Responding to Classical Liberalism

Chapter 5 and 6 (pgs. 114-157)

Reaction by Liberals

Welfare capitalism Welfare state Keynesian economics

Opposition to liberalismLuddites Chartists Socialists Classical

Conservatism

Classical Liberalismtheory practice

Overview

Classical liberalism was meant to be a movement towards freedom in society; to break with the confines of old, to allow people to achieve what is in their own best interest with little interference from government. Sounds great doesn’t it?

How is Nathan’s hotdog eating event a

metaphor—or bundle of metaphors--- for what

was wrong with classical liberalism?

Question for Inquiry

“Why did ideologies develop in opposition to classical liberalism?”

(2.7)

Classical liberalism and the Industrial Revolution transformed western society. A society based on agriculture and class separation (centered on station) became a society based upon industry, emergence of a middle class, laissez-faire government and the pursuit of industrial efficiency.

The ruling elite that emerged (the factory owners and entrepreneurs) and flourished under classical liberalism may have lived more democratically than the old ruling elite but the new ideology of laissez-faire capitalism was only concerned with two things….

INDUSTRIAL EFFICIENCY ACCUMULATION of WEALTH

These goals were considered more important than equality !!!!

Problems of Classical Liberalism…

• Huge companies took over, and small companies were no competitive

• Monopolies on industries such as oil, steel, railroads, sugar refining, meatpacking, and chemicals were developed.

• The huge monopolies that were being formed had so much power that they could influence the government officials to pass laws that were in their interest.

• Most of the wealth was in the hands of only a few very wealthy people. (Robber Barons)

• Poor wages and working conditions• Environmental concerns -- pollution, living conditions, etc• Government had no “responsibilities” – self interest, personal

autonomy, laissez-faire, etc.

Not all people saw the Industrial Revolution and classical liberalism as positive developments.

http://www.youtube.com/watch?v=3Efq-aNBkvc&list=TLt92K3rgOjiRxO3yC4Yr9_xkw_vF6xInx

Responses to Liberalism

https://www.youtube.com/watch?v=o9w6UVQgygE

Opponents of classical liberalism increased and flourished in the circumstances and conditions created by classical liberalism and a number of movements and new ideologies arose in opposition to the ideas/principles of classical liberalism…..

Grassroots Movements• Luddites• Chartists

New Ideologies• Utopian Socialism• Moderate/Democratic Socialism• Marxism (communism)• Classical conservatism

Grassroots Movements

Luddites The Luddites, a band of

nineteenth century English handicraftsmen, rioted in protest to the textile machinery that had taken them out of business.

Luddites destroyed thousands of pieces of machinery until they finally met their demise around 1817 when the government was able to control Luddites riots.

Chartists• Working-class in Britain that focused on political and social reform. They called for:

- Universal suffrage for all men over 21

- Equal-sized electoral districts

- Voting by secret ballot

- An end to the need for property qualifications for Parliament

- Pay for Members of Parliament- Annual elections

• The right to vote was deemed essential to change; working class individuals were denied this right

• Ironically, while the Chartists were a persecuted group, most of their demands were eventually implemented in the Reform Acts of 1867 and 1884

New Ideologies

• An ideology based on collectivist values• Specifics beliefs and valueso Resources should be controlled by the public (government) for the

benefit of everyone in society and not by private interests and not for the benefit of the individual

o Economic equalityo Cooperation over competitiono Control and direction in the economy

• Developed out of a want to reform political, social, and economic structures of 19th century…..to correct the problems that emerged out the free-market system (capitalism)

• Two basic types of socialism emerged

Socialist Ideologies

SOCIALISM

Communism/

MarxismUtopian Socialism

Democratic Socialism

Robert Owen – The Utopian Socialist Individuals such as Robert Owen

believed that education and improved working conditions could peacefully eradicate the worst aspects of capitalism, and lead to an ideal socialist society where all could live happily.

Utopian socialists wished to modify classical liberalism, not overturn the systems that supported it.

Marxism/Communism Marxism is also called scientific socialism

or communism to distinguish itself from other forms of socialism

His ideas were based primarily on the theory that history is the story of evolving class warfare (radical socialism), a class struggle (revolution) between the proletariat (workers) and bourgeoisie (owners).

