ASSIGNMENT

TOPIC: LAISSEZ- FAIRE

SUBMITTED TO SUBMITTED BY
DR.SHINCY.PS THAJUNNISA.E
ASSISTANT PROFESSOR OF LAW FIRST SEMESTER LLM
GLCK GLCK
NO: 16
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CONTENT
1 INTRODUCTION 3
2 LAISSEZ FAIRE DEFINED 4

3 THEORY OF LIBERTY 5-6

AND LAISSEZ FAIRE
4 HISTORICAL ORIGIN OF 7-8
THE DOCTRINE
5 RESULT OF COMPLETE 9-10
LAISSEZ FAIRE
6 DEMAND FOR 11-12
REGULATION AND
PHASE OF LIBERTY

7 INDIA AND LAISSEZ 13

FAIRE DOCTRINE

8 14
CONCLUSION
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INTRODUCTION

Laissez-faire was a political as well as an economic doctrine. the pervading theory

of the 19th century was that individuals pursuing their own desired ends would
thereby achieve the best result for the society of which they were part. the function
of the state was to maintain order and security and to avoid interference with the
initiative of individuals in pursuit of their own desired goals. the but laissez-faire
advocates nonetheless argued that the government had an essential role in
enforcing contracts as well as ensuring civil order. the philosophy’s popularity
reached its peak around 1870. in the late 19th century the acute changes caused by
industrial growth and the adoption of mass production techniques proved the
laissez-faire doctrine insufficient as a guiding philosophy. the British philosopher
and economist John Stuart Mill were responsible for bringing this philosophy into
popular economic usage in his PRINCIPLES OF POLITICAL ECONOMY(1848)
in which he set forth the arguments for and against government activity in
economic affairs.in this assignment, we are going to discuss Laissez Faire doctrine
in detail. In the present work, the doctrine is discussed mainly on the basis of the
text of w. Jethro brown.
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LAISEZZ FAIRE DEFINED

Laisezz- faire is a French phrase that translates to “allow to do” or “let it be”.it
refers to a political ideology that rejects the practice of government intervention
in an economy.it is the policy of allowing people to manage their own affairs in
their own way, so long as they do not cause mischief to others without the consent
of others. the concept of laisezz faire can also be described as an environment
where transactions between private parties are free from state intervention
including restrictive regulations, taxes, tariffs, and enforced monopolies.
The term "laissez-faire" can be found in print as early as April 1751, according to
the late Professor D. H. Mac Gregor. He incorrectly concluded that the phrase was
not used in English political economy until J. S. Mill introduced it in his Principles
of Political Economy (1848) in a famous chapter with the title "Of the Grounds
and Limits of the Laissez-faire or Non-Interference principle." Here, Mill argued
in favor of "laissez-faire" as a general norm; the sanctioning of the allowable
exceptions, of which there were many, came only after the party requesting
interference had established its case for interfering. A vision of absolute
commercial freedom should be feared as it will never come to pass. Yet, getting
as close to it as we can still need to be our goal. Always treat it as the default
position. Also, whenever any deviations from it are suggested, the proposers must
make it clear why the deviation is needed. The classicists similarly argued that
certain situations required the acceptance of interference as a universal principle.
Ricardo argued that it was necessary as a result "for government intervention to
do for them [i.e., the citizenry] what they are unable to do for themselves.
Provision for certain public works and institutions was taken into consideration
because the profit could never cover the cost for any one person or small group of
people, but it could frequently do much more than cover the cost for a great society
"or because the initial expenditure was too high for the private sector to take into
account.1

1
Edward R Kittrell, “Laissez Faire in English Classical Economics”
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THEORY OF LIBERTY AND LAISSEZ FAIRE

