What Is Laissez Faire Economics?

By Jeremy Bowman – Updated Nov 21, 2024 at 10:26 AM

Key Points

Laissez-faire economics advocates for minimal government interference, relying on market forces.
Adam Smith's notion of the "invisible hand" underpins this system, promoting self-regulated markets.
Reagan's era demonstrated laissez-faire with tax cuts and deregulation, but led to increased inequality and debt.

One of the most important factors in a country's economic health, well-being, and even culture is its economic system.

The choice of economic system affects regulations, entrepreneurship, freedom, and the ability to generate wealth. Within capitalism, there are a number of different approaches, and one of the better-known is laissez-faire.

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

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