laissez-faire

laissez-faire. The transition from the medieval to the modern economy was characterized by the progressive removal of restrictions on individuals and groups in favour of the operation of market forces. The balance between complete unrestriction based on the assumption that the best social organization is that which allows the individual maximum freedom, laissez-faire, and some control is still strenuously debated. In reality the state of complete laissez-faire has never existed. The classical economists believed that natural law required that the influence of government should be limited in favour of individual liberty. Strong supporters of this notion argue either that the actions of individuals pursuing their own ends are complementary, best reflected through the operation of a free market where individuals negotiate as equal partners, or that society is no more than the artificial aggregation of individuals so that no reference to a greater good is permissible. Beyond this extreme the main issue is to find a balance between complete laissez-faire and too great a degree of control. John Stuart Mill defined what has become accepted as the minimum level of state intervention. Amongst such interventions for the greater good, he included the power to enforce contracts and secure property rights, the administration of justice, the right to tax in order to provide public goods such as transport systems, sanitation and public health, and state-supported education. Typical laissez-faire constraints on 19th-cent. government were the fixed exchange rate and a minimalist attitude towards taxation. Ideas of social justice combined with individual freedom found a compromise in 19th-cent. poor law legislation, designed to provide help for the truly needy, while ensuring that the idle should be excluded.

While the notion of laissez-faire is usually associated with the decline of the medieval and mercantilist economic regimes, it has an enduring modern counterpart, or legacy, in the views of the neo-classical and new classical economists, who may use different terminology, but whose essential view is that individual freedom to function within untrammelled markets, with little involvement from government, represents the best type of economic organization. Variations of this position are found in monetarism, public choice theory, and the belief of some new classical economists that involuntary unemployment does not exist. All these strands of thought assert the right of the individual and depict state involvement in the economy as ineffectual or malign. See also free trade.

Clive H. Lee