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Definition

A socio-economic system in which the factors of production are substantially controlled by the private sector rather than the government. Adam Smith proposed the concept of laissez-faire (leave to do) in which he advocated that the "least government is the best government". He believed that governments are generally less efficient than the private sector because they lack the profit motive. For this reason, everything which does not have to be done by government should be left in the hands of the private sector. Today, most countries have a system of "mixed capitalism" which means that they impose higher taxes to provide certain social services - such as health care, education and income protection to their citizens. South Africa is a mixed capitalism, but includes a number of socialist aspects. For example, many of the state-owned enterprises (SOE) could easily be handled by the private sector and there is no real justification for the government to be involved in them. A prime example is South African Airways (SAA) which has cost the taxpayer tens of billions of rands to maintain and would be better run and managed by the private sector.

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