Definition of Laissez-faire economics:
One of the guiding principles of capitalism, this doctrine claims that an economic system should be free from government intervention or moderation, and be driven only by the market forces. Centered on the belief (termed invisible hand by the 18th century Scottish economist Adam Smith) that human beings are naturally motivated by self-interest and, when they are not interfered-with in their economic activities, a balanced system of production and exchange based on mutual benefit emerges. Laissez-faire (French for, allow to pass or let go) economics originated in the 18th century France where economists (then called physiocrats) such as Francois Quesnay (1694-1774) and Victor Riqueti-Marquis de Mirabeau (1715-89) became hostile to subsidies and discriminatory economic measures of then prevalent mercantilism. They believed in a bountiful nature and innate goodness of humankind, and asserted that governments should leave the individual alone except when social liberties are infringed. In 19th century, this philosophy became the dominant economic thinking in the Western world. But soon its failings reflected in the great disparity in distribution of wealth, harsh treatment of workers, disregard for consumer safety, and spread of monopolies, became clear. By the mid 19th century, opposition to laissez-faire economics began and governments in all industrialized countries intervened on behalf of workers and general population. Factory laws and consumer protection laws were enacted and growth of monopolies was checked. Early 20th century saw breakup of monopolies in the US and (after Second World War) nationalization of essential industries and services in Europe. Keynesian economics (which advocates government intervention in the national economy) further undermined it, a process spurred by the great depression of 1930s. From 1970s, however, the pendulum swung back to laissez-faire economics (renamed market economy or free enterprise) and brought deregulation of business, and progressive removal of trade barriers, which is continuing.
How to use Laissez-faire economics in a sentence?
- The other students laughed at his views on the economy. They believed that economics should be focused on free trade and the fact that government intervention shouldnt be allowed, they believed in Laissez-Faire Economics, a form of economics where humans affected the markets due to their selfish interest. The student they laughed at however was a staunch classical Chinese communist, who disagreed with all these views.
- In class, we would be going over Laissez-faire economics today, which excited me because I was very interested in them.
- Some people would prefer that there is a LAISSEZ-FAIRE ECONOMICS approach to things and that the businesses have all the control.
Meaning of Laissez-faire economics & Laissez-faire economics Definition