Laissez-Faire (Economics) - Explained
What is Laissez-Faire?
Written by Jason Gordon
Updated at April 8th, 2022
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Table of Contents
What is Laissez-Faire Economics?How does Laissez-Faire Economics Work? Academic Research on Laissez-faireWhat is Laissez-Faire Economics?
Laissez-faire is a philosophy that says the government should not be involved in business and a country's economy; rather, it should instead focus on protecting the rights of the citizens. The result is a stronger economy.
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How does Laissez-Faire Economics Work?
Laissez-faire is French for 'let do.' Loosely, it means that the government should let the market run without interference or let the market to do its thing.
In such an economy, the laws of supply and demand will work efficiently. Supply involves market aspects such as capital, natural resources, and labor while demand involves buying of goods and services by consumers, the government, or other businesses.
As a rebuttal to this philosophy, a Laissez-faire economy is normally affected by monopolies, theft, graft, and fraud - aspects which interfere with the rational market theory.
The government's only role then is to protect the citizens from fraud, theft, and coercion.