Laissez-faire in the context of "Fiscal conservatism"

The Republican Party, also known as the Grand Old Party (GOP), is a conservative and right-wing political party in the United States. It emerged as the main rival of the Democratic Party in the 1850s, and the two parties have dominated American politics since then.

The Republican Party was founded in 1854 by anti-slavery activists opposing the Kansas–Nebraska Act and the expansion of slavery into U.S. territories. It rapidly gained support in the North, drawing in former Whigs and Free Soilers. Abraham Lincoln's election in 1860 led to the secession of Southern states and the outbreak of the American Civil War. Under Lincoln and a Republican-controlled Congress, the party led efforts to preserve the Union, defeat the Confederacy, and abolish slavery. During the Reconstruction era, Republicans sought to extend civil rights protections to freedmen, but by the late 1870s the party shifted its focus toward business interests and industrial expansion. In the late 19th and early 20th centuries, it dominated national politics, promoting protective tariffs, infrastructure development, and laissez-faire economic policies, while navigating internal divisions between progressive and conservative factions. The party's support declined during the Great Depression, as the New Deal coalition reshaped American politics. Republicans returned to national power with the 1952 election of Dwight D. Eisenhower, whose moderate conservatism reflected a pragmatic acceptance of many New Deal-era programs.

The social market economy (SOME; German: soziale Marktwirtschaft, German pronunciation: [zoˌt͡si̯aːlə ˈmaʁktˌvɪʁtʃaft] ), also called Rhine capitalism, Rhine-Alpine capitalism, the Rhenish model, and social capitalism, is a socioeconomic model and ideology combining a free-market capitalist economic system with social policies and enough regulation to establish both fair competition within the market and generally a welfare state. It is sometimes classified as a regulated market economy. The social market economy was originally promoted and implemented in West Germany by the Christian Democratic Union under Chancellor Konrad Adenauer in 1949 and today it is used by ordoliberals, social liberals and social democrats alike. Its origins can be traced to the interwar Freiburg school of economic thought.

The social market economy was designed to be a middle way between laissez-faire forms of capitalism and socialist economics. It was strongly inspired by ordoliberalism, which was influenced by the political ideology of Christian democracy. Social market refrains from attempts to plan and guide production, the workforce, or sales but support planned efforts to influence the economy through the organic means of a comprehensive economic policy coupled with flexible adaptation to market studies. Combining monetary, credit, trade, tax, customs, investment, and social policies, as well as other measures, this type of economic policy aims to create an economy that serves the welfare and needs of the entire population, thereby fulfilling its ultimate goal.

Communitarianism is a philosophy that emphasizes the connection between the individual and the community. Its overriding philosophy is based on the belief that a person's social identity and personality are largely molded by community relationships, with a smaller degree of development being placed on individualism. Although the community might be a family, communitarianism usually is understood, in the wider, philosophical sense, as a collection of interactions, among a community of people in a given place (geographical location), or among a community who share an interest or who share a history. Communitarianism is often contrasted with individualism, and generally opposes laissez-faire policies that deprioritize the stability of the overall community.

Capitalism is an economic system based on the private ownership of the means of production and their use for the purpose of obtaining profit. This socioeconomic system has developed historically through several stages and is defined by a number of basic constituent elements: private property, profit motive, capital accumulation, competitive markets, commodification, wage labor, and an emphasis on innovation and economic growth. Capitalist economies tend to experience business cycles of economic growth followed by recessions.

Economists, historians, political economists, and sociologists have adopted different perspectives in their analyses of capitalism and have recognized various forms of it in practice. These include laissez-faire or free-market capitalism, state capitalism, and welfare capitalism. Different forms of capitalism feature varying degrees of free markets, public ownership, obstacles to free competition, and state-sanctioned social policies. The degree of competition in markets and the role of intervention and regulation, as well as the scope of state ownership, vary across different models of capitalism. The extent to which different markets are free and the rules defining private property are matters of politics and policy. Most of the existing capitalist economies are mixed economies that combine elements of free markets with state intervention and in some cases economic planning.

A market economy is an economic system in which the decisions regarding investment, production, and distribution to the consumers are guided by the price signals created by the forces of supply and demand. The major characteristic of a market economy is the existence of factor markets that play a dominant role in the allocation of capital and the factors of production.

Market economies range from minimally regulated to highly regulated systems. On the least regulated side, free market and laissez-faire systems are where state activity is restricted to providing public goods and services and safeguarding private ownership, while interventionist economies are where the government plays an active role in correcting market failures and promoting social welfare. State-directed or dirigist economies are those where the state plays a directive role in guiding the overall development of the market through industrial policies or indicative planning—which guides yet does not substitute the market for economic planning—a form sometimes referred to as a mixed economy.

In economics and political science, fiscal policy is the use of government revenue collection (taxes or tax cuts) and expenditure to influence a country's economy. The use of government revenue expenditures to influence macroeconomic variables developed in reaction to the Great Depression of the 1930s, when the previous laissez-faire approach to economic management became unworkable. Fiscal policy is based on the theories of the British economist John Maynard Keynes, whose Keynesian economics theorised that government changes in the levels of taxation and government spending influence aggregate demand and the level of economic activity. Fiscal and monetary policy are the key strategies used by a country's government and central bank to advance its economic objectives. The combination of these policies enables these authorities to target inflation and to increase employment. In modern economies, inflation is conventionally considered "healthy" in the range of 2%–3%. Additionally, it is designed to try to keep GDP growth at 2%–3% and the unemployment rate near the natural unemployment rate of 4%–5%. This implies that fiscal policy is used to stabilise the economy over the course of the business cycle.

Changes in the level and composition of taxation and government spending can affect macroeconomic variables, including:

Social liberalism is a political philosophy and variety of liberalism that endorses social justice, social services, a mixed economy, and the expansion of civil and political rights, as opposed to classical liberalism which favors limited government and an overall more laissez-faire style of governance. While both are committed to personal freedoms, social liberalism places greater emphasis on the role of government in addressing social inequalities and ensuring public welfare.

Social liberal governments address economic and social issues such as poverty, welfare, infrastructure, healthcare, and education using government intervention, while emphasising individual rights and autonomy.

The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and business failures around the world. The economic contagion began in 1929 in the United States, the largest economy in the world, with the devastating Wall Street crash of 1929 often considered the beginning of the Depression. Among the countries with the most unemployed were the U.S., the United Kingdom, and Germany.

The Depression was preceded by a period of industrial growth and social development known as the "Roaring Twenties". Much of the profit generated by the boom was invested in speculation, such as on the stock market, contributing to growing wealth inequality. Banks were subject to minimal regulation, resulting in loose lending and widespread debt. By 1929, declining spending had led to reductions in manufacturing output and rising unemployment. Share values continued to rise until the October 1929 crash, after which the slide continued until July 1932, accompanied by a loss of confidence in the financial system. By 1933, the U.S. unemployment rate had risen to 25%, about one-third of farmers had lost their land, and 9,000 of its 25,000 banks had gone out of business. President Herbert Hoover was unwilling to intervene heavily in the economy, and in 1930 he signed the Smoot–Hawley Tariff Act, which worsened the Depression. In the 1932 presidential election, Hoover was defeated by Franklin D. Roosevelt, who from 1933 pursued a set of expansive New Deal programs in order to provide relief and create jobs. In Germany, which depended heavily on U.S. loans, the crisis caused unemployment to rise to nearly 30% and fueled political extremism, paving the way for Adolf Hitler's Nazi Party to rise to power in 1933.