Laissez Faire Economics in Light of Kuhnian Paradigm Shift

A few days ago I decided to throw this idea out, but I am now coming back to it. The idea intrigues me and I would like to develop it for further.

I recognized this week while reflecting on how this trend could logical play out, that this theory could fall into Marxism very quickly, particularly on the level of falling into a determinist view of the progression of economic history. These economic paradigm shifts through history are not always positive. The fall of the Roman empire, Mercantilism etc. are all cases of a lapse in the progression. They are as well not necessary. Each shift is caused by human events which in themselves are the results of free choices. Once this is recognized, this theory holds water on a greater level, though there are still some holes.

The paradigm shift of this period was a transition to laissez-faire economics. One can see the “frenzy” accompanying this shift especially in the United States and to a lesser extent in Britain. The United States’ economic might was built upon the policy. Having been founded in this period, the country was built from the ground up with this policy to guide the building of infrastructure and industry.

The shift itself came about through the change, another paradigm shift in itself, of the the focus of political theory being based on society to being based the individual. The West inherited the political philosophy of the Greek that the body politic was based upon society with the individual playing a part in it. Actions on the political level were judged according to how they affected the whole. Thus Aristotle treats ethics and politics in the same books and overlaps them. Exile from the community was seen as a punishment in that one could no longer participate in society. The seventeenth century saw a shift to the individual being the basis of politics. The “State of Nature”, the natural state of man, was one in which he was alone. It was only because of some privation (starvation, other men stealing, death etc.) that he had to band together with others in order to fend for himself. Government is a necessary evil.

In light of this shift, business men, especially merchants, who had always found government regulation cumbersome to deal with, demanded a more efficient means to do business. Laissez faire and it will work. The individual could govern his own actions on this level. There was a shift towards this in the middle ages with the merchant guild system of international trade, but absolutist mercantilism cut it short. The dawn of democracy in the US and the shift towards it in Britain gave the provided the proper arena for this paradigm shift to come to fruition.