First, let's establish what laissez-faire capitalism is. Broadly defined, it is an economic system based on private ownership and control over of the means of production. Under laissez-faire capitalism, government activity is restricted to the protection of the individual's rights against fraud, theft and the initiation of physical force.
--Walter Williams, "Capitalism and the Finanacial Crisis"
How can anyone claim that we have tried laissez-faire and it has failed when, as pointed out by Dr. George Resiman,
1) Government spending in the United States currently equals more than forty percent of national income...
2) There are presently fifteen federal cabinet departments, nine of which exist for the very purpose of respectively interfering with...the economic freedom of the individual...
3) The economic interference of today’s cabinet departments is reinforced and amplified by more than one hundred federal agencies and commissions, the most well-known of which include, besides the IRS, the FRB and FDIC, the FBI and CIA, the EPA, FDA, SEC, CFTC, NLRB, FTC, FCC, FERC, FEMA, FAA, CAA, INS, OHSA,CPSC, NHTSA, EEOC, BATF, DEA, NIH, and NASA...
4) To complete this catalog of government interference and its trampling of any vestige of laissez faire, as of the end of 2007, the last full year for which data are available, the Federal Register contained fully seventy-three thousand pages of detailed government regulations...
5) And, of course, to all of this must be added the further massive apparatus of laws, departments, agencies, and regulations at the state and local level...
(emphases are mine)
In a system of laissez-faire capitalism, government would be prohibited from many of the activities it now not only participates in, but effectively controls. We have never had laissez-faire capitalism, although we were much closer during the explosively productive period of the late 19th century.
Advocates of government management of the economy mistakenly interpret the lack of government regulation and planning as lack of planning and regulation in general. But as Dr. Williams points out:
It is incorrect to say that laissez-faire or free markets are unregulated. There is ruthless regulation, but it's not by government.
The free market coordinates the plans of countless individual planners, implementing its regulatory mechanism through profit and loss, rewarding those who most efficiently provide the goods and services that others demand. Force and fraud are violations of individual rights and are appropriately excluded and punishable by law. All honest, voluntary exchanges are permitted. Government's role is limited to protecting life, liberty and property, and to overseeing strict equality before the law. The free choices of free individuals provide all the regulation which is necessary and morally justifiable.
In a different article, Dr. Williams points out:
Americans demand that Congress spend trillions of dollars on farm subsidies, business bailouts, education subsidies, Social Security, Medicare and prescription drugs and other elements of a welfare state. The problem is that Congress produces nothing. Whatever Congress wishes to give, it has to first take other people's money. Thus, at the root of the welfare state is the immorality of intimidation, threats and coercion backed up with the threat of violence by the agents of the U.S. Congress. In order for Congress to do what some Americans deem as good, it must first do evil. It must do that which if done privately would mean a jail sentence; namely, take the property of one American to give to another.
Judy Shelton, another defender of capitalism, aptly reminds us:
With freedom comes choice; with choice comes responsibility. What is true within one's own life and one's own community should be true for the world at large. Integrity matters, competence counts, and earnest effort finds its reward. The Latin root of the word "credit" -- credere -- means "to believe." There is no better starting point for restoring morality to capitalism.
Or restoring us to the morality which is capitalism.
Free trade. Not government coercion.
Honest trade. Not political corruption.
Personal accountability. Not government bailouts.
Punishment of fraud. Not protection from errors.
Individual rights. Not special interests.
I am for a government rigorously frugal and simple. Were we directed from Washington when to sow, when to reap, we should soon want bread. -- Thomas Jefferson
We need to get back to limited government and individual freedom.
Not just because it works, but because it is right.