GREAT INFLUENCE ON ECONOMIC DEVELOPMENT BY IMPLEMENTING

LAISSEZ FAIRE
Oleh Moch. Habib Umarsani
What is "laissez-faire" and why is it considered to be best for economic growth?

Laissez faire, loosely translated from the French, means "to leave alone." It refers to the
economic system we more commonly call "the free market," "private enterprise," or "capitalism."
I happen to be personally an advocate of laissez faire, so I think I can give you a fair and accurate
description of it and why it works, as opposed to a hostile or biased perspective. The economic
system of laissez faire has several elements: 1) respect for private property; 2) freedom to start and
own a business; 3) free markets in trade (that is, no government price controls or excessive
intervention); and a government limited to a "nightwatchman" function, which means essentially
making sure through its police and courts that contracts are not broken, disputes are peaceably
settled, everyone's rights are upheld, and that society is defended against lawbreakers internally
and aggressive enemies from abroad.

Laissez faire works best for economic growth because it provides individuals with the
greatest incentive to create wealth. Under laissez-faire capitalism, you cannot wrap a robe around
you, put a crown on your head, and demand that people give you money. That's what kings and
queens do. Instead, under laissez faire, if you want to get rich, you have to be inventive or
innovative; you have to produce a product that people want and can afford; you have to be better
and quicker than others at serving customers if you want to earn the most. Because you can't make
money in laissez faire if, for example, you cheat customers, steal from your workers, or produce a
shoddy product, it promotes excellence. Of course, there are plenty of exceptions--bad people
doing bad things, for example--but that's what government's limited function is supposed to handle.
Otherwise, the vast majoritiy of people as entrepreneurs and workers are generally honest and
engage in peaceful commerce under laissez faire--investing, selling, buying, and producing more
and better things for more people because that's how they get ahead.

All over the world, experience has demonstrated the superiority of capitalism over any of
its big-government counterparts. Capitalism (or laissez faire) feeds and clothes and houses more
people at higher levels than any other system. Those nations that are burdened with socialist
systems in which the government plays a very large role in the economy are also the countries that
are the poorest in terms of economic wealth and growth. Basically, people work harder, better,
and longer when they are working for themselves or a private business than when they have to
work for the government.

Laissez-Faire policy, which literally means "let it take its course" in French, is an economic
principle that emphasizes minimal government intervention in economic affairs. This concept has
been a controversial topic in economic policy discussions for centuries. On the one hand,
supporters believe that unregulated free markets can create economic efficiency and sustainable
growth. On the other hand, critics argue that these policies could lead to greater inequality and
exploitation.

Pro Laissez-Faire Arguments for Economic Growth

Proponents of Laissez-Faire policies maintain that minimal government intervention in

markets will result in strong and sustainable economic growth. Here are some pro arguments for
implementing this policy:

1. Innovation and Creativity: In a free market environment, innovation and creativity are
encouraged because companies have the freedom to try new ideas without excessive
government interference. This can drive long-term economic growth because innovation is
often the main driver of progress.
2. Resource Allocation Efficiency: Laissez-Faire allows markets to allocate resources
efficiently based on consumer needs and preferences. In an environment where markets are
unregulated, resources tend to be allocated to the most productive and profitable sectors,
which in turn can increase overall economic output.
3. Global Competitiveness: With minimal regulation, companies have the flexibility to
compete in the global market. They can respond quickly to market changes and adapt their
strategies as needed. This can increase the competitiveness of companies on a global scale,
which in turn can encourage the country's economic growth.
4. Private Involvement: Laissez-Faire policies encourage greater private involvement in the
economy. Private companies often have strong incentives to increase efficiency and
productivity because they are responsible for their own profits and losses. Greater private
involvement can generate greater investment and create new jobs.
5. Capital Formation: Without excessive government interference, markets have the ability to
mobilize capital more efficiently. Investors can choose the projects that are most promising
and have the potential to generate higher returns. This can accelerate economic growth by
enabling greater investment in infrastructure, technology and innovation.

Conclusion

Although Laissez-Faire policies have a number of benefits that can encourage economic
growth, it is important to remember that this approach also has limitations and risks. Without
adequate regulation, free markets can lead to monopolies, greater inequality, and vulnerability
to economic crises. Therefore, in implementing Laissez-Faire policies, the government must
still consider the need for limited intervention to ensure that markets operate fairly and
efficiently. With a balanced approach, Laissez-Faire policies can be an effective tool in
encouraging sustainable economic growth.