In this era, the Economic system is the backbone of every country. The countries are working by economic system to manage their production, distribution, resources allocation and exchange of commodities and services, etc. Different countries have different ideologies, so the economic systems adopted by them are also different. In this present era, we have Four major kinds of economic systems according to which countries are working. Capitalism is one of them, it is also known as the Free Market economic system.

In Capitalism, means of production are owned by private owners and they manage the production and distribution of goods and services to earn profit. In this economic system, the government plays a secondary role as the decision-making power lay with private owners mostly.

We will discuss two types of capitalism theories and learn how they are different from one another:

Laissez Faire Capitalism:

It is a type of economic system where all deals among private businessmen are made without any intervention of government. In Laissez-Faire Capitalism government controls all political and government aspects but doesn’t interfere in the economy of the country. All decisions of production and distribution are made according to rules supply and demand by private owners and the government protects them against coercion.

Anarcho capitalism:

It is an economic theory and political philosophy that is in favor of free-market economy and private ownership of property and negates the role of state or government. This philosophy assumes that people are self-righteous they know right from wrong, so they can manage a free market even in the absence of rules and regulations implied by the state for the protection of business, property, and people.

Laissez Faire Capitalism Vs Anarcho capitalism:

Laissez Faire Capitalism and Anarcho capitalism although seem similar but they are very different in many ways from one another. Following points will clarify the difference between these two economic systems:

Meaning:

Laissez Faire is a French word that means “let do” or “ leave us alone”, the meaning is that government should not interfere in the economy and make no business laws as the things can take their place on their own without the involvement of the state.  While Anarchois a Greek Word in which “an” stands for “NO” while the meaning of “archo” is “rule” that stands for government or state which means in this economic system government plays no role or is eliminated.

Fundamentals:

Laissez Faire Capitalism theory state that government should not interfere in private business by making laws related to business, and only take care of military, government issues and public sectors. The distribution of commodities can be decided in free market easily by the law and demand forces without state involvement.

On the other hand, Anarcho capitalism believes that private ownership can work without laws and government protection as people are self-righteous, but the involvement of laws can make them bad and they don’t need rules as they can self-discipline themselves and can form a voluntary society.

Existence of Government:

According to Laissez Faire Capitalism, the government is present, but it does not involve in the business of private owners and doesn’t make laws for push and pull of market. Markets work freely and the production and decision distribution decisions are made according to demand and supply laws.

On the other hand, in case of Anarcho capitalism government simply does not exist as market is free from state.

Role of government:

In Laissez Faire Capitalism government does not make business laws but protects individuals against criminal acts like theft, coercion, fraud and protect market from monopolies and provides protection while Anarcho capitalism favors wage labor and assumes that private business and free market can survive without the protection of government.

Freedom:

In Laissez Faire Capitalism although government is not involved in economy or make any business laws but is still has a mild presence in business world as government makes protection and compensation laws for the safety of individuals against criminal acts.

On the contrary, in Anarcho capitalism, freedom of business is maximum as there is no state or government involvement, not even a slightest bit as there is no government. 

Belief of individuals:

In  Laissez Faire Capitalism, individuals believe that the protection laws of government are good for their protection and safety of their business and property against fraudulent and criminal activities while in Anarcho capitalism individuals believe that humans are self-reliant and can protect themselves even without involvement of the state and can form a voluntary society that can help them in flourishing their talents and abilities.

Conclusion:

There are different type of economic systems in this world , capitalism is one of them all economic systems are different from one another

Laissez Faire Capitalism and Anarcho Capitalism are both capitalism theories but they are quite different from one another as both have their pros and cons as In Laissez Faire Capitalism government does not involve in the matters of the economy but provide protection to individuals against thefts, frauds, and coercion while in  Anarcho Capitalism eliminate the role of government as it assumes that private owners can protect themselves and can form a voluntary society and a free market that is free from government. We can’t prefer one on others as they both have their strong points. Did you enjoy?