Laissez-faire is an economic system in which transactions between private parties are free from government intervention such as regulation, privileges, tariffs and subsidies. The phrase laissez-faire is part of a larger French phrase and basically translates to "let do", but in this context usually means to "let go".
Laissez-faire is an economic theory that became popular in the 18th century. The driving principle behind laissez-faire, a French term that translates as "leave alone" (literally, "let you do"), is that the less the government is involved in the economy, the better off business will be – and by extension, society as a whole. Laissez-faire economics are a key part of free market capitalism.
The underlying beliefs that make up the fundamentals of laissez-faire economics include, first and foremost, that a "natural order" rules the world. Because this natural self-regulation is the best type of regulation, laissez-faire economists argue that there is no need for business and industrial affairs to be complicated by government intervention. As a result, they oppose any sort of federal involvement in the economy, which includes any type of legislation or oversight; they are against minimum wages, duties, trade restrictions, and corporate taxes. In fact, laissez-faire economists see such taxes as a penalty for production.
One of the chief critiques of laissez-faire is that capitalism as a system has moral ambiguities built into it: It does not inherently protect the weakest in society. While laissez-faire advocates argue that if individuals serve their own interests first, societal benefits will follow, detractors feel laissez-faire actually leads to poverty and economic imbalances. The idea of letting an economic system run without regulation or correction in effect dismisses or further victimizes those most in need of assistance, they say.
Developed in the mid-1700s, the doctrine of laissez-faire is one of the first articulated economic theories. It's thought to have originated with a group known as the Physiocrats, who flourished in France from about 1756 to 1778; led by a physician, they tried to apply scientific principles and methodology to the study of wealth. These "économistes" (as they dubbed themselves) argued that a free market and free economic competition were extremely important to the health of a free society. The government should only intervene in the economy in order to preserve property, life, and individual freedom; otherwise, the natural, unchanging laws that govern market forces and economic processes – what another laissez-faire advocate, British economist Adam Smith, dubbed the "invisible hand" – should be allowed to proceed unhindered.