Laissez-Faire (Economics) - Explained
What is Laissez-Faire?
Written by J. Mance Gordon
Updated at April 22nd, 2024
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What is Laissez-Faire Economics?
Laissez-faire is a philosophy that says the government should not be involved in business and a country's economy; rather, it should instead focus on protecting the rights of the citizens. The objective is a stronger economy.
What is Laissez-Faire Mean in French?
Laissez-faire is French for 'let do.'
Applied to economics, it means that the government should let the market run without interference or let the market to do its thing.
How does Laissez-Faire Economics Relate to Supply and Demand?
In such an economy, the laws of supply and demand will work efficiently. Supply involves market aspects such as capital, natural resources, and labor while demand involves buying of goods and services by consumers, the government, or other businesses.
What are Potential Negative Effects of Laissez-Faire Economics ?
A Laissez-faire economy is often affected by monopolies, theft, graft, and fraud - aspects which interfere with the rational market theory.
What is the Role of Government in a Laissez-Faire Economic System?
In a Laissez-Fair System, the government's only role then is to protect the citizens from fraud, theft, and coercion.