LAISSEZ FAIRE

DEFINITION

• A policy that allows businesses to operate woth very little interference from the government.

Examples
First expressed by Scottish economist Adam Smith in his 1776 classic The Wealth of Nations.

Examples
In the 1970s-1980s, Ronald Reagan and Margaret Thatcher both stressed the importance of laissez-faire as evidence mounted around the inefficiencies in state-run government and policies.

Why it matters:
The laissez faire philosophy heavily impacted economic policy during the industrial revolution of the 1800s. Governments began to institute economic policies designed not to control production or inhibit efficiency, but to protect workers and consumers.

ADVANTAGES

• Encourages creativity and growth
• Reduces government restrictions
• Power of free market

Influenced
The early industrialists with ideas of a free market governed by natural laws, not government rules.