What Is Laissez-Faire Economics?

Laissez-faire economics involves a minimal amount of government intervention in economic affairs. The term, French for "allow to do," is believed to have originated when Jean-Baptiste Colbert, who controlled finance under France's King Louis XIV, asked industrialists how the government could help business and received the answer, "Leave us alone."

There are four key fundamentals to a laissez-faire system. First, the individual is the basic unit in society. Second, individuals have the right to freedom. Third, the physical order of nature is self-regulating, and does not require intervention. Fourth, corporations are created by the state and should be monitored closely by citizens. Early advocates of laissez-faire also emphasized the need for markets to be competitive.