Question

What is Laissez-faire?

Hint:

For questions on economic ideologies like Laissez-faire, it’s crucial to explain the role of government (or lack thereof) in the economy, along with the advantages and criticisms of such policies.

Answer 1

Overview:
Laissez-faire is an economic philosophy of free-market capitalism that opposes government intervention in the economy. The term, which comes from French, literally means "let do" or "let go," emphasizing minimal government control over trade and business. It was popularized by economists like Adam Smith.
Key Points:
1. Economic Freedom:
Laissez-faire advocates for minimal regulation and interference from the government, allowing businesses and markets to operate freely based on supply and demand.
2. Adam Smith and the Invisible Hand:
Adam Smith's concept of the "invisible hand" in his book "The Wealth of Nations" is a key idea behind laissez-faire economics. According to Smith, individuals acting in their own self-interest would unintentionally contribute to the overall economic good.
3. Criticisms and Limitations:
While laissez-faire promotes economic freedom, critics argue that it can lead to inequality, exploitation, and environmental degradation due to the lack of government oversight.