Laissez-faire

12 Key excerpts on "Laissez-faire"

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  The Making of Modern Economics

  The Lives and Ideas of Great Thinkers

  • Mark Skousen(Author)
  • 2015(Publication Date)
  • Taylor & Francis

    (Publisher)

  Pour gouverner mieux, il faudrait gouverner moins (in order to govern better, we ought to govern less).

  “Laissez faire” has come to represent the hands-off policies advocated by Adam Smith, although he never used the phrase. In the twentieth century, John Maynard Keynes gave laissez faire a bad name; it represented the “do-nothing” policies prevalent during the Depression years. “For good or evil, in present day conditions Laissez-faire can no longer be relied upon to furnish economic projects with the capital they need,” he wrote (Skidelsky 1992: 185). According to Keynes, government was needed to rescue Laissez-faire capitalism.

  In fact, laissez faire was never meant to be a heartless “do-nothing” government policy. Adam Smith and the classical Laissez-faire economists actually aimed at dismantling the old system of regulations and special privilege, and thus improving the general welfare.

  The French economists were very much involved in Smith’s magnum opus, starting when he spent time in France preparing his book and discussing ideas with Quesnay, Turgot, and Voltaire. Once The Wealth of Nations was published, the French were highly successful in publicizing Smith’s model of free enterprise and liberalized trade throughout the Western world. They translated Smith’s book into French, published the first encyclopedia of economics and the first history of economic thought, and wrote the first major textbook in economics, Say’s Treatise on Political Economy , which was the principal textbook in the United States and Europe during the first half of the nineteenth century. Many of the Smithian principles were adopted by Alexis de Tocqueville in his profound study of Democracy in America (see box, pages 59 –61

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  Efficiency and Management

  • Guy Callender(Author)
  • 2008(Publication Date)
  • Routledge

    (Publisher)

  At the time that democracy became more egalitarian and diverse in its objectives, Laissez-faire became the populist economic doctrine that dominated UK economic policy. Arguably, one consequence was the comparative decline in national certainty of purpose and macro-efficiency. In place of national goals and international dominance, the individual rights of owners to pursue their own paths to their ‘profits on investment’ 97 became a dominating economic force. This chapter has evaluated a diversity of qualitative economic issues that have emerged in Anglo-American economies over the past two centuries. The aim of this historical review has been to underline the comparative speed with which some Anglo-American economies have shifted, at times rapidly, from Laissez-faire to centralized models of economic policy on a pragmatic basis. The chapter also raises the question: is the basis of economic theory, and therefore the foundations of its dominant position in the social sciences, objectively scientific or socio-political? The answer to this question may never be entirely clear. Yet the varying influences that have been identified in the historical analysis of the changing economic epochs of the past 120 years, and the overtly loose linkage made by Friedman between the size of government and the size of the tithe (which is a culturally-embedded belief rather than a universal measure), pose fundamental questions about the supposed scientific basis of economics

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  Essays on the Intellectual History of Economics

  • Jacob Viner, Douglas A. Irwin, Douglas Irwin(Authors)
  • 2014(Publication Date)
  • Princeton University Press

    (Publisher)

  Smith, 1 Wealth of Nations 100 (Edinburgh, 1814). THE HISTORY OF LAISSEZ FAIRE 223 would be, or could be made to be, substantially competitive. Towards the mo- nopolistic aspects of modern society they take various attitudes. Some look upon them as serious obstacles to economic welfare, and would have an otherwise laissez faire state vigorously suppress all important manifestations of monopoly that are not for special reasons to be accepted. Others maintain that government itself is, directly or indirectly, the major support of monopoly and that in a laissez faire economy monopoly, with minor exceptions, would not be able either to establish or to maintain itself in the absence of government support. Others while expressing in principle hostility to monopoly deny its practical importance and contend that in the main moderate elements of monopoly can be tolerated without serious loss, or even with benefit, in a predominantly competitive, laissez faire economy; like the competitive "economic man," the monopolistic firm, without intending it, is, as if guided by an invisible hand, serving the public interest. I would not dispute that even a monopoly-ridden market would be preferable to any economic system trying to operate without any kind of a market. But given the prevalence or the danger of substantial intrusion of monopoly into the market, the logic of the laissez faire defense of the market against state-intervention col- lapses and there is called for instead, by its very logic, state-supression or state- regulation of monopoly practices, which one may wish to call, as Henry Simons called it, an instance of "positive laissez faire" or, as I prefer, as an instance of deliberate departure from laissez faire. The free-market phase of the laissez faire doctrine is only one phase of that doctrine and is most relevant to the issues of commutative justice, of just relations in economic transactions between pairs of individuals.