Whatever the ambitions of the persons and classes whose cooperation led to the
establishment of democratic institutions, the association of subject freedom with
free political institutions could only be a temporary one. This identification
misinterprets a single liberty-related concept for the entire concept. While a fully
autonomous person must be self-governing, the value of democratic institutions at
any given time in a country's history will depend on the circumstances at the time.
The demands placed on the electorate's character will increase as a state's size and
complexity increase. The way a democracy uses its power will determine whether
a population is freer under it than under an aristocracy. In other words, both the
functions and the form of government should be clarified by a philosophy of
liberty. A long-standing theory of liberty that had been in the field now became
associated with the names of illustrious thinkers and statesmen and began to exert
an increasing influence over the course of legislation as a result of this fact being
acknowledged in nineteenth-century politics, which eventually led to its gradual
popularisation and ultimate triumph. Its nature may initially appear to highlight
the irony of events. A theory of liberty as suggesting the minimum amount of all
forms of governance prevailed over an uncontrolled faith in the benefits of popular
rule. This, however, would be a naive understanding of a movement whose
prominent proponents, prominently Bentham and John Stuart Mill, were also
fervent supporters of democratic institutions. Only after considering the doctrine
of laissez-faire’s definition and historical roots would it be possible to determine
the movement's true relevance. This laissez-faire doctrine was the vehicle through
which the theory of liberty which was the subject of the immediate examination
was put into action in the era's politics. A Select Committee of the House of
Commons Report from 1811 gave the doctrine of laissez-faire explicit approval.
The Report categorically rejects any "intervention of the legislature with the
freedom of trade, or with the absolute liberty of every individual to dispose of his
time and his labor in the way and on the terms which he judges most conducive to
his own interest."This concept may initially appear to be identical to anarchy;
nevertheless, political institutions are assumed, and their authority is uncontested
even though the ideology claims to define the proper bounds of that authority.
Briefly stated the laissez-faire doctrine reflected particular beliefs regarding the
goal of government as well as the methods by which it was to be accomplished.
The goal was to ensure that each person may pursue their own interests freely and
determine his or her own fate. The methods were minimizing State involvement,
avoiding paternalism, removing constraints on the right to express oneself freely,
removing feudal remnants, or, to put it another way, gradually substituting self-
help for State aid and State supervision.
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HISTORICAL ORIGIN OF THE DOCTRINE

Folklore has it that the term comes from the response that industrialists gave to
Jean-Baptiste Colbert, the comptroller general of finance under King Louis XIV
of France, when he asked them what the government could do to help businesses:
Please ignore us. The economists known as Physiocrats, who flourished in France
from about 1756 to 1778, are frequently associated with the doctrine of laissez-
faire. As it developed in Great Britain under the influence of Scottish philosopher
and economist Adam Smith's “An Inquiry into the Nature and Causes of the
Wealth of Nations”, the policy of laissez-faire received strong support in classical
economics.
The doctrine's historical roots have been variously described. Some have claimed
that it is the outcome of fundamental characteristics of the national character. For
some, it has appeared to be a legacy that the philosophic individualism of the
eighteenth century left behind for politics. Again, to some, it appeared to be a
result of the financial situation. In reality, facts and opinions were driving forces
that were reacting and acting upon one another. Both facts and opinions were
complex. The theory of biological evolution, national temperament, industrial
progress, economic theory, philosophical thought, and democratic beliefs all have
a position in the grand scheme of things.
despite being a significant factor, the national temperament needs little
explanation. It is sufficient to argue that, at any rate in contrast with Romance
nations, the English character supplied a soil that was peculiarly suitable to the
establishment of individualistic politics. The industrial progress that accompanied
the advancement of mechanical invention was a factor of more immediate
importance. England was the first nation to benefit from the new circumstances
and the first to acknowledge the need for a change in legislative policy that
followed. She was able to outperform foreign competitors in part as a result of
releasing her industry from the constraints of antiquated regulations. The
tremendous growth of the country's wealth and industry following the removal of
the Corn Laws seemed to finally prove the soundness of a policy of governmental
non-interference.
Adam Smith's successors in political economics supported the policy by the logic
of the schools. They declared that the increase in national wealth was the first
condition of the nation's good and should be the foremost object of its policy, in a
reversal of traditional ideas regarding the end of political society. These ideas
focused on questions of foreign policy, diplomatic intervention, the balance of
power, democratic institutions, and other similar issues and only recognized
national prosperity as a means of promoting national power. They were, however,
so influenced by individualistic theories about the nature of political society that
they equated national wealth with private individual wealth. Bagehot stated that
every political economy treatise he had read as a child began with the assumption
that two men were cast on an island that had no inhabitants. Economists
maintained that the policy of allowing individuals to have free play in the pursuit
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of gain was the best means of both increasing the total sum of wealth and
promoting the happiness of the nation because of the combination of these views
regarding the nature of society and the purposes of government.
The character of the law statute may have contributed to Democratic ideas being
in line with the attack on State interference for some time at least.
A contemporary economist writes, "It might perhaps be expected that we could
learn a good deal about labor legislation from the English statute book, which
covers almost continuously for 650 years." That great book does not call for such
legislation; truth be told there is over-abundance, and we might gain something
from the disappointment and vanity of much that has been sanctioned by English
Parliaments. However, the most important and impressive lesson we learn is that
labor legislation has almost always been class-based. It is the work of a prevailing
body to hold down a lower class, which had started to show badly designed
yearnings.
Finally, the Darwinian theory of natural selection gave a new and powerful ally to
the bias that comes from national temperament, the need that comes from changing
industry conditions, the individualistic theory of economists and philosophers, and
the goals of democratic reformers. By demonstrating how the unrestrained
struggle between individuals in the past had contributed to the evolution of the
species, that theory gave the current doctrine new authority and an ethical
justification. As a result, the stream of intellectual tendency, which had its
immediate source in industrial change, received tributary streams at various points
along its course that served to boost its volume and force. As a result, legislation
was most impacted in the early nineteenth century. Capital flowed more freely as
a result of the various Companies Acts and the abolition of usury legislation.
Gradually, manufacturers were freed from colourful restrictions that, while
originally meant to guarantee a certain level of quality in the products they
produced, were now seen as annoying. A new era of worker freedom began with
the repeal of the Statute of Apprentices in 1814 and the Combination Laws in
1824-1825. Religious liberty and freedom of speech were strengthened by
legislation. Lastly, a long series of laws were enacted under Bentham's leadership,
eliminating a number of expensive anomalies of an outdated justice system.
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RESULT OF COMPLETE LAISSEZ FAIRE

