A term describing an
economic theory that promotes government non-intervention. Laissez-faire theory states that most government interventions make an
economy less
efficient and hamper
growth. According to this, government ought to restrict itself to safeguarding the right to private
property. In its extreme form, it is opposed to any law limiting economic
activities short of theft or
extortion. Laissez-faire economists are philosophically opposed to minimum wages,
protectionism,
antitrust laws, and most laws intended to benefit workers at the expense of employers. Proponents of laissez-faire economics argue that it benefits employers and workers alike. For example, a man may open a mechanic shop to make
money for himself, but, in the process of doing so, he may hire otherwise unemployed mechanics and service otherwise broken cars, which then facilitates business for the rest of the community. If there were environmental or wage restrictions on his business, however, he might not hire as many employees and may not start the mechanic shop at all. Critics of the theory contend that its benefits are overstated and that a laissez-faire structure without regulation lends itself to the creation of
bubbles, which harms both businesses and their employees. See also:
Reaganomics,
Invisible Hand,
Keynesian economics,
Marxism,
Regulation.