Business, Legal & Accounting Glossary

Definition: Laissez-Faire

What is the dictionary definition of Laissez-Faire?

Dictionary Definition

With minimally restricted freedom in commerce.

The French term Laissez-faire literally means ‘Let do’. According to the classical liberal as well as the modern libertarian doctrine, laissez-faire means free and autonomous decisions by individuals with regard to economic matters and the lowering of government interference in the same.

Laissez-faire theory proposes no economic intervention by the state and encourages private initiative and production. However, the individuals involved in the production of goods and services must also take into account the personal and property rights of other individuals.

Full Definition of Laissez-Faire

Literally, laissez-faire is French for “let it be.” More usefully, laissez-faire is a philosophy that favours the government keeping its hands off the economy. In other words, supporters of laissez-faire believe only free market forces should determine prices, production, wages, and other key elements of the economy. At the opposing pole of laissez-faire economics are command economy systems where the government controls all means of production. The effectiveness of laissez-faire policies continues to be argued vigorously. Nearly all economists agree that complete laissez-faire is impossible for today’s U.S. economy. Moreover, voters’ expectations of an important role for government in the economy has made laissez-faire politically unpalatable. But the laissez-faire philosophy, which continues to provide the intellectual underpinning for advocates of limited government, remains a potent force in economic debate.

The laissez-faire theory has certain prominent characteristics. These are:

  • Near exclusion of government intervention in economic matters
  • Private ownership of properties
  • Free market
  • Minimal taxation
  • Minimal trade restrictions

The two strongest supporters of laissez-faire theory are the Chicago School of Economics and the Austrian School of Economics.

Concepts Related To Laissez-faire Economics

Following are certain concepts that are related to laissez-faire:

  • Classical economics
  • Individual transfer quota – ITQ
  • Crony capitalism
  • Invisible hand
  • Dismal science
  • Keynesian economics
  • Economics
  • Mercantilism

Classical Economics

Classical economics is that part of economics that deals with what has been done in the subject in the 18th and 19th century. Classical economists mainly dealt with various ways in which market economies and markets functioned.

Individual Transfer Quota – ITQ

Individual transfer quota – ITQ is a limitation imposed by a particular governing body on individuals and companies. These limits are imposed on the amount of a particular good or service that may be produced by the entity on whom it is imposed.

Invisible Hand

The invisible hand is a concept that has been coined by Adam Smith, a noted economist, in “An Inquiry into the Nature and Causes of the Wealth of Nations”, written in 1776. As per this concept, individuals contribute to social improvement by making efforts to improve their respective financial conditions.

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Laissez-Faire. Payroll & Accounting Heaven Ltd. December 04, 2020
Chicago Manual of Style (CMS):
Laissez-Faire. Payroll & Accounting Heaven Ltd. (accessed: December 04, 2020).
American Psychological Association (APA):
Laissez-Faire. Retrieved December 04, 2020, from website:

Definition Sources

Definitions for Laissez-Faire are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 1st April, 2020 | 8 Views.