Laissez-faire Definition Study Sections

    Laissez-faire, laissez-passer (French) – is used in a sense: let the business go its way; in discussions – the position of non-interference, inconsistency.

    The policy of laissez-faire, or, as Smith puts it, of natural freedom, flows directly from his views on man and society. If the economic activity of each person ultimately leads to the welfare of community, then it is clear that this activity should not be embarrassed.

    Smith believed that with the freedom of movement of goods and money, capital and labor, the resources of society would be used in the most rational, optimal way. Freedom of competition was the alpha and omega of his economic doctrine. It runs the red thread through all the “Wealth of Nations”. This principle Smith applied even to doctors, university professors and priests. If, say, the priests of all faiths and sects are free to compete among themselves, not to give any group of privileges, let alone monopoly, they will be most harmless (and this, as he hints, is their highest effectiveness).

    The role of Smith is not that he discovered the principle of laissez-faire, but that he substantiated it with the greatest thoroughness and systemativeness. Although this principle was born in France, to develop it to its logical conclusion and to lay the foundation for economic theory, the British should have been. England, turning into the most developed industrial country in the world, was already objectively interested in free trade. In France, the fashion for physiocratic theory was mostly the whim of enlightened and liberal aristocrats and passed very soon. In England, the “fashion” in Smith turned into a symbol of the faith of the bourgeoisie and the bourgeoisized nobility. The economic policy of the British government during the next century was, in a sense, the implementation of the Smith program.

    The first steps were made during the life of Smith. There is such a curious story. In the last years of his life, Smith was already famous. Being in 1787 in London, Smith came to the house of a great nobleman. In the living room was a large society, which included Prime Minister William Pitt. When Smith entered, everyone stood up. In his professorial habit, he raised his hand and said: “Please sit down, gentlemen.” Pitt answered, “After you, doctor, we are all your disciples here.” Perhaps this is only a legend. But it is believable. Pitt carried out some measures in the field of trade, by their spirit, consistent with the ideas of the “Wealth of Nations”.

    Smith does not formulate his program on points anywhere. But this can be done without much difficulty. Specifically, laissez-faire Smith means the following.

    1. It requires the abolition of all measures restricting, in modern language, the mobility of the workforce. First of all, we are talking about such feudal remnants as compulsory handicraft apprenticeship and the law on the settlement. It is clear that the objective meaning of this requirement is to ensure freedom of action for the capitalists. But we must remember the era when Smith wrote: the British working class at the time was suffering not so much from capitalism as from the insufficiency of its development. Therefore Smith’s demand was progressive and even humane.
    2. Smith advocated complete freedom of land trade. He was an opponent of considerable landownership and proposed repealing the laws that prevent the fragmentation of hereditary lands. Smith was for the land to pass into the hands of the owners, able to use from more economically or inclined to let the land into circulation. All this is aimed at the development of capitalism in agriculture.
    3. Smith proposed to abolish the remnants of government regulation of industry and domestic trade. Excises (indirect taxes), which are levied on the sale of certain goods in the domestic market, should be deduced only for the sake of budget revenues, and not for impact on the economy. In England, there were no duties levied on the transport of goods within the country. But that criticism of Smith for France sounded more acute and urgent.
    4. Smith subjected to detailed criticism of the entire foreign trade policy of England and developed a program of free trade. This is its most important demand, and it is most directly directed against mercantilism. This gave birth to free trade (from the English “free trade”), which became in the nineteenth century the banner of the British industrial bourgeoisie.

    Under the fire of Smith falls the whole arsenal of mercantilist politics: the desire for the compulsory activity of the balance of payments, the prohibition of the import and export of certain goods, high import duties, export premiums, monopoly trading companies. Especially sharply he opposed the British colonial policy, directly stating that it is dictated not by the interests of the nation, but by the benefits of a handful of traders. Smith considered the short-sighted and ridiculous policy of strangling industry and restricting trade that England spent in Ireland and, especially in the North American colonies. He wrote: “The prohibition of the whole people from making out of the product of their labor all that they can, or spend their capital and industrial labor, in this way, as he considers to be the most profitable, is a clear violation of the most sacred rights of mankind.”

    This was published in 1776 when England had already entered a war against the insurgent colonists. Smith treated American Republicanism with sympathy, although remaining an excellent British, did not advocate the separation of the colonies, but for the creation of an utterly same union between England and the colonies. He spoke no less boldly of the policy of plunder and oppression that the East India Company had been conducting in India. It should also be noted that Smith in his book wrote many sarcastic and harsh words about the church and the system of university education. True, in England he did not risk not his head, nor freedom, and he could not especially be afraid of a prison where other of his French friends visited him at different times: Voltaire, Diderot, Morelle, even Mirabeau. But he did not know how sensitive; there could be hatred and attacks by Anglican priests, university authorities and newspaper scribblers. He was afraid of all this and did not hide that he was afraid.

    The attractiveness of Smith’s personality lies in the fact that he, a man by nature cautious and cautious, nevertheless wrote and printed his bold book The Wealth of Nations, which he wrote about ten years ago.

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