their competitors and attempted to control supply and demand through production as well as through price controls.
The laissez-faire model of economics is embraced by a wide variety of people across the political spectrum. It is rejected, however, by many people who believe that more government regulation is beneficial, even if they see regulation as a necessary evil. Those who reject it often approve of some form of wealth redistribution, whether in the form of public assistance or corporate welfare. Laissez-faire economics is generally considered a libertarian ideal.
As a Leadership Philosophy
Along with being an approach to economics, laissez-faire can be a philosophy of leadership. Many people, however, do not feel that a laissez-faire leader is a leader at all. Some people need a leader to exert authority and control. Others find that leaders who allow people to act under the dictates of their conscience and use their own judgment are better received and more respected.
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Discussion Comments
@kentuckycat - I completely understand where you are coming from. You can really see an example of this in the reaction of the two political parties in America after the "great recession." The Democrats were advocating the government have some control over the economy, and this was the reason for the stimulus package.
The Republicans were saying that they are too involved in the government. This is simply a classic case of the government having a bit of a laissez faire approach to the economy and then follow it up with being heavily involved after an economic catastrophe.
I totally understand both the arguments concerning the dangers of a laissez faire approach. Governments over the years that have advocated a "hands off" approach to the economy and the government have tended to be corrupt and completely out of touch with the populace and this has led to many severe problems.
Although the average person does not like government intervention it is important for the government to take control of the economy to some extent. If the government just lets the "the market work it out" problems can occur such as the various stock market crashes and the housing bubble bursting. Right after these instances occurred what happened? The government immediately got severely involved in the economy.
Although some people in government favor a laissez faire approach to running a country and an economy it is a totally ridiculous approach to have and history has proven it so.
America at the turn of the 20th century had severe corruption problems and a much more severe division between the rich and poor than today. By taking a hands off approach and not allowing government intervention the people in power were able to allow monopolies to flourish and political machines to run amok with bribery and corruption.
From an historical standpoint I always find the period around the turn of the 20th century a great period of study. During this time there was a severe laissez faire approach from both an economic and governmental standpoint and corruption ran rampant. Great political machines ran this country and there was virtual no opposition to the monopolies which ran the economy. Those who did oppose were in the minority and it took decades to convince the American people that there needed to be more government intervention.
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