Laissez-faire is a policy of leaving things to take their own course without interfering into it. And a laissez-faire economy is an economic system without government interventions.

Laissez-faire is a French term variedly translates into English as 'allow to do', or 'let it be', or 'let them do'. In Economics, laissez-faire means abstention by governments from interfering in the mechanism of the free market.

Thus, in a Laissez-faire Economy, the government does not interfere in its core market mechanism. For example, in the 'laissez-faire capitalism', the economic policies held by capitalist countries are free of any government interferences - at least in any direct manner; the countries are free to do businesses while enjoying the liberty of the free market. Until or unless there are no violations of state laws, or similar such infringement of major regulations, usually there are no government interferences.

Criticism of Laissez-faire Economy

Although the capitalist countries advocate in favor of the laissez-faire Economy, critics find it rather questionable on different grounds. Major players of the so-called free market economy claims that it provides economies with the opportunity to flourish almost infinitely while some scholars argue that this just helps to reinforce the monopoly in the market. Scottish economist and philosopher Adam Smith (1723–1790) is among the first few who drew attention towards the problems of monopoly. Adam Smith, in his historic book 'An Inquiry into the Nature and Causes of the Wealth of Nations' (1776), pointed out some problems that can arise under an economic system of laissez-faire (e.g. monopolies) like higher prices, restricted supply, lower wages to workers etc.

Resources

Butler, Eamonn (2007). Adam Smith – A Primer. Institute of Economic Affairs. ISBN 978-0-255-36608-3.
Gaspard, Toufick (2004). A Political Economy of Lebanon 1948–2002: The Limits of Laissez-faire. Boston: Brill. ISBN 978-9004132597.
Smith, Adam (2003). The Wealth of Nations. Bantam Classics; reprint edition (original year of publication: 1776). ISBN-10: 9780553585971, ISBN-13 : 978-0553585971.
Williams, Gwydion M. (2000). Adam Smith, Wealth Without Nations. London: Athol Books. p. 59. ISBN 978-0-85034-084-6.

Online resources

economicshelp.org
macmillandictionary.com
Wikipedia