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  Authority and the Liberal Tradition

  From Hobbes to Rorty

  • Robert Heineman(Author)
  • 2020(Publication Date)
  • Routledge

    (Publisher)

  Laissez Faire Becomes Public Policy

  The proponents of limited government and economic individualism had widespread public support during much of the latter nineteenth and early twentieth centuries in the United States; and their views soon became part of the supreme law of the land as enunciated by the nation’s highest court. The laissez faire position gained additional credence from the tremendous economic and technological advances that occurred during this period. As a result, many Americans became convinced that governmental power was not necessary for domestic prosperity; and, thus, they saw no need to formulate an articulate theoretical basis for government as a democratically responsive force for social direction.

  William Graham Sumner and Minimal Government

  The foremost academic spokesman for laissez faire ideas in latter nineteenth-century America was, without a doubt, William Graham Sumner. An instructor at Yale University from 1868 until the early twentieth century, Sumner spent the better part of the period from 1870 through the early 1890s popularizing the doctrine of limited government and individual freedom. He was more than a devotee of the ideas of Spencer, however. His thought represents a fairly comprehensive amalgam of the currents comprising the intellectual revolution of the time. Adherence to the ideas of individualism and laissez faire originated from his early acquaintance with the thought of the classical economists.1 Much of his methodology seems to have been derived from his educational years spent abroad in Germany. His acceptance of Spencer’s ideas and their Darwinian parallels originally stemmed not from the Social Statics but from the later The Study of Sociology.2 Richard Hofstadter’s statement that Sumner “brought together three great traditions of western capitalist culture: the Protestant ethic, the doctrines of classical economics, and Darwinian natural selection…”3

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  Termites of the State

  Why Complexity Leads to Inequality

  • Vito Tanzi(Author)
  • 2017(Publication Date)
  • Cambridge University Press

    (Publisher)

  If the government was not able to solve problems, it was better if it did not even try to. Termites of the State 66 66 The view that a free and unregulated market economy can perform eco- nomic miracles is a relatively recent one, in spite of the frequent references to Adam Smith’s invisible hand over the years. On this important but rarely acknowledged point, it may be worthwhile to cite from an important his- torical book that discussed in great detail various reforms introduced in the nineteenth century in the United Kingdom. As the author of that book put it: A great deal of the talk about laissez faire [in the nineteenth century] must be discounted, or at least put into its proper context. In many cases the argument concealed an admission that a problem was insoluble, or that it must be endured, because no one could think of any method of solving it. From this point of view, the policy of laissez faire was not the result of a new and optimistic belief in the progress of society through private enter- prise. It was rather an acknowledgement that the fund of skill and expe- rience at the service of society was limited, and that, in the management of their common affairs, men would not be able to find the elasticity and adaptiveness [sic] which individuals showed in devising schemes for their own self-interest. The treatment of social and economic questions was more haphazard and empirical than Englishmen were ready to acknowledge. If a practical solution suggested itself, if a tentative experiment could be made, the doctrine of laissez faire would be thrust aside, only to be used again after another failure to discover the way out of a difficulty (Woodward, [1938] 1962, p. 16). This implies that Laissez-faire was a kind of frequent, second best approach to be used when what might have been the first best was not expected to be feasible.

