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This is an archived version of the article: Angus Burgin, “Laissez-Faire,” The Encyclopedia of Political Thought, ed. Michael T. Gibbons (John & Sons, Ltd., 2015). For access to the published version with original pagination see https://doi.org/10.1002/9781118474396. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.

Laissez-Faire justification on those who recommend intervention in the . Many have questioned such uses of Angus Burgin the term, holding, with John Elliott Cairnes, that they offer a “mere handy rule of practice” that is The term laissez-faire refers to a social system “totally destitute of all scientific authority” that endeavors to assign responsibility for (Cairnes 1873: 244). Even so, laissez-faire has economic outcomes to markets rather than to proven to be a remarkably resilient concept and . Beyond this generalization, its specific has persistently defied predictions of its incipient meaning has remained vague and inconsistent. decline. Some insist that it applies to a government that The term laissez-faire did not commonly provides little other than rudimentary appear in the English language until the mid- protections against criminal activity, as in 1800s, but it had entered French discussions of ’s “night-watchman ” or more than a century earlier. in Thomas Carlyle’s “anarchy plus the Turgot attributed its first such occurrence to an constable.” Although this extreme understanding incident in the late seventeenth century, when the of the concept is frequently invoked by critics and French François Legendre was said to dogmatists, few theorists have accepted it have told Louis XIV’s meddling as a representation of their ideas. Others argue Colbert: “laissez-nous faire.” Although slight that the term can encompass a far more expansive variations of this formula subsequently appeared range of activities: thus the historian of economic in the writings of Pierre de Boisguilbert, it did not thought has written that it refers to a become more widely adopted until the mid- government policy that attempts to provide not eighteenth century. Dupont de Nemours only , defense, and commutative , but famously attributed the popularization of the also public works that are considered essential phrase “laissez faire, laissez passer” in that period and unlikely to be pursued by private enterprise. to Vincent de Gournay; but Gournay left no Such a definition allows canonical figures like record of publications to validate the claim. The to be considered of first recorded use of laissez faire to signify an laissez-faire, but only if one adopts an economic doctrine appeared in the writings of unintelligibly broad understanding of its Gournay’s contemporary the Marquis meaning. d’Argenson, who circulated his writings broadly Due in part to these ambiguities, laissez-faire but published only one anonymous letter in his has been most commonly referenced not as a lifetime. specific and highly elaborated doctrine of For the remainder of the eighteenth century, political , but rather as an implicit references to laissez-faire remained infrequent. standard of inaction to which economic and Most Physiocrats did not align themselves with political proposals can be compared. John Stuart this concept, which was never used by Quesnay Mill provided a classic statement of this view in and appeared in the writings of Turgot only his Principles of Political Economy: “Letting alone, twice. Adam Smith never used the word either, in short, should be the general practice: every and its applicability to his system of ideas has departure from it, unless required by some great long been a source of scholarly disagreement. good, is a certain evil” (Mill 2004 [1848]: 865). Smith was a tireless supporter of free and When used in this manner, laissez-faire can remained consistently suspicious of the provide a guideline that places a burden of government’s capacity to improve upon market

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outcomes; but he also advocated public sought to elevate Mill’s qualified rule to a education, sought strict against prescriptive philosophy. , countenanced vigorous government Despite Mill’s reservations, the middle years action to improve the lot of the poor, and of the nineteenth century came to be seen by expressed concerns about the repetitive nature of many as the high tide of laissez-faire. In England mass . There is much for advocates of vigorously advocated , laissez-faire to admire in Smith’s writings, but the arguing successfully for the 1846 repeal of the term cannot be retrospectively applied to his Corn with the intransigence characteristic work without qualification. of what became known as “the The term is similarly absent from the works School.” The work of leveraged of Bentham, Malthus, and Ricardo, and its novel evolutionary theories to argue for an relationship with their work has been overstated. that minimized redistribution Bentham did write in the first chapter of A to the poor. In Frédéric Bastiat drew on a Manual of Political Economy that the proper theory of natural in order to undertake, “watchword of government” was “be quiet,” but with remarkable uniformity, the “task of freeing his passion for bureaucratic oversight and his the whole domain of private activity from the careful distinction between the “Agenda” and the encroachments of government” (Bastiat 1996 “Non-agenda” of government made it clear that [1850]). In America Francis he countenanced extensive interventions. The observed that laissez-faire had become a of pessimistic conclusions of Malthus’s Essay on the “whether a man were an at all” Principle of Population have been used to justify (Walker 1889: 17). Even saw a wave of market outcomes ever since, but Malthus himself enthusiasm for “English .” saw benefits in significant restrictions on trade. Beginning in the late 1860s support for Ricardo famously advocated for free trade, but laissez-faire economic policies across Europe the political implications of his work were began to wane. Under the leadership of Gustav ambiguous and his theory of became a Schmoller, a group of historical economists in primary justification for . Germany argued that their country’s recent Laissez-faire finally entered common usage in credulousness toward an abstract market the English language with the publication of John had resulted in disastrous inequalities. American Stuart Mill’s Principles of Political Economy in 1848 students who took their at German (Mill 2004 [1848]). Although Mill adopted laissez- universities returned home with new doubts faire as a baseline beyond which all acts of about an that many now government intervention would need to be associated with their native land. In 1884, just a justified, in practice he found many instances year before founding the American Economic where such intervention was merited. Mill’s ideal Association, Richard T. Ely wrote that the new government accepted a responsibility for the political economy “does not acknowledge provision of education, the care of lunatics, idiots, laissez-faire as an excuse for doing nothing while and children, the exercise of control over practical people starve, nor allow the all-sufficiency of , the subsistence of the destitute, the as a plea for grinding the poor” (Ely oversight of transactions that impacted outsiders, 1884: 64). Even in England, support for laissez- and the maintenance of a learned class. Mill’s faire policies entered into a prolonged decline. followers, John Elliott Cairnes and Henry The British constitutional lawyer Albert Venn Sidgwick, were sharply critical of those who Dicey’s Lectures on the Relation between and Public Opinion, delivered at Harvard Law School

