All of this, however, though required for laissez-faire doctrine, was
also consistent with mercantilism, at least of the English type. The
later exponents of laissez-faire did not invent the "economic man" who
pursued only his own interest, but inherited him from the mercantilists
and from the doctrine of original sin. English analysis of social
process had in this sense always been "individualistic," and in this
sense both mercantilism and the widely-prevalent theological
utilitarianism were at least as individualistic as later laissez-faire
economics. Englishmen, moreover, had long been jealous of governmental
power, and at the height of English mercantilism they insisted upon
limits to appropriate governmental intervention. It is not safe,
therefore, to label anyone before Adam Smith as an exponent of
laissez-faire merely on the ground that he would exempt a few specified
types of economic activity from interference by government. It would be
misleading also to apply to eighteenth-century writers modern ideas as
to the dividing line between "interventionists" and exponents of
"liberalism" or of "laissez faire." As compared to modern
totalitarianism, or even to modern "central economic planning," or to
"Keynesianism," the English mercantilism of the late seventeenth and
the eighteenth century was essentially libertarian. It is only as
compared to Adam Smith, or to English classical and the Continental
"liberal" schools of economics of the nineteenth century, that it was
interventionist.
Adam Smith is regarded as an exponent of laissez-faire because he laid
it down as a general principle (subject in practice to numerous and
fairly important specific exceptions) that the activities of government
should be limited to the enforcement of justice, to defense, and to
public works of a kind inherently unsuitable for private enterprise. He
based this doctrine partly on natural rights grounds, partly on the
belief that there was a pervasive natural and self-operating harmony,
providentially established, between individual interest and the
interest of the community, partly on the empirical ground that
government was generally inefficient, improvident, and unintelligent.
Public-domain text, read in full here on John Shaqi.
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