Question

. In what respects might Smith rightly be called an advocate of laissez-faire? On what basis might one challenge this label?

Answer 1

Smith had proposed that an invisible hand operates in the markets and when left alone without external intervention, it would help reach equilibrium production and consumption. This is seen as laissez faire because he wanted minimal intervention and said that free markets are only way to ensure economy is functioning efficiently.

Some economists have challenged this argument saying that Smith has never used the words 'Laissez Faire' in his writings.They suggest that he spoke about Natural Liberty which was confused with laissez faire.