Which kind of economy would you vote for – a laissez-faire market or a planned economy? My vote is for free markets.
The term ‘laissez-faire’ implies “leave it alone”. The essential traits of such as system usually are freedom to establish a business of one’s choice, no price controls and governmental function limited to that of a ‘watchman’. This entails respect for private property, the society is protected against internal lawbreakers, disputes are settled peacefully and people’s rights are upheld.
Compare Nepal with Switzerland and you will realize that though both are landlocked, one is controlled, repressed with no rule of law and poor the other is open, freer and has a rule of law. One starves the other fasts.
Laissez-Faire System and Economic Growth
A laissez-faire system gives individuals immense incentive to create wealth and this, in turn, works well for the economy. The working of this kind of a system is simple –understand the need or demand of the masses and produce the product. If you want to be richer or better off than your competition, you have to be a pioneer. Innovation, speedy implementation and affordability are held in high regard in a free market economy.
In a laissez-faire economy, you cannot produce substandard products, cheat your clients or even steal from your employees. Your competition will take over the market at the slightest hint of fraudulence on your part. Constant competition boosts efficiency and lowers costs. People work hard as rewards and penalties are meted out immediately and swiftly. In this way, the market promotes peaceful commerce and encourages excellence.
Take the example of cell phones. If you remember the first ones which came out – they were bulky, awkward and had faulty reception. I remember the first one costing almost USD 5000. Look what competition between Nokia, Samsung, Motorola and now Apple has given to us. Even as these companies made billions they enriched all of us constantly giving us a better product at great prices.
People endeavor to gain technical knowledge and industry skill as the market broadens. The forces of production undergo speedy development. New opportunities for making profits attract foreign investment. A huge variety of goods are made available. Laissez faire or capitalism feeds, clothes and facilitates bigger and better standards of living as compared to any other system.
Planned economies, where the government has the last say, are also the ones that are the poorest in terms of wealth. It is a fact that people work harder and better when they work for themselves than when they have to do it for the government. The sad part is that the adoption of a laissez-faire system is not widespread. Government power to boost the pace of growth has a kind of seductive lure and this dominates most economies. The endeavor to further growth through government intervention has more often than not electrocuted developing countries instead of electrifying them. However, did we learn lessons from this?