Laissez-Faire

Definition of Laissez-faire 

The definition of Laissez-Faire is as follows. Literally, laissez-faire means "to let it happen," to "not interfere."

Laissez-Faire and the Wealth of Nations by Adam Smith

In the work of Adam Smith, the Wealth of Nations, he meant that if the individual was left on his own to discover, by trial and error, the work he could do and where he fits in economic life, then things would settle into a natural order, and productivity would thrive.

Government duties

As far as Adam Smith was concerned, the government had only three duties:

• to protect society from violence or invasion;
• to protect its citizens from injustice; and
• to maintain public works and buildings that could never be for the interest of any one individual alone.

They were the same principles of government that Thomas Jefferson would soon be fighting for in the new United States. To Adam Smith, utopia meant a society in which there was absolute free trade.

Laissez-faire capitalism and Adam Smith

Even though Adam Smith has been called "the apostle of capitalism," Adam Smith always took the side of the worker in his writing, sometimes sounding almost like Karl Marx. He was angry that English law allowed employers to organize for their rights, but not employees. Adam Smith warned against letting merchants and manufacturers influence government policies. And he described those in power in manufacturing and trade as: (Adam Smith Quotes)

"an order of men who have generally an interest to deceive, and even to oppress the public and who have, upon many occasions, both deceived and oppressed it." 

Businessmen, he said,

"seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

But Adam Smith also believed strongly in private property, because it stimulated enterprise. And he also believed that the number of jobs available and the wages paid, depended above all else, on the accumulation of capital. Still, he stressed that high wages were profitable to both the employer and the employee alike. He also urged the abolition of slavery, from the economic point of view as he put it, "work done by free men comes cheaper in the end than that performed by slaves."