This chapter covers: historical theorizing about what role the state ought to play in an economy; from the mercantilist to the market role; historical fear of a Leviathan government role; government role in France and the origin of the term “laissez faire”; Adam Smith’s alternative view of the “wealth of nations”; the role of the “invisible hand”; Weber’s view of mercantilism and of its role in the growth of the capitalist system; advent of the Industrial Revolution and its need for energy, and also for better use of time; Adam Smith’s view of the role of the state in regulations and also in some redistribution; and the importance of empathy in communities.

This chapter covers: the growing importance of Chicago School of Economics and of School of Public Choice; the work of F. Hayek; individual rights and individual freedom are seen as being more important than community rights and goals; privatization of Public Private Partnerships and of pensions; laziness is associated with unemployment, and social assistance is discouraged; marginal tax rates begin to be reduced; differentiations in compensations for work increases; Gini coefficients begin to rise; welfare beneficiaries are seen as lazy individuals who wish to live at the expense of hard-working and tax paying individuals; free markets are seen as a miracle drug; many conservative economists receive Nobel Prizes; the social landscape experiences a dramatic change in the 1980s in a rightward direction; fiscal stabilization policy loses influence; monetary policy becomes more important; and there is a return to pre-Keynesian times.

This chapter covers: the beginning of reforms: first of constitutional and then of economic reform; laissez faire continues to be the popular ideology for economists; growing contrast between laissez faire and socialist ideologies; laissez faire continues to stress the pursuit of efficiency and growth over that of equity; socialism stresses the promotion of equality; many forms of socialism are developed; Darwinian views of laissez faire continue to prevail in the United States and in the United Kingdom; laissez faire continues to ignore equity; the income distribution becomes more uneven; economics becomes progressively more “scientific” with the increasing use of mathematics; and the concept of equilibrium continues to prevail and its impact on policies remains strong until 1930.

This chapter covers: strong belief among economists in the merit of laissez faire, during the nineteenth century; intolerance for government interference; countries’ unification and its impact on the government’s economic role; use of import duties during laissez faire; the impact of the Industrial Revolution on government policies; the growth of urbanization and fall in rural societies; workers become more organized and more unionized; the growth of negative externalities and need for regulations and for taxes to deal with them; the growth of equity concerns while a new rich bourgeoisie comes into existence with the Industrial Revolution, the new rich form a new class and replace the old nobles; the rise of large monopolies and of some very rich individuals while workers’ wages remain low, and working conditions remain poor; socialist views become more popular and strikes more frequent; they also become more violent; and the decline of extended rural-based families creates the need for alternative safety nets.

This chapter covers: the return to unrestrained laissez faire in the 1920s; realization by some economists of some failures in the functioning of free markets; the discovery of monopolistic competition and of potential shortcoming in aggregate demand; Keynes proposes countercyclical fiscal policy to support demand; conservative resistance to changes and views that governmental intervention would inevitably corrupt the role and the efficiency of free markets; fear of contamination from the “Russian communist revolution”; race riots in the United States, fascism in Italy and Nazism in Germany; the impact of the Great Depression on employment and production; growing doubts about free market policies; realization that market operators might not always be constrained by competition but might create cartels and engage in other abuses; Hayek’s Road to Serfdom and his influence; increasingly, many begin to see in a new light a potential role of the government; should the government correct only presumed allocation problems, or also problems in the distribution of income?; the policies of the New Deal in the United States in the 1930s, and the Beverage proposed reforms in the United Kingdom in 1942; making income distribution less unequal became more acceptable; taxes became more progressive; and conservative opposition continued.

Scandinavian immigrants were primarily concerned with economic betterment in a post-war laissez-faire–based economy but helped Old World countrymen, though not nonwhites, navigate free-market pitfalls.