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Laissez-faire ( i / ˌ l ɛ s eɪ ˈ f ɛər - / , French: [lɛsefɛʁ] ( listen ) ) (or sometimes laisser-faire) is an economic environment in which transactions between private parties are free from tariffs , government subsidies , and enforced monopolies , with only enough government regulations sufficient to protect property rights against theft and aggression . The phrase laissez-faire is French and literally means "let [them] do", but it broadly implies "let it be," "let them do as they will," or "leave it alone". Scholars generally believe a laissez-faire state or a completely free market has never existed. [ 1 ] [ 2 ] [ edit ] Etymology
Laissez-faire
Life in Great Britain during the Industrial Revolution
The Industrial Revolution is the period encompassing the vast social and economic changes that resulted from the development of steam-powered machinery and mass-production methods, beginning in about 1960 in Great Britain and extending through some of the first half of the nineteenth century. The lives of large sections of the population of Great Britain underwent massive changes during the industrial revolution. Work became more regimented and disciplined, and began to take place outside the home.
Wage slavery
Wage slavery refers to a situation perceived as quasi- voluntary slavery , [ 1 ] where a person's livelihood depends on wages , especially when the dependence is total and immediate. [ 2 ] [ 3 ] It is a negatively connoted term used to draw an analogy between slavery and wage labor by focusing on similarities between owning and renting a person.Corporate capitalism is a term used in social science and economics to describe a capitalist marketplace characterized by the dominance of hierarchical , bureaucratic corporations . A large proportion of the economy of the United States and its labour market falls within corporate control. [ 1 ] In the developed world, corporations dominate the marketplace, comprising 50 percent or more of all businesses. Those businesses which are not corporations contain the same bureaucratic structure of corporations, but there is usually a sole owner or group of owners who are liable to bankruptcy and criminal charges relating to their business.
Corporate capitalism
In economics and contract theory , information asymmetry deals with the study of decisions in transactions where one party has more or better information than the other. In contrast to neo-classical economics which assumes perfect information, this is about "What We Don't Know". [ 1 ] This creates an imbalance of power in transactions which can sometimes cause the transactions to go awry, a kind of market failure in the worst case. Examples of this problem are adverse selection , [ 2 ] moral hazard , and information monopoly. [ 3 ] Most commonly, information asymmetries are studied in the context of principal–agent problems . Information asymmetry causes misinforming and is essential in every communication process. [ 4 ]
Information asymmetry
Wage labour
Wage labour (or wage labor in American English ) is the socioeconomic relationship between a worker and an employer , where the worker sells their labour under a formal or informal employment contract . [ 1 ] These transactions usually occur in a labour market where wages are market determined. [ 2 ] In exchange for the wages paid, the work product generally becomes the undifferentiated property of the employer, except for special cases such as the vesting of intellectual property patents in the United States where patent rights are usually vested in the original personal inventor. A wage labourer is a person whose primary means of income is from the selling of his or her labour in this way. In modern mixed economies such as those of the OECD countries, it is currently the dominant form of work arrangement.
Consumer capitalism
Consumer capitalism is a theoretical economic and social political condition in which consumer demand is manipulated, in a deliberate and coordinated way, on a very large scale, through mass-marketing techniques, to the advantage of sellers. The theory is controversial. It suggests manipulation of consumer demand so potent that it has a coercive effect, amounts to a departure from free-market capitalism , and has an adverse effect on society in general.
Ordoliberalism
Ordoliberalism is a German variant of neoliberalism that emphasises the need for the state to ensure that the free market produces results close to its theoretical potential. [ 1 ] Ordoliberal ideals (with modifications) drove the creation of the post- World War II German social market economy and its attendant Wirtschaftswunder . In the beginning, many Ordoliberals called themselves Neoliberals to separate themselves from old school classical liberalism . However, ordoliberals promoted the concept of the social market economy, and this concept promotes a strong role for the state with respect to the market, which is in many ways different from the ideas that are nowadays connected with the term neoliberalism. [ 2 ]
Competition law , known in the United States as antitrust law , is law that promotes or maintains market competition by regulating anti-competitive conduct by companies. [ 1 ] The history of competition law reaches back to the Roman Empire . The business practices of market traders, guilds and governments have always been subject to scrutiny, and sometimes severe sanctions. Since the 20th century, competition law has become global. The two largest and most influential systems of competition regulation are United States antitrust law and European Union competition law .
Competition law
Welfare state
% of GDP in social expenditures in OECD states, 2001. A welfare state is a "concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity , equitable distribution of wealth , and public responsibility for those unable to avail themselves of the minimal provisions for a good life. The general term may cover a variety of forms of economic and social organization." [ 1 ] The sociologist T.H. Marshall identified the welfare state as a distinctive combination of democracy , welfare , and capitalism .
Simple commodity production (also known as "petty commodity production"; the German original word is einfache Warenproduktion ) is a term coined by Frederick Engels to describe productive activities under the conditions of what Marx had called the "simple exchange" of commodities , where independent producers trade their own products. The use of the word "simple" does not refer to the nature of the producers or of their production, but to the relatively simple and straightforward exchange processes involved. [ edit ] Origins