What is Laissez-Faire?

Laissez-faire is an economic theory from the 18th century that opposed any government intervention in business affairs. The driving principle behind laissez-faire, a French term that translates to "leave alone" (literally, "let you do"), is that the less the government is involved in the economy, the better off business will be, and by extension, society as a whole. Laissez-faire economics is a key part of free market capitalism.

The 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.

Popularized 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.

Led by a physician, they tried to apply scientific principles and methodology to the study of wealth. These "économists" (as they dubbed themselves) argued that a free market and free economic competition were extremely important to the health of a free society. 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.

Legend has it that the origins of the phrase "laissez-faire" in an economic context came from a 1681 meeting between the French finance minister Jean-Baptise Colbert and a businessman named Le Gendre.

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