America points to its free enterprise system as a model for other nations. The country's economic success seems to validate the view that the economy operates best when government leaves businesses and individuals to succeed -- or fail -- on their own merits in open, competitive markets. But exactly how "free" is business in America's free enterprise system? The answer is, "not completely." A complex web of government regulations shape many aspects of business operations. Every year, the government produces thousands of pages of new regulations, often spelling out in painstaking detail exactly what businesses can and cannot do. The American approach to government regulation is far from settled, however. In recent years, regulations have grown tighter in some areas and been relaxed in others. Indeed, one enduring theme of recent American economic history has been a continuous debate about when, and how extensively, government should intervene in business affairs.

Laissez-faire Versus Government Intervention Historically, the U.S. government policy toward business was summed up by the French term laissez-faire -- "leave it alone." The concept came from the economic theories of Adam Smith, the 18th-century Scot whose writings greatly influenced the growth of American capitalism. Smith believed that private interests should have a free rein. As long as markets were free and competitive, he said, the actions of private individuals, motivated by self-interest, would work 67