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in 1898 and published in 1905, offered a infrastructure, prohibiting harmful prolonged lament over the rise of and practices, imposing controls on monopolies, associated “eclipse” of laissez-faire. and offering that guaranteed a Dicey exaggerated the support for laissez- basic level of and shelter to all. faire among the classical economists, but he was Hayek’s closest allies in the joined by many in his assessment that its expressed their reservations about laissez-faire in influence had reached a low ebb. In 1906 the stronger terms. The American economist asserted in a economist argued in the early 1920s speech that laissez-faire had been “generally that the ethical conclusions of laissez-faire abandoned” due to “the cumulative effect of economists relied on assumptions that had no experience,” the need for “self-defense” against relevance to the actual world. He criticized them powerful new business enterprises, and the for ignoring the frequency with which growing “popular confidence” in governing knowledge was circumscribed, humans were bodies that were fast becoming more capable and irrational and impulsive, desires were induced by efficient (Fisher 1907: 18). Nearly two decades culture, were immobile or indivisible, later argued in a piece competitors sought to combine, transactions titled “The End of Laissez-Faire” that the concept influenced more than just the parties involved, had become a mere “copybook maxim” that had and economic failed to align with little support among academic economists and moral desert (Knight 1997 [1935]). Knight’s was fast losing its hold on the popular student Henry Simons advocated a “positive imagination (Keynes 1927: 20). Both Fisher and program for laissez-faire,” which included a Keynes believed that the decline of laissez-faire steeply progressive and a call to break represented a long-term trend that would end in up large into much smaller business its permanent displacement. units. Knight and Simons joined Hayek in calling The events of the at first for the abandonment of laissez-faire in favor of seemed to validate these predictions, as less doctrinaire approaches to market advocacy. newspapers on both sides of reported But predictions of the demise or supersession that recent economic dislocations had brought of laissez-faire would prove misplaced in the the era of laissez-faire to a close. Even the leading decades after II, as several discrete advocates of free trade were quick to dissociate communities of market advocates developed themselves from any connection with the bold new arguments against government doctrine. used his inaugural interference. One of these communities emerged lecture at the School of Economics to under the oversight of , criticize his colleagues for their dogmatic support Hayek’s onetime mentor in who fled to for laissez-faire and neglect of their profession’s the United States in 1938 and later took up a “positive” to identify where and when state professorship at University. Mises’s action was beneficial. Later, in his 1944 postwar treatise argued that the The Road to Serfdom, Hayek disparaged laissez- of economics proceeded through rigorous faire as “a highly ambiguous and misleading aprioristic reasoning, which revealed that description of the principles on which a liberal government intervention was only merited in policy is based” (Hayek 2008 [1944]: 118). He then cases that involved the preservation of economic outlined a broad range of activities in which he (Mises 1963 [1949]: 285). Mises believed state action was merited, such as developed a passionate community of followers limiting working hours, providing transportation and successors, but their “Austrian” views

