Laissez-faire refers to an economic philosophy that advocates for minimal government interference in the economy.
The phrase “laissez-faire” originates with the French physiocratic economists, who were early proponents of a free market economy. The phrase translates literally to “let them do it”, but the figurative meaning is somewhat closer to “leave them to do it.” It has since been used to describe the views of many free market economists, such as Adam Smith, Friedrich Hayek, and Milton Friedman. Laissez-faire economists advocate policies such as:
- The elimination of trade barriers (import duties and other protectionist policies)
- The elimination of government price controls (minimum prices for goods, services, or labor)
- Absolute, or near absolute freedom of contract
- The elimination or reduction of government regulation.
The term “laissez faire” has also come to be used to describe an authority figure taking a hands-off approach to their duties, but this is neither the original nor usual sense of the phrase. In this usage, a lax parent may be described as “laissez-faire”, or a judge may take a “laissez faire” approach to appellate review. Unlike the use of the term to describe economic policy, in this context the term “laissez-faire” is almost invariably a negative label. It is used to insinuate that the authority figure has failed to perform their duties with appropriate care.
During the Lochner Era, the Supreme Court of the United States is said to have forced a laissez-faire economy onto the United States. By limiting the power of the government to restrict a baker’s work hours, the Supreme Court endorsed a much stronger interpretation of the freedom of contract, a hallmark of laissez-faire economics. However, this interpretation was short-lived, ending with the Supreme Court’s acceptance of President Roosevelt’s New Deal policies.
There is a fear among some political commentators that the Supreme Court will return to the laissez-faire economics of the Lochner Era, however this has not yet come to pass. Today laissez-faire policies are driven by politicians in the legislative and executive branches, not the judicial branch.
[Last updated in June of 2023 by the Wex Definitions Team]