Laissez-faire capitalism can be translated to mean an economic system where the government and the economy are loosely connected. The phrase laissez-faire also translates to mean “let go” or “leave alone," which has been expanded to state, “to live and let live." Thus, in a laissez-faire system, the business sector is free from government intervention in their transactions, such as tariffs and regulations.

The laissez-faire doctrine gained momentum in different regions around the world following the supporting push for freedom of thought. The idea was based on the need to advance free trade and competition in different economies. Proponents of laissez-faire capitalism suggest that although the government remains separate from individual transactions, it should ensure that contracts are enforced and civil order maintained. Additionally, they believe that the economy is a self-regulating entity that does not require any external regulations.

In its purest form, laissez-faire capitalism is the same thing as a pure market economy.  This is an economy in which the government does not take any part in managing the economy.  In such an economy, there would be no such things as, for example, minimum wage laws or workplace safety laws.  All decisions would be made on a purely economic basis.

In American history, the term "laissez-faire capitalism" has been used to refer to the state of affairs before the Progressive Era and especially the New Deal inserted government into more aspects of the economy.  However, the US economy has never been truly laissez-faire.  Even in the allegedly laissez-faire period, the government intervened on behalf of companies (doing things like breaking up strikes) and did things (subsidizing railroads) to try to boost the economy.

So a laissez-faire economy would be one in which there would be no government involvement in the economy, but such a situation cannot really exist in the real world.