Laissez-faire

Laissez-faire is short for "laissez faire, laissez passer," a French phrase meaning "let do, let pass." It is pronounced approximately lessEH fare, lessEH pahssEH.

History

Pre WWII

Thomas Jefferson was one of the first to use the laissez-faire philosophy, as it can easily be interpreted through his inaugural speech.

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Laissez-faire philosophy was dominant in the late 19th and early 20th century in the wealthier countries of Europe and North America. Many historians also see that period as the height of laissez-faires implementation in those countries.

Related Topics:
19th - 20th century

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However, there are critics who suggest that what was described as "laissez-faire" policy was simply pro-business policy, as with large subsidies for businesses to produce the railroads in the United States or the common use of tariffs by Republican presidents there. In this context, laissez-faire rhetoric was used to justify denial of similar subsidies to the poor and working classes. Some believe these claims are still valid.

Related Topics:
Tariffs - Republican

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For many, laissez-faire theories fell into disrepute because of their failure to allow governments to deal with managing the economy during and after World War I, and their alleged role in creating the Great Depression.

Related Topics:
World War I - Great Depression

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However, some libertarians, such as Milton Friedman argue that by the time of the Great Depression, significant government economic regulation had already taken place in most major economies, as workers and employees in all industries organized themselves into trade unions to demand better living standards, as well as various checks and balances to the perceived "tyranny of laissez-faire".

Related Topics:
Milton Friedman - Trade unions

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Workers succeeded in obtaining minimum wage laws and a progressive income tax in some countries. International trade barriers were also in the policy pipeline (e.g. Smoot-Hawley Tariff in the USA). So, according to the above-mentioned libertarians, the economies that suffered from the Depression, although possibly closer to laissez-faire than any other economic models that were ever used, still did not embrace pure capitalism.

Related Topics:
Minimum wage - Progressive income tax - Smoot-Hawley Tariff - Pure capitalism

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Post WWII

In the Cold War era, state regulation and involvement in the economy reached a peak. Such policies were implemented by most countries, no matter what side of the Iron Curtain they were on.

Related Topics:
Cold War - Iron Curtain

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In this environment laissez-faire economics assumed a stronger ideological edge, especially through the Austrian School (aka Chicago School) and such luminaries as Ludwig von Mises and Friedrich Hayek. Some argued that if the Free World was truely defined by it's freedom, then it's citizens should have full economic freedoms.

Related Topics:
Austrian School - Chicago School - Ludwig von Mises - Friedrich Hayek - Free World

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Hong Kong was the first Free World territory to embrace laissez-faire economic policy in this era, having officialy followed that path since the 1960s and perhaps earlier.

Related Topics:
Hong Kong - 1960s

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During the late 1970's, the Free World experienced many economic difficulties. The government of Prime Minister Margaret Thatcher in the United Kingdom believed that lessening the power of the state in the economy would improve things. After a period of intense pain to many, this was found to be the case.

Related Topics:
Margaret Thatcher - United Kingdom

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Following Thatcher's lead, President Ronald Reagan of the United States, Finance Minister Roger Douglas of New Zealand and Chile's military ruler General Augusto Pinochet also followed a generally laissez-faire path during the 1980's. Other Western leaders implemented more laissez-faire policies at this time, but not to the same extent as these countries.

Related Topics:
Ronald Reagan - United States - Roger Douglas - New Zealand - Chile's - Augusto Pinochet

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Modern industrialised nations today are not typically representative of laissez-faire principles, as they usually involve significant amounts of government intervention in the economy. This intervention includes minimum wages, significant redistribution through tax, welfare and subsidy programs, government ownership of businesses, regulation of market competition and economic trade barriers.

Related Topics:
Government - Minimum wages - Redistribution - Tax - Welfare - Subsidy - Government ownership - Regulation - Trade

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However, much less intervention occurs than did before Thatcher and Reagan's changes were made.

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