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remained marginalized within an economics little more than enforce contracts and provide profession that increasingly found their police functions, and his rise to prominence syllogistic reasoning and literary obscure. represented the renewal of political in a More broadly influential was , the radical version of laissez-faire. Soviet émigré who authored popular novels Advocates of laissez-faire, including Mises, including (published in 1943) Rand, Friedman, and their followers, long and (published in 1957). Rand’s represented it as a highly circumscribed philosophy, which she called “,” approach to government intervention in the defended market outcomes by identifying a close activities of citizens. Their critics, however, alignment between economic productivity and replied that laissez-faire did not emerge moral desert. Both Mises and Rand defended the organically: it, too, was only made possible concept of laissez-faire and criticized colleagues through extensive government interventions. who were more willing to allow for deviations “There was nothing natural about laissez-faire,” from the ideal. argued in The Great Transformation; The most influential academic of “free markets could never have come into being laissez-faire during the second half of the merely by allowing things to take their course” twentieth century, however, was the University (Polanyi 2001 [1944]: 145). The self-regulating of Chicago economist . Relying market was always confronted by threats ranging on the empirical research methodologies and from trade unions to monopolies, and it was mathematical language of postwar economics, sustained only through constant and often Friedman developed a multipronged assault on aggressive interventions. More recently, the Keynesian consensus shared by many of his economic sociologists have emphasized the colleagues. In a series of major analytical works restrictions on that “neoliberal” he asserted that inept , rather economists and politicians have enacted in order than market failures, caused the Great to protect their preferred systems of market Depression, and that failed to exchange. Such systems, they have emphasized, stimulate demand as Keynesians expected. often treat political as secondary to the Drawing on the work of his colleague George economic of those in positions of Stigler, Friedman argued that regulators usually political and financial authority. In these ended up serving the corporations they were interpretations, “laissez-faire” is a misleading charged to oversee, and that concerns about description for a system in which the government monopoly advantages were largely misplaced. carefully constructs the terms of exchange and With the publication of and Freedom in restricts the democratic capacity to intervene. 1962, he expanded upon these arguments to Laissez-faire remains a nebulous term. It has express a comprehensive political worldview. In been used in reference to theorists who wish to almost all cases, Friedman found the government restrict government to little more than police to cause more harm than it solved, and he argued functions, as well as theorists who embrace far for the abolition of government functions such as more expansive roles in line with those of most licensing bureaus, disaster aid, the draft, modern democratic states. It has served as both a and national parks. He intended even his positive regulative ideal and the foundation for an proposals, including school vouchers and a economic worldview; as an expansive moral negative , as pragmatic solutions on doctrine founded on an ethos of productivity and the journey to a government with no public as a narrowly economic doctrine focused on the education or . Friedman’s ideal state did accumulation of ; as a pessimistic

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restriction on the exercise of popular democracy and as an optimistic attempt to expand . Advocates have represented it as the absence of intervention, while critics have seen it as reliant upon the constant exercise of state power. Regardless of its meaning, justification, and conceptual viability, laissez-faire continues to carry great weight as a point of reference in debates about political economy. The term’s very ambiguity remains essential to its proliferation, allowing its definition to shift in accordance with the needs of those who invoke it.

SEE ALSO: ; Capitalism; Classical Political Economy; ;

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References Further Reading

Bastiat, F. (1996 [1850]) Economic , ed. W. H. Backhouse, R. and Medema, S. G. (2008) “Laissez- Boyers, trans. G. B. de Huszar. Irvington-on- Faire, Economists and.” In S. Durlauf and L. E. Hudson, NY: Foundation for Economic Blume (Eds.), New Palgrave Dictionary of Education, http://www.econlib.org/library/ Economics, 2nd ed. London: Macmillan, vol. 4, pp. Bastiat/basHar0.html (accessed January 2, 2014). 848–56. Cairnes, J. E. (1873) Essays in Political Economy: Castelot, E. (1987) “Laissez-Faire, Laissez-Passer: Theoretical and Applied. London: Macmillan. History of the Maxim.” In J. Eatwell, M. Milgate, Ely, R. T. (1884) The Past and Present of Political and P. Newman (Eds.), The New Palgrave Economy. Baltimore, MD: N. Murray. Dictionary of Economics. Palgrave Macmillan, Fisher, I. (1907) “Why Has the Doctrine of Laissez http://www.dictionaryofeconomics.com/ Faire Been Abandoned?” , New article?id=pde1987_X001261 (accessed January 2, Series 25 (627), 18–27. 2014). DOI: 10.1057/9780230226203.2918 Hayek, Friedrich (2008 [1944]) The Road to Serfdom. Grimmer-Solem, E. (2003) The Rise of Historical London: . Economics and Social Reform in Germany, 1864– Keynes, J. M. (1927) The End of Laissez-Faire. London: 1894. Oxford: Clarendon. Hogarth Press. MacGregor, D. H. (1949) “The Laissez-Faire Knight, F. H. (1997 [1935]) The of Competition. Doctrine.” In D. H. MacGregor, Economic Thought : Transaction. and Policy. New York: , Mill, J. S. (2004 [1848]) Principles of Political Economy. pp. 54–89. Amherst, NY: Books. Robbins, L. (1952) The Theory of in Mises, L. von (1963 [1949]) Human Action: A Treatise English Classical Political Economy. London: on Economics. Chicago: Contemporary Books Macmillan. Publishing Group. Rodgers, D. T. (1998) Atlantic Crossings: Social Politics Polanyi, K. (2001 [1944]) The Great Transformation: The in a Progressive Age. Cambridge, MA: Harvard Political and Economic Origins of Our Time. : University Press. Beacon Press. Rothschild, E. (2001) Economic Sentiments: Adam Viner, J. (1960) “The History of Laissez Smith, Condorcet, and the Enlightenment. Faire,” Journal of , 3, 45–69. Cambridge, MA: Press. Walker, F. (1889), “The Recent of Political Simons, H. (1948) Economic Policy for a Free . Economy in the United States.” In Report of the Chicago: University of Chicago Press. Proceedings of the American Economic Association, Winch, D. (2009) Wealth and Life: Essays on the Third Annual Meeting, December 26–9, 1888, Intellectual History of Political Economy in Britain, Philadelphia, pp. 17–40. 1848–1914. Cambridge: Cambridge University Press.