Marxism/CommunismActions/beliefs:

1. Public property2. Government run factories3. Government run banks4. Nationalized Industries = government run,

owned and operated 5. Government control over transportation and

communication6. Free public education

Classical Conservatism• Classical conservatism was a right wing reaction

(reactionary) to classical liberalism• Wanted to revert back to the way things were before• Edmund Burke and classical conservatives beliefs:

• Society should be hierarchical (people are not equal—some people suited for leadership) ---- ELITISM

• Limited electorate to choose government • Care for the welfare of others --- tyranny is

unacceptable --- charity not gov’t programs• Stability of society is paramount—achieved through

law and order and the maintenance of the customs and traditions that bind society together.

• Burke predicted that Rousseau’s concept of the “general will of the people” was misguided as it would allow the mediocre, uneducated and uninterested power to rule.

How did classical lib

eralism

respond to competing ideologies?

Outcome 2.8

• Some classical liberals gradually came to see the merits of some of their opponents’ views and modified some of their values and beliefs

• Rather grudgingly, classical liberals began to recognize that some changes were necessary. The basic premise for these modifications was an acceptance of the fact that those who believed in the pursuit of industrial efficiency—laissez-faire capitalists--needed to develop a social conscience and more concern for the equality rights of workers

• Welfare Capitalism: a classical liberal economic system combined with a government that used legislation to give workers protection.

Examples: limited working hours, minimum wage, pensions, medical plans, etc

• Britain, for example, passed a series of Factory Acts, beginning in 1810

• Each Act gradually improved the working conditions in factories, decreased working hours, regulated the ages at which children could be employed, and regulated the number of hours women and children could be required to work

• Still, capitalists did not gladly or easily give way to new ways of thinking about society’s responsibilities

Welfare Capitalism at work…

• He was a republican who recognized some of the problems associated with classical liberalism

• When the United Mine Workers of Pennsylvania walked off the job, instead of calling in the army against the workers as owners had hoped, Roosevelt threatened to use the army against the owners should they refuse to negotiate.

• He called this a “square deal” and eventually forced the arbitration.

• In 1912, T. Roosevelt went on to form the National Progressive Party because he felt the Democrats and Republicans were too resistant to change.

THEODORE ROOSEVELT AND WELFARE CAPITALISM…

http://www.youtube.com/watch?v=5mWzXqDbM5c

Why Did a Third Party not Develop in America?

1. World War One (1914)• Governments became per-occupied with the war effort• Needed industrialists to ensure sufficient war supplies

2. The “First Red Scare” (1917-1920’s)• Public fear of Communism• Large labor strikes in USA…..rise of socialism?

3. A Return to Conservative Values• Due to the Red Scare, Harding and Coolidge (conservative

republicans) were the next two presidents of the USA and promised a “return to normalcy”

• Their platform included….. Isolationism Nativism Reduce government involvement

• The move from welfare capitalism to the welfare state was motivated by the Great Depression.

• The problems that arose during this period made it obvious that the existing political, economic and social order had failed.

• What began to emerge was as we know it today.

Modern Liberalism

THE ROARING

TWENTIES

• United States was the richest country in the world.(resources & population)

• After the war the U.S.A. became wealthy by mass producing consumer goods like radios and cars

• The USA and Canada also became the breadbasket for Europe during WWI.

• Factory workers were paid well which meant they spent money on consumer goods.

The beginning of the end...

• As the 20’s progressed , more and more people were buying shares/stocks of companies “on margin” or “on time” (credit) and these shares rose in price.

• Factories produced more goods than people could buy; therefore, the supply of goods was much more than the demand.

• After the war ended, America continued to produce large amounts of grain. When France began producing grain again, the market became flooded and the price of grain plummeted. People began selling their stocks

THE WALL STREET CRASH• In 1929 share prices were

rising but profits for companies began to decline.

• By September and October, the market was fluctuating wildly

• On October 24th of 1929, panic selling of shares forced the value of shares to drop drastically.

