John Maynard Keynes

John Maynard Keynes, The End of Laissez-Faire, Amherst, N.Y., Prometheus Books, 2004 [1926].

Above all, the ineptitude of public administrators strongly prejudiced the practical man in favour of laissez-faire - a sentiment which has by no means disappeared. Almost everything which the State did in the eighteenth century in excess of its minimum functions was, or seemed, injurious or unsuccessful. [19]

Cairnes, in the Introductory Lecture on 'Political Economy and Laissez-Fair,' which he delivered at University College, London, in 1870, was perhaps the first orthodox economist to deliver a frontal attack upon laissez-faire in general. 'The maxim of laissez-faire,' he declared, 'has no scientific basis whatever, but is at best a mere handy rule of practice.' This, for fifty years past, has been the view of all leading economists. Some of the most important work of Alfred Marshall - to take on instance - was directed to the elucidation of the leading cases in which private interest and social interest are not harmonious. [28]

In the first place, each individual will discover what amongst the possible objects of consumption he wants most by the method of trial and error 'at the margin,' and in this way not only will each consumer come to distribute his consumption most advantageously, but each object of consumption will find its way into the mouth of the consumer whose relish for it is greatest compared with that of the others, because that consumer will outbid the rest. Thus, if only we leave the giraffes to themselves, (1) the maximum quantity of leaves will be cropped because the giraffes with the longest necks will, by dint of starving out the others, get nearest to the trees; (2) each giraffe will make for the leaves which he finds most succulent amongst those in reach; and (3) the giraffes whose relish for a given leaf is greatest will crane most to reach it. In this way, more and juicier leaves will be swallowed, and each individual leaf will reach the throat which thinks it deserves most effort.
This assumption, however, of conditions where unhindered natural selection leads to progress, is only one of the two provisional assumptions which, taken as literal truth, have become the the twin buttresses of laissez-faire. The other one is the efficacy, and, indeed the necessity, of the opportunity for unlimited private money-making as an incentive to maximum effort. [30]

[unfettered free markets, assumption 1: efficient allocation through competition; assumption 2: maximum productivity from maximum reward]

There are other considerations, familiar enough, which rightly bring into the calculation the cost and character of the competitive struggle itself, and the tendency for wealth to be distributed where it is not appreciated most. If we have the welfare of the giraffes at heart, we must not overlook the sufferings of the shorter necks who are starved out, or the sweet leaves which fall to the ground and are trampled underfoot in the struggle, or the overfeeding of the long-necked ones, or the evil look of anxiety or struggling greediness which overcasts the mild faces of the herd. [32]

Individualism and laissez-faire could not, in spite of their deep roots in the political and moral philosophies of the late eighteenth and early nineteenth centuries, have secured their lasting hold over the conduct of public affairs, if it had not been for their conformity with the needs and wishes of the business world of the day. [34]

Laissez-faire has ruled over us rather by hereditary right than by personal merit. [35]

The important thin for Government is not to do things which individuals are doing already, and to do them a little better or a little worse; but to do those things which at present are not done at all. [40]