What economic theory advocates for free markets and minimal government intervention?

Laissez-faire capitalism is the economic theory that promotes the idea of free markets operating with minimal government intervention. This concept is rooted in the belief that when individuals are allowed to pursue their own economic interests, the resulting competition and innovation will ultimately lead to greater efficiency and wealth creation for society as a whole. Proponents of laissez-faire argue that government regulation often hinders economic growth and that the marketplace is best left to regulate itself through supply and demand.

Historically, laissez-faire principles gained prominence during the 18th and 19th centuries, particularly in the context of the Industrial Revolution, where increased industrial activity called for a shift away from strict government control toward more freedom for businesses and entrepreneurs. This contrasts starkly with other economic theories such as socialism and communism, which advocate for significant government control over the economy and resources. Similarly, mercantilism focuses on state intervention in economic affairs to accumulate wealth, particularly through trade surplus and regulation. Thus, laissez-faire capitalism stands out as the theory most aligned with minimal government interference in economic activities.