Q7. What do you understand by Laissez-faire? Is it advisable to have Laissez-faire governments?
When the Industrial Revolution was gaining strength in England— and the same was generally true in other countries— the growing belief was that governments should not interfere with business and industry. The theory known as laissez-faire or ‘let us alone’, was then a kind of religion among capitalists.
According to the laissez faire idea, the businessman should be free to look after his own interests. Only the unwritten law of supply and demand should determine the size of his profits. The same unwritten law would determine the fate of the worker, whether he had a job, what would be his working conditions and salary. The famous economist Adam Smith voiced this idea in 1776 in a book called The Wealth of Nations, and it had many supporters, too.
Protection for industrial workers could not have taken place without a change in the ideas of the responsibilities of governments
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.
Gradually, the state’s role in economic development has also come to be recognized. This is true particularly of the developing countries that cannot modernize their economies without a comprehensive and large-scale effort on the part of the state. In fact, in these countries, it is the state, rather than the private capitalist, that is the main agency for economic development.