It is said that the 17th-century French finance minister Colbert once asked a group of businessmen what he could do for them. One of them, Legendre, is supposed to have replied, “Laissez nous faire” (“leave us alone!”). The reply became a slogan, serving ever since as a tag for the policy of keeping government direction of the economy to a minimum. (Some argue that the minimum should be none.)

The theory of laissez-faire stems from the fact that what we call an economy is a vast array of interactions among individuals, each of whom is concerned with making his or her living by organizing and exerting skills and energies to that end. In the process, the agent will frequently find it advantageous to benefit from the ...