Lao Tzu and the Tao of laissez-faire (6thC BC)

Lao Tzu

Lao Tsu, the founder of Taoism, advises a wise ruler to follow a policy of laissez-faire, in other words “to do nothing” and thus allow the people to transform themselves:

Therefore a sage has said, ‘I will do nothing (of purpose), and the people will be transformed of themselves; I will be fond of keeping still, and the people will of themselves become correct. I will take no trouble about it, and the people will of themselves become rich; I will manifest no ambition, and the people will of themselves attain to the primitive simplicity.’

Some 2,000 years before the theory of “laissez-faire” was developed by French economists in the 18th century, the Chinese philosopher and founder of Taoism, Lao Tsu in his book Tao-te Ching was offering very similar advice to rulers. He offered a number of maxims designed to guide the actions of “the wise ruler” and they contain a number of assumptions about how political and economic systems work which modern day classical liberals find congenial. These are the idea that world operates according to natural laws which cannot be violated by rulers without harming the interests of “their” people; that order in the world arises spontaneously and that the best thing the wise ruler can do is step back, not interfere, and allow these ordering forces to operate by themselves; that excessive numbers of laws and regulations create more criminals; that the use of violence, especially in war, harms the people; that rulers are faced with a Hayekian “problem of knowledge” and that sometimes the best thing for them to do is not to meddle in the affairs of other people. How different the advice in this passage is from the advice to the prince Niccolo Machiavelli gave in 1513.