Laissez Faire – UPSC GS1

  • Policy of minimum governmental interference in the economic affairs of individuals and society.
  • “Leave us alone.”
  • The policy of laissez-faire received strong support in classical economics as it developed in Great Britain under the influence of economist and philosopher Adam Smith (Wealth of Nations -1776).
  • Belief in laissez-faire was a popular view during the 19th century; its proponents cited the assumption in classical economics of a natural economic order as support for their faith in unregulated individual activity. The British economist John Stuart Mill was responsible for bringing this philosophy into popular economic usage in his Principles of Political Economy (1848), in which he set forth the arguments for and against government activity in economic affairs.
  • Laissez-faire was a political as well as an economic doctrine. The pervading theory of the 19th century was that the individual, pursuing his own desired ends, would thereby achieve the best results for the society of which he was a part. The function of the state was to maintain order and security and to avoid interference with the initiative of the individual in pursuit of his own desired goals.
  • The laissez faire doctrine was opposed by many people. Gradually, almost all the countries came to accept the idea that the state has a legitimate right and duty to regulate the economy. The Factory Acts in England and many laws dealing with   the economy in all countries were a consequence of this.