The honeymoon of interests between the early capitalists and autocratic kings did not last long. "This selfsame monarchy, which for weighty reasons sought to further the aims of commercial capital and was. . . itself aided in its development by capital, grew at last into a crippling obstacle to any further development of European industry." [Rudolf Rocker, Nationalism and Culture, p. 117]
This is the social context of the expression "laissez-faire" — a system which has outgrown the supports that protected it in its early stages of growth. Just as children eventually rebel against the protection and rules of their parents, so the capitalists rebelled against the over-bearing support of the absolutist state. Mercantilist policies favoured some industries and harmed the growth of industrial capitalism in others. The rules and regulations imposed upon those it did favour reduced the flexibility of capitalists to changing environments. As Rocker argues, "no matter how the abolutist state strove, in its own interest, to meety the demands of commerce, it still put on industry countless fetters which became gradually more and more oppressive . . . [it] became an unbearable burden . . . which paralysed all economic and social life." [Op. Cit., p. 119] All in all, mercantilism became more of a hindrance than a help and so had to be replaced. With the growth of economic and social power by the capitalist class, this replacement was made easier.
Errico Malatesta notes, "[t]he development of production, the vast expansion of commerce, the immeasurable power assumed by money . . . have guaranteed this supremacy [of economic power over the political power] to the capitalist class which, no longer content with enjoying the support of the government, demanded that government arise from its own ranks. A government which owed its origin to the right of conquest . . . though subject by existing circumstances to the capitalist class, went on maintaining a proud and contemptuous attitude towards its now wealthy former slaves, and had pretensions to independence of domination. That government was indeed the defender, the property owners' gendarme, but the kind of gendarmes who think they are somebody, and behave in an arrogant manner towards the people they have to escort and defend, when they don't rob or kill them at the next street corner; and the capitalist class got rid of it . . . [and replaced it] by a government [and state] . . . at all times under its control and specifically organised to defend that class against any possible demands by the disinherited." [Anarchy, pp. 19-20]
Malatesta here indicates the true meaning of "leave us alone," or "laissez-faire." The absolutist state (not "the state" per se) began to interfere with capitalists' profit-making activities and authority, so they determined that it had to go — as happened, for example, in the English, French and American revolutions. However, in other ways, state intervention in society was encouraged and applauded by capitalists. "It is ironic that the main protagonists of the State, in its political and administrative authority, were the middle-class Utilitarians, on the other side of whose Statist banner were inscribed the doctrines of economic Laissez Faire" [E.P. Thompson, The Making of the English Working Class, p. 90]. Capitalists simply wanted capitalist states to replace monarchical states, so that heads of government would follow state economic policies regarded by capitalists as beneficial to their class as a whole. And as development economist Lance Taylor argues:
"In the long run, there are no laissez-faire transitions to modern economic growth. The state has always intervened to create a capitalist class, and then it has to regulate the capitalist class, and then the state has to worry about being taken over by the capitalist class, but the state has always been there." [quoted by Noam Chomsky, Year 501, p. 104]
In order to attack mercantilism, the early capitalists had to ignore the successful impact of its policies in developing industry and a "store of wealth" for future economic activity. As William Lazonick points out, "the political purpose of [Adam Smith's] the Wealth of Nations was to attack the mercantilist institutions that the British economy had built up over the previous two hundred years. . . In his attack on these institutions, Smith might have asked why the extent of the world market available to Britain in the late eighteenth century was so uniquely under British control. If Smith had asked this 'big question,' he might have been forced to grant credit for [it] . . . to the very mercantilist institutions he was attacking . . ." Moreover, he "might have recognised the integral relation between economic and political power in the rise of Britain to international dominance." Overall, "[w]hate the British advocates of laissez-faire neglected to talk about was the role that a system of national power had played in creating conditions for Britain to embark on its dynamic development path . . . They did not bother to ask how Britain had attained th[e] position [of 'workshop of the world'], while they conveniently ignored the on going system of national power - the British Empire — that . . . continued to support Britain's position." [Business Organisation and the Myth of the Market Economy, p. 2, p. 3, p.5]
Similar comments are applicable to American supporters of laissez faire who fail to notice that the "traditional" American support for world-wide free trade is quite a recent phenomenon. It started only at the end of the Second World War (although, of course, within America military Keynesian policies were utilised). While American industry was developing, the country had no time for laissez-faire. After it had grown strong, the United States began preaching laissez-faire to the rest of the world — and began to kid itself about its own history, believing its slogans about laissez-faire as the secret of its success. In addition to the tariff, nineteenth-century America went in heavily for industrial planning—occasionally under that name but more often in the name of national defence. The military was the excuse for what is today termed rebuilding infrastructure, picking winners, promoting research, and co-ordinating industrial growth (as it still is, we should add).
As Richard B. Du Boff points out, the "anti-state" backlash of the 1840s onwards in America was highly selective, as the general opinion was that "[h]enceforth, if governments wished to subsidise private business operations, there would be no objection. But if public power were to be used to control business actions or if the public sector were to undertake economic initiatives on its own, it would run up against the determined opposition of private capital." [Accumulation and Power, p. 26] In other words, the state could aid capitalists indirectly (via tariffs, land policy, repression of the labour movement, infrastructure subsidy and so on) and it would "leave them alone" to oppress and exploit workers, exploit consumers, build their industrial empires and so forth.
So, the expression "laissez-faire" dates from the period when capitalists were objecting to the restrictions that helped create them in the first place. It has little to do with freedom as such and far more to do with the needs of capitalist power and profits (as Murray Bookchin argues, it is an error to depict this "revolutionary era and its democratic aspirations as 'bourgeois,' an imagery that makes capitalism a system more committed to freedom, or even ordinary civil liberties, than it was historically" [From Urbanisation to Cities, p. 180f]). Takis Fotopoules, in his essay "The Nation-state and the Market", indicates that the social forces at work in "freeing" the market did not represent a "natural" evolution towards freedom:
"Contrary to what liberals and Marxists assert, marketisation of the economy was not just an evolutionary process, following the expansion of trade under mercantilism . . . modern [i.e. capitalist] markets did not evolve out of local markets and/or markets for foreign goods . . . the nation-state, which was just emerging at the end of the Middle Ages, played a crucial role creating the conditions for the 'nationalisation' of the market . . . and . . . by freeing the market [i.e. the rich and proto-capitalists] from effective social control." [Society and Nature, Vol. 3, pp. 44-45]
The "freeing" of the market thus means freeing those who "own" most of the market (i.e. the wealthy elite) from "effective social control," but the rest of society was not as lucky. Peter Kropotkin makes a similar point in Modern Science and Anarchism, "[w]hile giving the capitalist any degree of free scope to amass his wealth at the expense of the helpless labourers, the government has nowhere and never. . .afforded the labourers the opportunity 'to do as they pleased'." [Kropotkin's Revolutionary Pamphlets, p. 182]
The one essential form of support the "Libertarian" right wants the state (or "defence" firms) to provide capitalism is the enforcement of property rights — the right of property owners to "do as they like" on their own property, which can have obvious and extensive social impacts. What "libertarian" capitalists object to is attempts by others — workers, society as a whole, the state, etc. — to interfere with the authority of bosses. That this is just the defence of privilege and power (and not freedom) has been discussed in section B and elsewhere in section F, so we will not repeat ourselves here.
Samuel Johnson once observed that "we hear the loudest yelps for liberty among the drivers of Negroes." Our modern "libertarian" capitalist drivers of wage-slaves are yelping for exactly the same kind of "liberty." [Johnson quoted in Noam Chomsky, Year 501, p. 141]