What is it?
(French: "allow to do"), policy based on a minimum of governmental interference in the economic affairs of individuals and society. The origin of this term is uncertain, but it is usually associated with the economists known as Physiocrats, who flourished in France from about 1756 to 1778. The policy of laissez-faire received strong support in classical economics as it developed in Great Britain under the influences of Adam Smith and John Stuart Mill, who was 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.
Laissez-faire is a political as well as an economic doctrine. The pervading theory of the 19th century was that the individual, pursuing his own desired ends, would thereby achieve the best results for the society of which he was a part. The function of the state was to maintain order and security and to avoid interference with the initiative of the individual in pursuit of his own desired goals.
What happened to these beliefs?
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.
Contrast with: mercantilism