laissez-faire

Modifications

As the system of capitalist enterprise evolved in the 19th cent., more and more businesses found it in their interest to combine with their competitors in huge trusts or cartels in order to control prices and production. Competition, which had been expected to regulate the market, seemed instead to be encouraging monopoly. The principle of state noninterference was discarded; indeed, during the 20th cent. the state was often called upon to restore and preserve freedom of competition where it appeared to be in danger of disappearing. Agreements in restraint of trade and practices of "unfair" competition were outlawed. Thus the practice of laissez-faire was modified. The theory, however, was not abandoned; it became a tenet of the opponents of socialism. It was credited with lowering consumer prices by eliminating the high costs of competition. In that way, the emphasis in laissez-faire theory was shifted from competition to the importance of profit as an incentive to production and of individual initiative as necessary to economic progress.

Sections in this article:

The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2012, Columbia University Press. All rights reserved.

More on laissez-faire Modifications from Fact Monster:

See more Encyclopedia articles on: Economics: Terms and Concepts