what is laissez faire 
laissez faire is an economic theory dating back to the 18th century that opposes any government intervention in business affairs the driving principle behind laissez faire economics is that the less the government is involved in the economy the better off business and society as a whole will be it is a french term that translates to leave alone or more literally to let you do laissez faire economics is a key component of free market capitalism investopedia sydney saporitounderstanding laissez fairethe underlying beliefs that make up the fundamentals of laissez faire economics include the idea that economic competition constitutes a natural order that rules the world because this natural self regulation is the best type of regulation laissez faire economists argue that there is no need for business and industrial affairs to be complicated by government intervention as a result they oppose any sort of federal involvement in the economy which includes any type of legislation or oversight they are against minimum wages duties trade restrictions and corporate taxes in fact laissez faire economists see such taxes as a penalty for production laissez faire is often associated with libertarian views on the economy where government plays an extremely limited role in fact one of the key characteristics of laissez faire economics is that the government should only be involved with the following three functions history of laissez fairepopularized in the mid 1700s the doctrine of laissez faire is one of the first articulated economic theories it originated with a group known as the physiocrats who flourished in france from about 1756 to 1778 1 these thinkers tried to apply scientific principles and methodology to the study of wealth and economic production these economists argued that a free market and free economic competition were extremely important to the health of a free society 2 they believed the government should only intervene in the economy to preserve property life and individual freedom otherwise the natural unchanging laws that govern market forces and economic processes what later british economist adam smith dubbed the invisible hand should be allowed to proceed unhindered unfortunately an early effort to test laissez faire theories did not go well as an experiment in 1774 turgot louis xvi s controller general of finances abolished all restraints on the heavily controlled grain industry allowing imports and exports between provinces to operate as a free trade system but when poor harvests caused scarcities prices shot through the roof merchants ended up hoarding supplies or selling grain in strategic areas even outside the country for better profit while thousands of french citizens starved riots ensued for several months in the middle of 1775 order was restored and with it government controls over the grain market 3despite this inauspicious start laissez faire practices developed further by such british economists as smith and david ricardo ruled during the industrial revolution of the late 18th and early 19th century and as its detractors noted it resulted in unsafe working conditions and large wealth gaps only at the beginning of the 20th century did developed industrialized nations like the u s begin to implement significant government controls and regulations to protect workers from hazardous conditions and consumers from unfair business practices however it s important to note that these policies were not intended to restrict business practices and competition criticism of laissez fairelaissez faire advocates argue that if individuals serve their own interests first societal benefits will follow one of the chief criticisms of laissez faire is that capitalism as a system has moral ambiguities built into it it does not inherently protect the weakest in society as such detractors feel laissez faire actually leads to poverty and economic imbalances the idea of letting an economic system run without regulation or correction in effect dismisses or further victimizes those most in need of assistance they say the 20th century british economist john maynard keynes was a prominent critic of laissez faire economics and he argued that the question of market solutions versus government intervention needed to be decided on a case by case basis 4reduces government involvement in business which is thought to be inefficient and stiflingencourages self responsibility and innovationpromotes free markets and competitionlack of regulations can harm consumers and the environmentcan generate negative externalitiescompetition naturally leads to wealth inequalitymay incentivize bad actors