ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The laissez-faire theory mainly advocates government non-intervention. Economic theorist Adam Smith believed that the optimal functioning of markets needed minimal government intervention.

Detailed explanation-2: -We know Adam Smith today as the father of laissez faire ("to leave alone") economics. This is the idea that government should leave the economy alone and not interfere with the “natural course” of free markets and free trade.

Detailed explanation-3: -So then, while Smith was sympathetic to laissez-faire proponents, he was not totally committed to laissez-faire economics. He was not as rigid nor as minimalistic as laissez-faire economists advocate. He did not see laissez-faire principles as absolutes.

Detailed explanation-4: -Laissez-faire is an economic philosophy of free-market capitalism that opposes government intervention. The theory of laissez-faire was developed by the French Physiocrats during the 18th century. Laissez-faire advocates that economic success is inhibited when governments are involved in business and markets.

Detailed explanation-5: -Often, laissez-faire capitalism is also referred to as free market capitalism or market capitalism. Simply put, laissez-faire translates to “leave us alone” meaning that the government should remain out of the economy and instead allow individuals to freely carry out their own economic affairs.