Describe the early advocates of laissez faire and explore some of its critics

Question

What will be an ideal response?

Answer 1

ANSWER:
The most celebrated exponent of laissez faire (“let them do”) was Adam Smith (1723–1790), a Scottish economist. In The Wealth of Nations (1776) Smith argued that if individuals were allowed to seek personal gain, the effect, as though guided by an “invisible hand,” would be to increase the general welfare. The government should refrain from interfering in business, except to protect private property; it should even allow duty-free trade with foreign countries. By advocating free-market capitalism, Smith was challenging the prevailing economic doctrine, mercantilism, which argued that governments should regulate trade in order to maximize their hoard of precious metals. Persuaded by Adam Smith’s arguments, governments after 1815 dismantled many of their regulations, but no major power opened its economy to foreign competitors. Nonetheless, it was obvious that industrialization was causing widespread misery. Two other British thinkers, Thomas Malthus (1766–1834) and David Ricardo (1772–1832), attempted to explain the poverty they saw without challenging the basic premises of laissez faire. The cause of the workers’ plight, they said, was the population boom, which outstripped the food supply and led to falling wages. The workers’ poverty, they claimed, was as much a result of “natural law” as was the wealth of successful businessmen. For them the only way for the working class to avoid mass famine was to delay marriage and practice self-restraint and sexual abstinence. Businesspeople in Britain eagerly adopted laissez-faire ideas that justified their activities and kept the government at bay. But not everyone accepted the grim conclusions of the “dismal science,” as economics was then known. The British philosopher Jeremy Bentham (1748–1832) believed that it was possible to maximize “the greatest happiness of the greatest number,” if only Parliament would study the social problems of the day and pass appropriate legislation. The German economist Friedrich List (1789–1846) rejected laissez faire and free trade as a British trick “to make the rest of the world, like the Hindus, its serfs in all industrial and commercial relations.” To protect their “infant industries” from British competition, he argued, the German states had to erect high tariff barriers against imports from Britain. On the European continent, List’s ideas helped lead to the formation of the Zollverein, a customs union of most of the German states, in 1834.