Rome Roman law developed during the 1st to 3rd centuries AD, and was divided between public and private law. Public law dealt with the administration of government, whereas private law regulated interactions between individuals. According to Rothbard, Roman "Private law developed the theory of the absolute right of private property and of freedom of trade and contract. While Roman public law theoretically allowed state interference in the life of the citizen, there was little such interference in the late Republic and early Empire. Private property rights and laissez-faire were therefore the fundamental heritage of the Roman law to later centuries, and much of it was adopted by countries of the Christian West."
Europe In Europe, the
laissez-faire movement was first widely promoted by the
Physiocrats, a movement that included
Vincent de Gournay (1712–1759), a successful merchant turned political figure. Gournay is postulated to have adapted the Taoist concept
wu wei, from the writings on China by
François Quesnay The doctrine of
laissez-faire became an integral part of
19th-century European liberalism. In Britain, the newspaper
The Economist (founded in 1843) became an influential voice for
laissez-faire capitalism.
Laissez-faire advocates opposed food aid for famines occurring within the
British Empire. In 1847, referring to the famine then underway in Ireland, founder of
The Economist James Wilson wrote: "It is no man's business to provide for another". More specifically, in
An Essay on the Principle of Population,
Malthus argued that there was nothing that could be done to avoid famines because he felt he had mathematically proven that population growth tends to exceed growth in food production. However,
The Economist campaigned against the
Corn Laws that protected landlords in the
United Kingdom of Great Britain and Ireland against competition from less expensive foreign imports of cereal products. The
Great Famine in Ireland in 1845 led to the repeal of the Corn Laws in 1846. The tariffs on grain which kept the price of bread artificially high were repealed. However, repeal of the Corn Laws came too late to stop the Irish famine, partly because it was done in stages over three years. A group that became known as the
Manchester Liberals, to which
Richard Cobden (1804–1865) and
John Bright (1811–1889) belonged, were staunch defenders of free trade. After the death of Cobden, the
Cobden Club (founded in 1866) continued their work. The breakdown of
laissez-faire as practised by the British Empire was partly led by British companies eager for state support of their positions abroad, in particular British oil companies. In Italy, philosopher
Benedetto Croce created the term "liberism" (derived from the Italian term
liberismo), a term for the
economic doctrine of
laissez-faire capitalism; it is synonymous with
economic liberalism. He claimed that "Liberalism can prove only a temporary right of private propriety of land and industries." It was popularized in English by Italian political scientist
Giovanni Sartori. Sartori specifically imported the term from Italian to distinguish between
social liberalism, which is generally considered a
political ideology often advocating extensive government intervention in the economy, and those
economic liberal theories that propose to virtually eliminate such intervention. In informal usage, liberism overlaps with other concepts such as
free trade,
neoliberalism,
right-libertarianism, the American concept of
libertarianism, and
Milton Friedman. The
Austrian School economist
Eugen von Böhm-Bawerk argues that the differences between the economical concept of liberism and the economical consequences of liberalism can be summarized by saying that "A market is a law system. Without it, the only possible economy is the street robbery."