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  America's Free Market Myths

  Debunking Market Fundamentalism

  • Joseph Shaanan(Author)
  • 2017(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  Finally, there is an important modern development that should be addressed which suggests an even greater gulf between competitive free markets and contemporary laissez faire. It also raises questions about the latter philosophy’s objectives. Contemporary laissez faire (or neoliberalism) does not really seek to block government economic interven- tion, at least not completely. Their goal is not to end govern- ment intervention but rather to redirect it away from more commonly accepted routes (to which both traditional and contemporary laissez faire object). It definitely should not be used to help society’s less fortunate, to provide health care, to reduce risk for the majority, to protect competition, to lessen macro-instability and so on. Instead, intervention should be used to help the upper echelons of society 17 and large corporations. Such an objective is clearly inconsistent with traditional laissez faire and, above all, contradicts free market principles. It reinforces the point that the ultimate objective is corporate profitability and if profits can be raised through government intervention then so be it – a rather unusual form of laissez faire. 198 J. SHAANAN 5 THE LAISSEZ FAIRE EXPERIENCE Laissez faire in the US may have begun with Thomas Jefferson’s presidency and his dislike of a large central government 18 and admiration for farmers’ self-sufficiency. Perhaps it began during the Jacksonian movement that was based on aggressive economic individualism. 19 However, in both the US and the UK the advent of industrialization changed the equation. For many industrial workers there was no farm to return to when recessions and unemployment struck. Therefore, they did not have the political independence of the farmer. The new industrial cities offered factory workers wretched living conditions and harsh social con- ditions. Given their inferior bargaining position and greater eco- nomic uncertainty they needed protection.

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  The Legitimation Crisis of Neoliberalism

  The State, Will-Formation, and Resistance

  • Alessandro Bonanno(Author)
  • 2017(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  For the entire ninetieth century and the first three decades of the twentieth century, the Laissez-faire doctrine and commensurate policies dominated the economy and society. And while the theory of free func- tioning of the market was criticized throughout the period, it was only after the crisis of 1929 and the onset of the Great Depression in the 1930s that those alternative postures that later constituted the essence of the Fordist regime were implemented. To be sure, Laissez-faire is a multifaceted theory that had rarely found applications that truly reflected its orthodoxy. Yet, in the ninetieth century and early twentieth century, the ideas of the free functioning of the market accompanied by state actions that would safe- guard its working were widely accepted at the scientific and political levels. In his classical critique of the Laissez-faire doctrine and period, Karl Polanyi (2001 [1944]) illustrated its benefits and, above all, crippling contradictions. The central point of his theory of the double movement refers to the historical tendency to counter the working of the free market with protectionist moves. Accordingly, protectionism was a constant component of the ninetieth-century economy and represented one of its 1 THE STATE IN CLASSICAL Laissez-faire, ITS CRISIS … 15 major dimensions after the 1870s. Polanyi contended that Laissez-faire requires pacifist and internationalist outlooks that justify and promote the free circulation of commodities, labor, and capital. Popular in the first portion of the ninetieth century, these sentiments were later replaced by those favoring protectionism and imperialism. As global competition increased and the generation of profit and control of market were increasingly dif ficult, the policies of protecting markets (protectionism) and areas of commercial influence (imperialism) became highly practiced.

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  Modern Understandings of Liberty and Property

  Liberty, Property, and the Law

  • Richard A. Epstein(Author)
  • 2013(Publication Date)
  • Routledge

    (Publisher)

  I will carefully avoid using the term laissez faire to mean what only unscrupulous or ignorant opponents of it and never its exponents make it mean, namely, philosophical anarchism, or opposition to any governmental power or activity whatsoever. I will in general use the term to mean what the pioneer systematic exponents of it, the Physiocrats and Adam Smith, argued for, namely, the limitation of governmental activity to the enforcement of peace and of "justice" in the restricted sense of "commutative justice," to defense against foreign enemies, and to public works regarded as essential and as impossible or highly improbable of establishment by private enterprise or, for special reasons, unsuitable to be left to private operation. Both the Physiocrats and Adam Smith gave some sanction to the limited expansion of governmental activity beyond these limits. Following their example, I will not deny the laissez faire label to any writer who in general accepts the limitations I have enumerated to governmental activity, even if he occasionally, incidentally, and inconsistently relaxes these limitations slightly to permit either of a restricted list of minor exceptions or of temporary suspension of the laissez faire code in case of emergency or abnormal conditions, such as war, famine, or earthquake.

