Central planning, found in economic systems such as state socialism, requires the government to control prices, manufacturing and distribution. Free market capitalism functions, ideally, without any government interference.
Laissez-faire is a French term meaning "allow to do." The "let it be" attitude embraced by free market economists led to the term being coined by French physiocrats during the 18th century and is still used today.
Economists of the Austrian School of Economics argue that the free exchange of goods and services, without interference from the government, can show accurate economic outcomes (how a business performs, what products are in higher demand, who succeeds, who fails etc.) better than planned economies, because the data sourced is virtually free of variables of manipulation (rent control or government bailouts etc.)
For example, wild animals are fighting over food and territory, representing market competition. Staying away and letting the animals struggle to discover who the strongest is would be the laissez-faire approach, representing the free market. Shooting a tranquilizer dart into stronger animals to give weaker animals a better chance is interference and represents a regulated market. Breaking up the fight, naming winners and arbitrarily distributing rewards represents central planning--or state socialism.
Free market capitalism has been likened to a jungle by laissez-faire economists, for it is "beautiful and savage and must be left alone." In a nutshell, free market capitalism is an undisturbed marketplace where businesses and individuals can buy and sell goods without state interference.
Advocates for free market economics include, but are not limited to:
- Milton Friedman
- Thomas Sowell
- Ludwig Von Mises
- Friedrich Hayek
- Murray Rothbard
For more information on free markets, read What is Libertarianism?