Mill approaches the question of government intervention by establishing a general principle and then examining the exceptions.

• The General Principle: “Laisser-faire, in short, should be the general practice: every departure from it, unless required by some great good, is a certain evil.” The burden of proof is always on those who recommend government interference. The reasons include: individuals understand their own interests better than the state; government is collectively inferior to the intelligence of all individuals combined; and leaving people to manage their own affairs is a crucial part of their practical education in public spirit.
• Authoritative vs. Non-Authoritative Interference: He distinguishes between controlling free agency via commands and penalties versus merely giving advice, providing information, or establishing a parallel, competing state-run institution. The former requires a much stronger justification.

1. Justified Government Interventions

Mill outlines several major classes of exceptions where the arguments for laissez-faire are overruled by stronger considerations of public good.

1. When the Consumer is an Incompetent Judge: The presumption in favor of the market fails when the buyer is not qualified to judge the commodity. The most important case is education, where the government is justified in imposing a legal obligation on parents to provide elementary instruction for their children.
2. Protection of Those Who Cannot Protect Themselves: This applies with great force to children (e.g., laws against over-work) and animals (laws against cruelty).
3. Contracts in Perpetuity: For engagements for life, such as marriage, the state should be “extremely jealous” and grant release on a sufficient case being made.
4. Delegated Management: In cases of large joint-stock companies, where shareholders delegate management, the government is warranted in enforcing publicity and other conditions for the protection of the public.
5. Public Charity (Poor Laws): The relief of destitution is a case where individuals act for the interests of others. Mill argues for a legal right to subsistence to avoid the randomness of private charity and to prevent a “premium on crime.” However, the condition of a person receiving relief must be “considerably less desirable than the condition of those who find support for themselves” to preserve the incentive to work.
6. Services of Collective Benefit: The government should undertake actions of great social usefulness where no individual has a sufficient private incentive, such as colonization, scientific exploration, building lighthouses, and supporting a “learned class” through university professorships.
7. Backward Societies: In nations where the people are too poor, uneducated, or unused to joint action to undertake necessary works (roads, schools, canals), the state may need to perform these functions.

1. Erroneous Interventions

Mill condemns several common government interferences as being grounded on false theories:

• Protectionism: Prohibiting imports to protect domestic industry is a “mischievous” policy that renders the labor and capital of a country less efficient, resulting in “sheer loss, to the country as well as to the consumer.”
• Usury Laws: Laws fixing a maximum rate of interest are counterproductive. They do not lower the rate but rather drive borrowers with imperfect security to disreputable lenders, increasing their costs and demoralizing the public by encouraging contract violations.