What principle advocates that the government should have a limited role in economic management?

The principle that advocates for a limited government role in economic management is known as laissez-faire. This concept emphasizes that economic activity should be free from government intervention, allowing the forces of supply and demand to determine market outcomes. Laissez-faire economics is rooted in the belief that markets are self-regulating and that minimal restrictions on business and trade will lead to the most efficient and beneficial economic results.

In the context of laissez-faire, proponents argue that when individuals are free to pursue their own economic interests without government interference, it leads to innovation, competition, and overall economic growth. This aligns with the belief in the effectiveness of free markets and the idea that government involvement tends to distort market mechanisms.

Contrasting principles like interventionism and market regulation involve more significant government involvement in the economy, typically aimed at achieving specific goals such as equity, stability, and consumer protection. Supply-side economics, while advocating for lower taxes and less regulation, still operates within a framework where the government plays an active role in motivating economic growth. In contrast, laissez-faire strictly limits that role, prioritizing individual entrepreneurship and market dynamics.