United States Frank Bourgin's study of the
Constitutional Convention and subsequent decades argues that direct government involvement in the economy was intended by the
Founding Fathers. The reason for this was the economic and financial chaos the nation suffered under the
Articles of Confederation. The goal was to ensure that dearly-won political independence was not lost by being economically and financially dependent on the powers and princes of Europe. The creation of a strong central government able to promote science, invention, industry and commerce was seen as an essential means of
promoting the general welfare and making the
economy of the United States strong enough for them to determine their own destiny. Others view Bourgin's study, written in the 1940s and not published until 1989, as an over-interpretation of the evidence, intended originally to defend the
New Deal and later to counter
Ronald Reagan's economic policies. Historian Kathleen G. Donohue argues that in the 19th century
liberalism in the United States had distinctive characteristics and that "at the center of classical liberal theory [in Europe] was the idea of
laissez-faire. To the vast majority of American classical liberals, however,
laissez-faire did not mean "no government intervention" at all. On the contrary, they were more than willing to see government provide tariffs, railroad subsidies, and internal improvements, all of which benefited producers". Notable examples of government intervention in the period prior to the
American Civil War include the establishment of the
Patent Office in 1802; the establishment of the Office of Standard Weights and Measures in 1830; the creation of the Survey of the Coast (later renamed the United States Coast Survey and then the
United States Coast and Geodetic Survey) in 1807 and other measures to improve river and harbor navigation; the various
Army expeditions to the west, beginning with
Lewis and Clark's
Corps of Discovery in 1804 and continuing into the 1870s, almost always under the direction of an officer from the Army
Corps of Topographical Engineers and which provided crucial information for the overland pioneers that followed; the assignment of Army Engineer officers to assist or direct the surveying and construction of the early railroads and canals; and the establishment of the
First Bank of the United States and
Second Bank of the United States as well as various protectionist measures (e.g. the
tariff of 1828). Several of these proposals met with serious opposition and required a great deal of horse-trading to be enacted into law. For instance, the First National Bank would not have reached the desk of President
George Washington in the absence of an agreement that was reached between
Alexander Hamilton and several Southern members of Congress to locate the capitol in the
District of Columbia. In contrast to Hamilton and the
Federalists was
Thomas Jefferson and
James Madison's opposing political party, the
Democratic-Republicans. Most of the early opponents of
laissez-faire capitalism in the United States subscribed to the
American School. This school of thought was inspired by the ideas of Hamilton, who proposed the creation of a
government-sponsored bank and increased tariffs to favor Northern industrial interests. Following Hamilton's death, the more abiding
protectionist influence in the antebellum period came from
Henry Clay and his
American System. In the early 19th century, "it is quite clear that the
laissez-faire label is an inappropriate one" to apply to the relationship between the United States government and industry. In the mid-19th century, the United States followed the
Whig tradition of
economic nationalism, which included increased state regulation and
macroeconomic development of infrastructure.
Public works such as the provision and regulation transportation such as railroads took effect. The
Pacific Railway Acts provided the development of the
First transcontinental railroad. To help pay for its war effort in the Civil War, the
United States government imposed its first personal
income tax on 5 August 1861 as part of the
Revenue Act of 1861 (3% of all incomes over US$800; rescinded in 1872). Following the Civil War, the movement towards a
mixed economy accelerated. Protectionism increased with the
McKinley Tariff of 1890 and the
Dingley Tariff of 1897.
Government regulation of the economy expanded with the enactment of the
Interstate Commerce Act of 1887 and the
Sherman Anti-trust Act. The
Progressive Era saw the enactment of more controls on the economy as evidenced by the
Woodrow Wilson administration's
New Freedom program. Following
World War I and the
Great Depression, the United States turned to a mixed economy which combined
free enterprise with a
progressive income tax and in which from time to time the government stepped in to support and protect American industry from competition from overseas. For example, in the 1980s the government sought to protect the automobile industry by "voluntary" export restrictions from Japan. In 1986, Pietro S. Nivola wrote: "By and large, the comparative strength of the dollar against major foreign currencies has reflected high U.S. interest rates driven by huge federal budget deficits. Hence, the source of much of the current deterioration of trade is not the general state of the economy, but rather the government's mix of fiscal and monetary policies – that is, the problematic juxtaposition of bold tax reductions, relatively tight monetary targets, generous military outlays, and only modest cuts in major entitlement programs. Put simply, the roots of the trade problem and of the resurgent protectionism it has fomented are fundamentally political as well as economic". A more recent advocate of total
laissez-faire has been
Objectivist Ayn Rand, who described it as "the abolition of any and all forms of government intervention in production and trade, the separation of State and Economics, in the same way and for the same reasons as the separation of Church and State". Rand's political philosophy emphasized
individual rights (including
property rights) and she considered
laissez-faire capitalism the only moral social system because in her view it was the only system based on the protection of those rights. She opposed
statism, which she understood to include
theocracy,
absolute monarchy,
Nazism,
fascism,
communism,
socialism and dictatorship. Rand believed that natural rights should be enforced by a constitutionally limited government. Although her political views are often classified as
conservative or
libertarian, she preferred the term "radical for capitalism". She worked with conservatives on political projects, but disagreed with them over issues such as religion and ethics. She denounced
libertarianism, which she associated with
anarchism. She rejected anarchism as a naïve theory based in
subjectivism that could only lead to collectivism in practice. == Models ==