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Laissez-Faire Capitalism

Definition

This is an economic system where the government minimizes its interference with businesses, and there are no restrictions on how goods and services can be produced or sold.

Analogy

Think of laissez-faire capitalism as a soccer game without a referee. The players (businesses) are free to play the game (produce/sell goods and services) however they want, without any rules or regulations to follow.

Related terms

Free Market: An economic system in which prices for goods and services are determined by the open market and consumers. In other words, supply and demand.

Capitalism: An economic system where private entities own the factors of production. The four factors are entrepreneurship, capital goods, natural resources, and labor.

Economic Liberalism: A political ideology that values the freedom of individuals — including the freedom of religion, speech, press, assembly, and markets — as well as limited government.