Laissez-Faire Economics
Learn about laissez-faire economics — the doctrine of minimal government intervention in markets that shaped 19th-century policy.
Laissez-faire ('let it be') economics is the doctrine that governments should not intervene in the market economy. Rooted in Adam Smith's idea that free markets, guided by the 'invisible hand' of supply and demand, allocate resources more efficiently than government planning, laissez-faire became the dominant economic philosophy of the 19th-century industrializing world.
In practice, laissez-faire meant opposition to tariffs, business regulation, minimum wages, labor protections, and government provision of social services. Its advocates argued that economic freedom was the foundation of political freedom and that any government interference distorted natural market processes. The doctrine justified the enormous inequalities of the Industrial Revolution — if workers suffered, that was the natural result of market forces, not a problem for government to solve.
The Great Depression delivered a devastating blow to laissez-faire orthodoxy. When unregulated markets collapsed, producing mass unemployment and social misery, governments intervened on an unprecedented scale — Roosevelt's New Deal in the United States, Keynesian demand management in Britain. The postwar consensus accepted a significant role for government in managing the economy, though debates between free-market advocates and proponents of state intervention continue to shape economic policy worldwide.