A laissez-faire economy fails to be representative of the interests of all sections of a society; it may cater only to the majority or the affluent class.

The command economy is a key feature of any communist society. Cuba, North Korea, and the former Soviet Union are examples of countries that have command economies, while China maintained a command economy for decades before transitioning to a mixed economy that features both communistic and capitalistic elements.

A laissez-faire economy is one in which the government plays a very limited role. In a command economy, also known as a planned economy, the government largely determines what is produced and in what amounts. Welfare refers to government efforts to provide for people’s basic needs.

Learn about free-market economics, as advocated in the 18th century by Adam Smith (with his “invisible hand” metaphor) and in the 20th century by F.A. Hayek. Laissez-faire, (French: “allow to do”) policy of minimum governmental interference in the economic affairs of individuals and society.

Laissez-faire economics is a theory that restricts government intervention in the economy. It holds that the economy is strongest when all the government does is protect individuals’ rights. Laissez-faire is French for “let do” or “leave us alone.”

The U.S. government has always played a role in the economic affairs of the nation. Prices are allowed to fluctuate based on supply and demand, and all transactions are voluntary, not compelled, or restricted by the government. This system is also referred to as “pure capitalism” or “laissez-faire capitalism.”

Before the development of capitalism, these decisions would have been controlled by the government. Competition is another central principle of laissez-faire capitalism. Under mercantilism, the government controlled the means of production and therefore there was little to no competition.

Laissez faire works best for economic growth because it provides individuals with the greatest incentive to create wealth. 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.

Adam Smith

Laissez-faire, a French term that roughly translates to “leave it alone,” is a capitalist economic theory that argues that government should regulate the marketplace as little as possible. Market decisions are best made by workers, consumers and capitalists on an individual level without outside interference.

Advantages of Laissez-Faire Leadership

• It encourages personal growth. Because leaders are so hands-off in their approach, employees have a chance to be hands-on.
• It encourages innovation. The freedom given to employees can encourage creativity and innovation.
• It allows for faster decision-making.

There are many common characteristics of the laissez-faire leadership style including:

• Little guidance from leaders.
• Employees have the ability to make decisions.
• People are expected to solve their own problems.
• Access to many resources and tools.
• Constructive criticism from leaders.
• Leaders take charge when necessary.

Buffett employs a “hands-off” management style, which has worked extremely well for him (Stern). This style of leadership is referred to as Laissez-Faire, or delegative leadership, and often leads to low productivity levels (Cherry). The characteristics of this style of leadership are: Leaders provide little guidance.