Laissez Faire, Laissez Passer
Paris, around 1680. As the story goes, the finance minister of Louis XIV, Jean-Baptiste Colbert, gathers a group of merchants. He asks a simple question: what can the state do to help your business?
One of them, a merchant named Legendre, gives a famous answer. “Laissez-nous faire.” Leave us alone.
About seventy years later, the economist Vincent de Gournay turns that reply into a phrase: laissez faire, laissez passer. Let people act. Let goods pass.
The state offered to help. The market asked only to be left alone.
The knowledge nobody has
Think about the bread you ate this morning. Nobody planned it for you. A farmer grew the wheat, a driver moved it, a miller ground it, a baker baked it. Most of them never met. None of them thought about your breakfast. Yet the bread was there.
Friedrich Hayek called this the knowledge problem. The information needed to run an economy sits in no single place. It’s spread across millions of heads, and most of it can’t be written down. No central office can collect it in time.
The price does that job instead. When wheat gets scarce, its price rises, and thousands of strangers adjust without being told to. No memo required. Hayek’s essay in four lines:
Deep Dive: The Use of Knowledge in Society (1945)
Leonard Read made the point with a pencil. In I, Pencil, not one person on earth knows how to make a pencil from scratch: the wood, the graphite, the paint, the eraser. Yet pencils cost almost nothing and are everywhere. Nobody is in charge. That is the point. Leonard Read tells the story from the pencil’s point of view. Cedar from Oregon and California, graphite from Sri Lanka, wax, glue, a brass ring. Loggers, miners, sailors, chemists: millions of people cooperated to make it, and not one of them knows the whole recipe. Nobody ordered them to. Prices coordinated every step. Read’s point: if no mastermind can make a pencil, be suspicious of plans that need a mastermind for a whole economy.
Deep Dive: I, Pencil (1958)
Order doesn’t need a designer. It needs freedom and a price.
The seen and the unseen
Every action has effects you can see and effects you can’t. Frédéric Bastiat built a whole way of thinking around that one idea.
A boy breaks a shop window. A bystander shrugs: well, at least the glazier, the man who fits the new glass, gets some work. True. That’s the part you see.
But the money the shopkeeper spent on glass might have bought new shoes. The shoemaker got no order. That’s the part you don’t see. The window is not new wealth. It’s wealth moved, and partly destroyed. Bastiat’s rule: every act has one effect you see now and a chain of effects you don’t. The broken window opens the essay, then he runs the same test on taxes, subsidies, public works, and tariffs. The trick is always the same: count what the policy creates, ignore what it prevents. The bad economist stops at the first effect. The good one counts the whole chain.
Deep Dive: What Is Seen and What Is Not Seen (1850)
Many interventions carry this trap. The benefit is loud and close. The cost is quiet and spread thin. Planners optimize what they can see and pay with what they can’t.
Good intentions are not the same as good arithmetic.
Freedom is not chaos
Here is where both the fans and the critics of laissez faire get it wrong.
Laissez faire was never “no rules.” A free market rests on something underneath: property you actually own, and contracts that are actually enforced. Take those away and you don’t get freedom. You get the strongest person taking whatever they want.
The rule of law is the frame. Inside it, people are free to act. Without it, “free market” just means whoever brings the most force wins. A fight, not a market.
Hayek wrote a book, The Road to Serfdom, on where that other road leads. Freedom needs a structure. The structure isn’t the enemy of freedom. It’s what makes it possible.
A market without the rule of law is a game with no referee.
The one price they never freed
Governments let go of most prices. They almost never let go of one: money.
Money is a price too. The price of everything else. When a government prints too much of it, your savings quietly buy less, and you never voted for that. A tax that doesn’t look like a tax.
This is why I got interested in money nobody can print. If free prices coordinate strangers better than any planner, why should the most important price, the price of money itself, be the exception?
They freed the price of bread. They kept the price of money.
The default is freedom
Notice the burden of proof most of us carry. We assume freedom needs a reason, and control is the safe default. “Prove this should be allowed.”
Turn it around. Freedom is the baseline. Every rule, every ban, every intervention is what has to earn its place. Not because the market is perfect. It isn’t. Markets fail, people get hurt, and some problems need a shared answer. But whoever wants to override millions of free choices should be the one who explains why. Every time.
Colbert asked what the state could do to help. Three centuries later, the best answer is still the merchant’s.
Let people act. Let goods pass. The rest is the exception, not the rule.
