Explanation :The term was first coined in France and it means “allow to do” or “leave it be”. The idea behind this term is mostly applied to the field of economics. It is one of the principles that support the free market system and theory. This concept was mostly supported by Jean-Baptiste Colbert and Dr. Francois Quesnay and it backs the idea that the market works more efficiently when the government leaves some room to market participants to interact between each other without strict supervision. This idea was also backed by Adam Smith, the father of classical economics. He stated that the market was able to self-regulate through supply and demand interactions and he recommended low government participation to increase productivity and economic development. The concept of laissez faire can also be applied to leadership. In this case, by allowing individuals to have some freedom to act and make decisions, this principle predicts a better outcome than if the leader micro-manages strictly each of the activities being performed.
In a nutshell :
- 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 and believes that economic success is more likely the less governments are involved in business.
- Later free-market economists built on the ideas of laissez-faire as a path to economic prosperity, though detractors have criticized it for promoting inequality.