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Governments play a big role in our economy today From environmental rules to price regulations it is generally assumed that governments are needed to keep the economy moving It was Adam Smith who first challenged the thoughts of government in the economy His theory was that an economic system functions best when there is no interference by government This theory was known as laissez-faire or let things be Smith concluded that the capital follows its most lucrative course It is based on the belief that the natural economic order tends when undisturbed by artificial stimulus to secure the maximum well being for the individual and therefore for the community1 Laissez-faire is basically the doctrine that government should almost always leave people alone and let them do as they please as long as they respect the personal and property rights of others Although Smith strongly supported this theory he did not believe in it absolutely He believed that there should be no government intervention except in three cases The only time that governments should intervene is with defense justice and certain public works2 Smith believed that the production and exchange of goods and a rise in the general standard of living could only be attained through private industrial and commercial businessmen with minimum government control He believed that any further government intervention would affect the major aspects of a market economy such as competition Adam Smith believed that human progress could only be possible in an economy where everybody follows his or her own self-interests3 The general argument was that individualism would lead to more order and progress within the community In order to make money people will produce things that they know other people want or need When the consumer and the seller meet in the market a pattern of production develops that result in social harmony Therefore through self-interest the producer is motivated to produce that which society
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