1. Laissez-Faire Economics
Adam Smith
Thomas Malthus
David Ricardo

2. Laissez-Faire = “let do” or “let them alone”
Foundation of capitalism
Basic Characteristics
no government interference in the economy
allows owners of business to set working conditions
opposed any government effort to help the poor

3. Laissez-Faire Economists
Founder: Adam Smith
Thomas Malthus and David Ricardo also believed in no government interference.
The leaders of the Industrial Revolution favored this approach
Government interference was seen as a threat to economic growth

4. Natural Laws of Economics
According to Smith there are 3 natural laws of economics
Law of Self Interest – people work for their own good
Law of Competition – competition forces people to make a better product
Law of Supply and Demand – enough goods would be produced at the lowest possible price to meet demand

5. Government responsibilities included the following
Maintain a strong currency ($)
Enforce contracts
Protect private property
Impose low tariffs and taxes
Maintain a strong military to protect trade

6. Impact on the Working Class
During the Industrial Revolution the Laissez-Faire policies were adopted by leading capitalists.
The government did not regulate working conditions
The government did not oversee living conditions
As conditions worsened, new economic theories developed that supported government regulation.