laissez-faire


Also found in: Dictionary, Thesaurus, Legal, Financial, Idioms, Wikipedia.

laissez-faire

(lĕs'ā fâr`) [Fr.,=leave alone], in economics and politics, doctrine that an economic system functions best when there is no interference by government. It is based on the belief that the natural economic order tends, when undisturbed by artificial stimulus or regulation, to secure the maximum well-being for the individual and therefore for the community as a whole.

Formulations of the Doctrine

Historically, laissez-faire was a reaction against mercantilismmercantilism
, economic system of the major trading nations during the 16th, 17th, and 18th cent., based on the premise that national wealth and power were best served by increasing exports and collecting precious metals in return.
..... Click the link for more information.
, a system of commercial controls in which industry and trade, especially foreign trade, were merely seen as means of strengthening the state. Navigation laws, trade monopolies, taxes, and paternalistic regulations of all kinds bore heavily upon the rising class of merchants in the period of European colonial expansion. It was on behalf of this class that the French physiocratsphysiocrats
, school of French thinkers in the 18th cent. who evolved the first complete system of economics. They were also referred to simply as "the economists" or "the sect." The founder and leader of physiocracy was François Quesnay.
..... Click the link for more information.
, pioneer economists in the 18th cent., first formulated the principles of laissez-faire. With the physiocrats, state noninterference became a cardinal teaching; they especially opposed the taxation of commercial pursuits.

Opposition to mercantilism and state paternalism also motivated Adam Smith, father of classical economics, whose name more than any other is connected with British laissez-faire doctrines. Smith believed that individual welfare rather than national power was the correct goal; he thus advocated that trade should be free of government restrictions. When individuals were free to pursue self-interest, the "invisible hand" of rivalry or competition would become more effective than the state as a regulator of economic life. Smith did not believe in laissez-faire in an absolute sense; he found a place for government activity in public works, such as the building of canals and docks to facilitate trade, and in the regulation of foreign commerce to protect certain home industries.

In the hands of Jeremy Bentham the doctrine of laissez-faire became a philosophy of individualism and of utilitarian ethics, and John Stuart Mill brought it to what was probably its highest point. The strong individualism of the theory naturally appealed to the factory owners and merchants of the Industrial RevolutionIndustrial Revolution,
term usually applied to the social and economic changes that mark the transition from a stable agricultural and commercial society to a modern industrial society relying on complex machinery rather than tools.
..... Click the link for more information.
, whose attempts to transform society along capitalistic lines were often hampered by old laws and the opposition of landed interests.

The so-called Manchester school of economics, especially Richard Cobden and John Bright, popularized the doctrines of free trade and laissez-faire, which, after initially being considered radical doctrines, were becoming the accepted theory of classical economics. Cobden and Bright, both successful businessmen, brought laissez-faire into the arena of politics: they secured the repeal of the corn lawscorn laws,
regulations restricting the export and import of grain, particularly in England. As early as 1361 export was forbidden in order to keep English grain cheap. Subsequent laws, numerous and complex, forbade export unless the domestic price was low and forbade import
..... Click the link for more information.
—mercantilist import duties that raised the price of food needed by the industrial workers—and they opposed even the minimal provisions of the factory acts that Parliament had passed in order to regulate such abuses as long hours and woman and child labor. Laissez-faire principles were nowhere embodied fully in legislation. Governments, at the very least, continued to levy tariffs as a means of protecting domestic manufacturers.

Modifications

As the system of capitalist enterprise evolved in the 19th cent., more and more businesses found it in their interest to combine with their competitors in huge trusts or cartels in order to control prices and production. Competition, which had been expected to regulate the market, seemed instead to be encouraging monopoly. The principle of state noninterference was discarded; indeed, during the 20th cent. the state was often called upon to restore and preserve freedom of competition where it appeared to be in danger of disappearing. Agreements in restraint of trade and practices of "unfair" competition were outlawed. Thus the practice of laissez-faire was modified. The theory, however, was not abandoned; it became a tenet of the opponents of socialism. It was credited with lowering consumer prices by eliminating the high costs of competition. In that way, the emphasis in laissez-faire theory was shifted from competition to the importance of profit as an incentive to production and of individual initiative as necessary to economic progress.

Bibliography

See J. W. McConnell, Basic Teachings of the Great Economists (1943); F. W. Hirst, ed., Free Trade and Other Fundamental Doctrines of the Manchester School (1903, repr. 1968); A. W. Coats, ed., The Classical Economists and Economic Policy (1971).

laissez-faire

political doctrine that an economic system functions best without governmental interference. [Politics: Misc.]
References in periodicals archive ?
To what extent do the secondary school principals in the sample demonstrate authoritative, democratic and laissez-faire leadership styles?
While, the laissez-faire leadership style practices non-interference policy and workers are free of any type of hard and fast rules and they do not follow any particular course to meet the organizational goals.
On the whole, the utility of FRL model has been acknowledged in relation to its more comprehensive approach, to cover multiple leadership behaviours, in terms of incorporating non-leadership approach (laissez-faire) to a more transformational approach (idealised influence), instead of placing sole focus on single or uniform approach of leadership (Kirkbride, 2006).
presidents have leaned toward different strategies, from Ronald Reagan's laissez-faire tactics to Franklin Roosevelt's social market inclinations.
Mill, Marshall, and Pigou and champion the end of laissez-faire.
TABLE 4: PEARSON'S CORRELATION FOR STRATEGY IMPLEMENTATION AGAINST LAISSEZ FAIRE LEADERSHIP STYLE QUESTIONS Correlations Strategy Laissez-faire Pearson Correlation 1 .621 (**) Strategy Sig.
Rivot's motive thereby is to draw a different picture of Keynes and Friedman compared to their stereotypes: whereas Keynes is often regarded as favouring interventions into the market system, Friedman on the opposite is regularly viewed as the typical laissez-faire economist (2).
Cahill criticises the idealist conception of neoliberalism, arguing that 'actually existing neoliberalism' is quite a different phenomenon than anything to be found in laissez-faire ideology.
* Laissez-Faire Leadership: according to Bernard Bass, Laissez-Faire leader avoids active leadership role and is regarded as the most passive type of the leadership [10].
Findings of the study are in line with the theoretical assumptions of transformational and laissez-faire leadership style but inconsistent for transactional leadership style.
The Objective Standard is a quarterly journal of culture and politics written from an Objectivist perspective (Objectivism being Ayn Rand's philosophy of reason, egoism, and laissez-faire capitalism).
Chapters argue for the alternative: an establishment of laissez-faire capitalism, and considers the moral superiority of a capitalist system based on individual rights and less government involvement in social affairs.