The course of events quickly showed that laissez-faire, even if it were a viable
doctrine of liberty, was not a means of saving the country. The philosophy had
said, among other things, that there should be no government control over the
nation's industries. Yet, the factory movement, which initially backed this
assertion, ultimately disproved it. The master and apprentices had lived in a
quasi-family relationship under the industrial organization that the eighteenth
century inherited from the past. These trainees were future masters in the
making. The factory eventually took the place of the home as the industrial
environment in the late eighteenth and early nineteenth centuries due to
scientific and technological advancement. The home industry was unprofitable
due to the circumstances that allowed for the factory. In the early phases of the
movement, leaders focused their attention on the task of getting the archaic
regulatory structure abolished. As the movement grew, experience showed that
modern business needed a system of State regulation just as much as the
feudal industry did.
The master and apprentices had a close relationship that was akin to a family
under the industrial organization that the eighteenth century had inherited
from the past. These trainees were future masters. The factory eventually took
the place of the home as the industrial milieu in the latter eighteenth and early
nineteenth centuries due to scientific and technological advancement. The
factors that enabled the factory also rendered the home industry unprofitable.
Early on in the movement, statesmen focused their attention on the task of
getting the antiquated regulatory structure abolished. The experience proved as
the movement grew that modern industry needed a system of State regulation
just as much as the feudal industry did.
Large capital was required because the factory required expensive machinery.
If the workers themselves had been able to contribute the capital, a
cooperative industry would have been born. But, prior to the factory revolution,
there had been such a clear propensity for money to become concentrated in
the hands of a small number of people that it seemed inevitable that a
"capitalistic class" would acquire the means of production. The worker suffered
twice: the close bond between the master and apprentice was severed, and the
worker no longer qualified to become a master. As a result, it became more and
more challenging to find in the national economy the rivalry between free and
equal persons that the laissez-faire doctrine had claimed to promote. Workers
were under the control of the capitalist, who was in complete control of the
situation. It was Sir Walter Scott who first observed that "manufacturers are
transferred to great towns, where a man may assemble five hundred workmen
one week and dismiss them the next, without having any further connection
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with them than to receive a week's work for a week's wages, nor any further
concern about their future fate than if they were so many old shuttles”.
The conflict between the manufacturers' interests and those of the workers
and the general public grew more and more severe. The manufacturers sought
instant profit, even if this profit would have been achieved by tactics that would
have caused immediate suffering for the workforce, depleted national vigor,
and wasted national resources. For instance, it served the interests of the
manufacturer to be free to underpay and overwork his employees, increase the
number of hours worked, hire women who should be caring for the home, hire
children without regard to their ability to earn a living in the future and
disregard sanitary regulations that were crucial to the worker's comfort and
health. Subsequent opponents of laissez-faire have emphasized how the
working conditions in factories prior to Lord Shaftesbury's legislation were fatal
to labor productivity and, as a result, adverse to the long-term interests of the
manufacturers as a class. Although the validity of this criticism is
unquestionable today, there isn't much proof of it being acknowledged in the
historical records of the time.
Theoretically, the problems alluded to may have been mitigated, if not averted,
either via effective coordination among the employees or through the reining of
public opinion as expressed through philanthropic groups. Brown states that
Experience, however, has shown that these methods are completely
insufficient. The freedom that the politician who had praised laissez-faire was
perceived to represent for large segments of the community was little more
than a freedom to perish in proportion to the development of the factory
system. The loss of human life in the lead industries drove Coleridge into
vehement eloquence, and he adopted a more serious tone. He yelled, "Free
labor implies infanticide and soul murder on the side of the rich, and self-
slaughter on the part of the poor."
Brown mentioned about Sidney Webb who detailed the historical white slavery
of that period. Women working half-naked in the coal mines, young children
dragging trucks all day in the foul atmosphere of the underground galleries;
infants bound to the loom for fifteen hours in the heated air of the cotton mill,
and kept awake only by the overlooker lash; hours of labor for all, young and old,
limited only by the utmost capabilities of physical endurance; the complete
absence of the sanitary provisions necessary to a rapidly growing population. In
the unbiased pages of subsequent blue-books reports, you find these and other
unnamed injustices listed as the outcomes of freedom of contract and complete
laissez-faire.2