  No social doctrine has a meaningful historical life except with reference, explicit or implicit, to an existent or conceivable alternative or array of alternatives. It is a useful simplification as a first approximation to regard the alternatives to laissez faire as lying along a straight line measuring degrees of governmental intervention in the field of economic activity. Looking in one direction, this straight line represents Herbert Spencer's road to "The Coming Slavery," or Friedrich Hayek's "Road to Serfdom." It is only since the eighteenth century "Enlightenment" that slavery and serfdom have been regarded as pejorative terms. Those well-disposed towards laissez faire should therefore perhaps use in preference such terms as "Road to Tyranny" or "Road to Totalitarianism," labels which as far as I know no one would ever have chosen for highways on which he wished mankind to travel. Looking in the other direction, however, this highway also represents the Road to Anarchy. In any case, along this road are many conceivable stopping-places, and no one may be interested in either of its terminal points. Route 1, a great national highway which connects Boston, New York, Philadelphia, Baltimore, and Washington, begins at Fort Kent in Maine and ends at a sand-dune at the southern tip of Florida. Except on the arbitrary assumption that travel on this road, in either direction, is totally without benefit of brakes, the terminal points of our metaphorical road are often assigned an extravagant degree of practical significance in discourse in this field. Until quite recent years, actual and vital discussion in the public forum has turned mainly on the comparative merits as resting-places along our highway of points not greatly distant from each other, or perhaps more accurately, as between no movement at all and a limited amount of movement, sometimes in both directions simultaneously, from the existing resting-place. Before World War I the issue in debate was never, as far as I can see, between laissez faire and totalitarianism, or between the welfare state and philosophical anarchism. As I will be dealing mostly with pre-1914 facts or ideas, I will spend no time on St. George-and-the-dragon types of argument.

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  The Evolution of the British Welfare State

  A History of Social Policy since the Industrial Revolution

  • Derek Fraser(Author)
  • 2017(Publication Date)
  • Bloomsbury Academic

    (Publisher)

  © Derek Fraser 2017 Derek Fraser The Evolution of the British Welfare State https://doi.org/10.1057/978-1-137-60589-4_6

  Begin Abstract

  6.  Laissez-faire and state intervention in the mid-nineteenth century

  Derek Fraser

  1  

  (1) Leeds, United Kingdom

   

    Derek Fraser

  Email: [email protected]

  End Abstract

  6.1 Summary

  The new industrial society was underpinned by a middle-class ideology usually termed political economy or Laissez-faire. A firm belief in the virtues of a free market was based on the writings of Adam Smith, David Ricardo and Thomas Malthus and the application of their ideas was promoted by Jeremy Bentham, with his Utilitarian philosophy which would produce ‘The Greatest Happiness of the Greatest Number’. The working-class response to this class ideology was a combination of mutual aid and a belief in self-help, most prominently expressed in the individualism to be found in the writings of Samuel Smiles. Historians have drawn attention to the paradox that the great age of Laissez-faire ideology was also a period of remarkable, if unplanned and unsystematic, growth in state intervention. The chapter explores the historiographical ways in which this paradox may be resolved.

  6.2 I Social ideas to c .1870

  The case studies in social policy described in previous chapters were at once a part of and a response to the social philosophy which emerged in the first half of the nineteenth century. Inevitably such an explosive social change as the Industrial Revolution was accompanied by new ideas in economic and social affairs. Industrial capitalism came to be justified by the so-called political economy of a group of thinkers known collectively as the ‘classical economists’. The demonstration of the general principles of economic theory which explained the role of capital and free competition (the essential elements of the new society) crystallised into a Laissez-faire

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  The New Roberts Court, Donald Trump, and Our Failing Constitution

