The Laissez-faire concept advocates minimal government intervention in individual and societal economic affairs. Popular belief holds that the term was coined after industrialists said, “Leave us alone” when asked what the government could do to help businesses. The Physiocrats were French economists active from 1756 to 1778 who developed laissez-faire. Classical British economics favored laissez-faire. The term was pioneered by physiocrats between 1756-1778 in French economic schools (Phelps & Wallsch., 2022). They are credited with popularizing laissez-faire at the time. The classical economic theory did not consider laissez-faire (Phelps & Wallsch., 2022). Laissez-faire promotes employee independence, creativity, and innovation in business and management.
The concept that people should just be left alone was popular in the 19th century. Its supporters pointed to the belief in a natural economic order that is present in classical economics to justify their optimism regarding unrestricted free enterprise. Individual initiative, creativity, libertarian economics, open markets, and healthy competition are fostered (Locke & Wright, 2018). It supported the concepts of respect for private property, freedom to start and own a business, and free markets in trade without government price controls or excessive intervention. They made the whole context of laissez-faire famous at the time.
Laissez-faire impacted the Reconstruction by ensuring that there was less interference from the government in the operations of businesses. As a direct consequence of the environment, businesses demonstrated a greater propensity for taking risks and investing in the economy (Phelps & Wallsch., 2022). It enhanced motivation to prioritize the maximization of profits, thus making the reconstruction dynamic.
Laissez-faire ensured that products had an edge in the market, and businesses needed to become more innovative and creative in their approaches. Not only did this method increase productivity, but it also made technological advancements. Since there was less taxation, individuals and businesses alike reaped the benefits of this change by having more money available for personal spending (Locke & Wright, 2018). Corruption was prevented from allowing for innovation, which might have arisen from bureaucrats with little expertise but a great deal of regulatory power.
The laissez-faire philosophy significantly influenced politics, culture, and the economy during the Gilded Age. The liberal ideology fought against anything that liberals, as a group, believed would stifle the natural competitive drive of the individual. During the Gilded Age, liberals looked to political action to combat the rampant corruption that plagued governments across the country. The political power of immigrants was a significant concern for liberals, particularly the political power of Catholic immigrants and former slaves of African descent (Phelps & Wallsch., 2022). Some people advocated for a return to the old voting procedure, which involved verifying the voters’ property before allowing them to cast a vote.
The liberal viewpoint was that the efforts of the government to improve society were counterproductive. It prevented blacks in the South from succeeding in a free-market economy and was a significant factor in the Republican Party’s decision to abandon Reconstruction in the late 1870s. This argument was central to the liberals’ role in the decision. The concept of “liberty of contract,” which refers to the freedom for employers and employees to negotiate the terms of their employment agreement, was a significant concern for laissez-faire economists (Locke & Wright, 2018).
The Supreme Court utilized this reasoning to overturn state laws that mandated worker protections such as minimum wages and maximum weekly hours. The court concluded that state regulations and labor unions violated people’s freedom to bargain over their working conditions. In determining wages and working conditions, the decisions made by the court did not take into account the power dynamic between employees and employers.
In summary, numerous successful leaders have adopted a more hands-off style despite Laissez-faire’s unpopularity. Modern business people have significantly succeeded by surrounding themselves with talented staff members and delegating decision-making to them. In the end, a laissez-faire strategy assumes that team members will be highly independent. They have access to every tool they could require. However, it can be very effective if everyone on the team gets along well and knows how to prioritize their tasks.
References
Locke, J. L., & Wright, B. (Eds.). (2019). The American Yawp: A Massively Collaborative Open US History Textbook, Vol. 1: To 1877. Stanford University Press.
Phelps, W., & Wallach, J. J. (Eds.). (2022). Containing Multitudes: A Documentary Reader of US History to 1877. University of Arkansas Press.