2
W.JETHRO BROWN
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DEMAND FOR REGULATION AND PHASE OF LIBERTY

The existence of such horrible conditions might appear to be enough to disprove
the laissez-faire concept, yet that doctrine was firmly ingrained in national
mentality. It was inspired by temporary but nevertheless real needs; it was linked
to the names of prominent intellectuals, economists, scientists, and democratic
reformers; and its implementation greatly aided England's industrial victory over
rivals on the continent. there ensured a period of conflict of which evidence can
be seen in the progress both of political thought and of legislative actions. The
debate around the Factory Laws served as another example of the conflict between
established policy and national requirements. Lord Shaftesbury found himself in
direct battle with the Liberal statesmen of his period when he tried to save men,
women, and children from the barbarisms of the mine and factory.
We might seek through all of history and not find a more compelling example of
how a flawed theory can sway morally upright and brilliant men away from the
path of justice. Thankfully, Lord Shaftesbury and the doctrine of governmental
intervention prevailed over liberal statesmen and the laissez-faire philosophy. The
call for state intervention grew louder and louder. Workmen's Compensation Acts,
which limit the employment of women in factories, serve as a good example of
the general nature of law from the latter part of the nineteenth century. acts to
ensure widespread education. Acts for the Housing of the Working Classes as well
as Public Health Acts.
Jethro Brown thinks about the importance of the opposition to industrial laissez-
faire in light of the era's legal ideas. He said that Certainly, the rejection implied
the need for a new interpretation of the democratic spirit. Men have contended that
liberty defined as freedom from tyrannical legislation is what democracy is all
about since very early times. He said that men are no longer clinging to the idea
that the free play of individual interest and freedom of contract between employer
and employee will save them. They are more afraid of being exploited by the
plutocrat than they are of being tyrannized by their rulers, and they are likely to
link the cause of liberty with socially unjust policies. Theories of liberty are
undoubtedly present in democratic institutions and the laissez-faire legislative
system. Yet, neither individually nor collectively, these theories can be regarded
as conclusive. They clearly highlight some elements that are necessary for liberty
and even give them an overblown emphasis. It is possible, though, that the
expansion of the scope of State activity in the latter half of the nineteenth century
was nothing more than an acknowledgment of the necessity to use new methods
to achieve the same goal. The real test of liberty is not found in the structure of
government or the number of laws that regulate citizens' behavior, but rather in
the degree to which each citizen is guaranteed access to the means of realizing
their own potential. Brown point out that Liberal statesmen of the past generation
and even some distinguished thinkers of our own time have failed to recognize
this.
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Brown point out many ways that government regulation could support citizen
liberty. He demonstrates that rejecting a laissez-faire legislative approach is not
at odds with the idea of liberty but rather should be viewed as a step toward a
better comprehension of both the essence of liberty and the ways in which it may
be realized. he mentioned significant contrast in this transition as follows:
• Law and liberty are thought to conflict accidentally rather than
fundamentally. It might occur if a class has taken control of the executive
branch of government or if social and economic conditions are too
advanced for the current state-run regulatory structure. Regardless, liberty
has both positive and bad aspects, but initially, the latter one could be
more noticeable. New laws must be passed in addition to repealing
outdated ones. Law and liberty so develop side by side in a truly
progressive society.