  • Stephen M. Feldman(Author)
  • 2017(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  And as the Americans hoped, foreign investors responded by fun- neling capital into American enterprises, especially railroads. Even in times of economic crises, such as the 1893 depression, many American business and government leaders remained committed to gold as “a standard of value the world over,” in the words of a Wisconsin congres- sional representative. 52 In fact, international trade and economic inter- action in the early-twentieth century, before the onset of war in 1914, was more extensive than during any prior point in history. British econo- mist John Maynard Keynes would comment that “internationalization… 3 REPUBLICAN DEMOCRACY EVOLVES: CORPORATIONS AND LAISSEZ FAIRE 95 was nearly complete in practice.” 53 Given the worldwide appeal of laissez faire—in its manifestation as an unregulated international market—and its ostensible success in generating wealth, the strength of the ideology in the United States was unsurprising, even when Progressivism emerged as a powerful political force and successfully pushed for at least some social welfare legislation in the early-twentieth century. 54 Justice Field had dissented in The Slaughterhouse Cases, but other jurists and scholars were soon following his lead, as Laissez-faire ideology burrowed deeply into American constitutional jurisprudence. A leading constitutional scholar, Christopher G. Tiedeman, published his Treatise on the Limitations of Police Power in the United States in 1886. He unequivocally explained his purpose: to support “Laissez-faire doctrine, which denies to government the power to do more than to provide for the public order and personal security by the prevention and punishment of crimes and trespasses.” Tiedeman opposed any form of social welfare legislation and argued that courts should interpret constitutional provi- sions to limit state police powers.

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  Boisguilbert Economist of the Reign of Louis XIV

  • Hazel Van Dyke Roberts(Author)
  • 2019(Publication Date)
  • Columbia University Press

    (Publisher)

  Weulersse, Revue d'histoire de doctrines économtques, 1910, p. 128. 7 See below, p. 324. 8 Adam Smith, as is well known, does not use the French expression. Instead he usually refers to occurrences under conditions of perfect liberty. The only case in which he may be said to use the phrase itself is the English equivalent of laissez faire la nature. See below, pp. 325-327. 9 Gesamtausgabe, Erste Abteilung, Band 3, p. 575. For the best example of laissez faire economics run riot, as it were, and to contrast its spirit with 2 5 2 L A I S S E Z F A I R E With Boisguilbert the expression meant not so much laissez-nous faire, but literally laissez faire la nature. It was nature's plan for the functioning of economic society which must not be interfered with by any ministère étrangère . 10 Just what did he regard as nature's plan for mankind ? It was that all men should be able to gain a livelihood from their labor or that of their ancestors. Immediately, it was anything which served to bring this about and did not tend ultimately to destroy this ability upon the part of others, and thus, in turn, of oneself. It is in this way that the term may be said to have included just tax-ation as well as freedom to trade. The oppression of unjust taxation interfered with the ability to gain a livelihood or to improve one's condition as certainly as restrictions on the abil-ity to trade. Laissez faire meant the mutual aid of man and nature : that products be moved from the place where they were superfluous to the place where products were lacking. It meant freedom to sell under conditions of equality with the buyers. There are two reasons why Boisguilbert stressed freedom to sell. The first is because at the time he was writing France was limit-ing the competition for the purchase of her grains to the home market, and the aides prevented the movement or sale of wine.

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  Wealth, Power, and the Crisis of Laissez Faire Capitalism

  • D. Gibson(Author)
  • 2011(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  60 Laissez Faire at Home 215 Post–World War II policies around the world featured more protectionism and state intervention in economies than has been true since the 1970s. In the United States the huge infrastructure investments of the 1930s and the mobilization of the economy during World War II were followed by a period of investment and prosperity lasting to the beginning of the 1970s. Peschek observed that between 1947 and 1968 there was “a 107 percent increase in the real net value of structures and equipment in manufacturing, a more than doubling of output per worker, and a 70 percent increase in real personal income per capita in the United States.” 61 In spite of the real record at home and abroad, the U.S. Establishment has remained committed to the laissez faire polices of the IMF,World Bank, and WTO.The supporters of free trade, privatization, free flow of investment, and other laissez faire policies do not question or critically examine these policies. The explanations for the fail- ures of the last thirty years are found in the politics or cultures of individual countries, not the polices the Establishment has promoted. 62 In spite of the failures and the growing opposition to laissez faire, the Establishment goes on, apparently seeing no alternative that is acceptable. John Gray predicted in 1998 that when the expected financial crisis came, perhaps triggered by derivatives, change might occur because no country, including the United States, could act to sustain the global economy. 63 As the new century began the Bush II administration was attempting to intensify U.S. and international commitment to laissez faire, demanding, for example, the complete elimina- tion of “all industrial tariffs by 2015.” 64 This reflects the fact that the U.S. Establishment remains thoroughly committed to laissez faire, including the IMF program.These policies still have the backing of the powers that be, but are increasingly resisted and opposed.

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