• Liberty is a Catholic. It advocates for the freedom of all men, not just a
select few. The greatest accomplishment of our time can be seen in the
focus currently placed on the freedom that belongs to others as opposed
to one's own. While laissez-faire preached an era of equality of freedom
for all men, it failed to acknowledge that such freedom was impracticable
in an economy where the proletariat was perpetuated. Under the latter
ideal, it is the State's sacred duty to create the conditions necessary for
each citizen to demonstrate his manhood.

• The power to act as one ought, rather than as one likes, is the kind of
liberty that modern government aspires to encourage. This does not imply,
that the State is justified in outlawing all morally repugnant behavior. It
does, however, represent a significant divergence from laissez-faire. It
agrees with laissez-faire in that it defines freedom in terms of self-
realization, but it also suggests a certain understanding of what that self-
realization should look like.
When Huxley declared, "The only freedom I care about is the freedom to do
good," he wasn't just expressing a personal preference; he was also expressing a
fledgling national ideal. In contrast to a simple quantitative conception of liberty,
the ideal suggests a qualitative one. It indicates that we should take into account
not just the number of things a man is free to do, but also the nature of those
things. It suggests that the goal of the legislation is to remove obstacles that
prevent people from achieving the greatest of all goals—a life well lived—rather
than to remove restrictions on individual inclination.
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INDIA AND LAISSEZ FAIRE DOCTRINE

In India, there are various judgments that have explained the concept of Laissez-
faire. In Vishnu Agencies versus Tax Officer,3 the court said: “The maxim Laissez
faire is derived from the 18th century in France. It expresses the desire on the
part of the mercantile community for non-interference by the state.”
In Bombay Telephone Canteen Employees’ Association versus Union of India4:
it was held that the principle of Laissez faire has been dealt a lethal blow by article
14 of the Constitution which assures to every person, a just, fair, and reasonable
procedure before terminating the services of an employee.
In Government Branch Press versus D.B. Belliawpa5: “The doctrine of Laissez
faire has been eroded by the judicial decision and the legislation, particularly in
its application to persons in public employment to whom the constitutional
protection of Article 14 and Article 311 is available.” The rise of a welfare state
proceeds from the political philosophy that the greatest economic and social
good is the greatest number that requires the greater intervention of the
government.
In Modern Dental college and research center versus the State of Madhya
Pradesh6:, The Supreme Court held that the economic policy of this country has
traveled from Laissez-faire to a welfare state and then to a liberalized economy.

3
(1978)1 SCC 520
4
(1997)6 SCC 723
5
(1979) 1 SCC 477
6
(2016) 7 SCC 353
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CONCLUSION

Economists defined the doctrine of laissez-faire as the policy of allowing people

to manage their own affairs in their own way so long as they do not cause
mischief to others without the consent of others. there is minimum state
intervention and secure the free play of individuals. Jethro brown point out that
Laissez-faire was a misguided attempt to save the country and uphold
democracy. It is mostly due to the lack of a suitable interpretation of liberty.
According to Thomas Hobbes, the presence of absolute autonomy in a state-of-
nature economy creates a situation of chaos for both producers and consumers.
Such an economy can lead to inequality of income and wealth that may
contribute to a vicious cycle wherein inheritance plays a key role in financial
placement within society. As put forward by Adam Smith, monopolies can
emerge wherein they control supply, charge higher prices, and pay lower wages
to workers. also, A laissez-faire economy fails to be representative of the
interests of all sections of society; it may cater only to the majority of the affluent
class. Thereby, public goods with positive externalities such as education and
healthcare may not be equally distributed in society, whereas goods with
negative externalities may be over-consumed.
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BIBLIOGRAPHY

1.W. JETHRO BROWN -“UNDERLYING PRINCIPLES OF MODERN LEGISLATION”

2. EDWARD R. KITTREL –“LAISEZZ FAIRE IN ENGLISH CLASSICAL ECONOMICS”
3. https://fee.org/articles/what-is-laissez-faire/