• By October 29th, the market crashed. “Black Tuesday”

• The stock market crash brought an end to prosperity in the U.S.A.

Other Causes of The Great Depression

• Supply outgrew demand……over production = falling prices• Droughts• Wages did not increase to

match inflation• Farmers went bankrupt• Banks failed• Factories closed• Increase in unemployment• High rate of corporate fraud

• By 1931, unemployed people were lining up in breadlines since there was no unemployment insurance.

• Countries used protective tariffs in an attempt to protect domestic industry, so global trade declined.

• By 1932, 12 million people were unemployed.

• President Herbert Hoover feared that assistance from the government would make citizens dependent and unable to stand on their own two feet.

• In 1932, the American people voted for Franklin D. Roosevelt as president on a platform of government intervention to get the USA out of the Depression.

THE GREAT DEPRESSION

A Proposed Solution = Government Intervention

• Classical liberals believed that there would be full employment when supply and demand were in balance.

• They also believed that the “natural law” of economics was that good times were followed by bad times. Therefore, it was the individual’s responsibility to save for bad times during periods of prosperity.

• Keynes argued that the economy was unstable and people reacted in times of uncertainty by hoarding money, thereby harming the economy.

A Proposed Solution: Keynes

John Maynard Keynes: A British economist who developed the theory known as “Demand Side Economics” or “Keynesian Economics” in response to Great Depression

• Because few people could predict the variances in the market, most suffered during times of recession and depression.

• He proposed a solution to this problem through the regulation of government spending, taxation, the regulation of the interest rate and production of money.

• In doing so, governments could regulate consumer demand, thus regulating the economy. This became known as “Demand-Side Economics”

depression

prosperity

FISCAL POLICY

Increase government $

Decrease taxes

MONETARY POLICY

Increase $ supply

Decrease interest rates

FISCAL POLICY

Decrease government $

Increase taxes

MONETARY POLICY

Decrease $ supply

Increase interest rates

Keynes’ Regulation of the Business Cycle

Keynes’ Demand Side Economics

More money in your pockets:Governments should spend money in a recession to reduce its severity. It should also reduce taxes.

Less money in your pockets:Governments should spend less money in boom times to soften a boom. It should also raise taxes.

• Franklin D. Roosevelt (FDR)was

president of the United States from

1933-1945• He was the first to convert to Keynes's theories and put them

into practice….on a national level• He implemented massive public works programs to put people to

work…..Alphabet Agencies (WPA, CCC, PWA)• He called it the “New Deal”, an echo of Theodore Roosevelt’s

“square deal.”• This represented the beginning of a shift to the welfare state and

a mixed economy (capitalism with government intervention) in many Western democracies

• By the 1960’s North America and most of Europe had some semblance of a mixed economy --- modern liberalism

The “New Deal”

LEFT RIGHT

Marxism

Socialism

Modern Liberalism

Welfare Capitalism

Classical Liberalism

Classical Conservatism

Command Economy

Mixed Economy

Free-market Economy

Traditional Economy

How did the concept of equality expand?Outcome 2.8

Equal

• Welfare capitalism depended on the efforts of capitalists and government; ordinary citizens had little power or influence in society, thus, equality rights had still to be achieved

• During the 19th-century, labourers who wanted to improve their standard of living and their quality of life began to attempt to form unions

• What this involved was a recognition of a new right—the right to organize

• More and more people began to believe that liberalism required a move toward equal opportunity and equal respect for all members of society

LABOUR STANDARDS AND UNIONS

As a result of the struggles' of the 19th-centry, unions exist

even today.

The Value of Unions…• Unions could significantly strengthen

the achievement of labour’s goals by acting collectively to negotiate equitable wages and decent working conditions—all of which undermined the capitalist’s control of the workplace

• They could also threaten a strike if their desires were not met

• Unions were regarded as rebellious of classical liberal principles and capitalism, and were fiercely opposed

• Unions did not become legal in Canada until 1872

• Classical liberalism proclaimed the equality of men, but not all men. Only certain men were considered “equal” and in most cases women were not included.

• In many cases only certain races, economic classes, religious members, etc were permitted to vote while others were excluded.

• Slowly, qualifications were removed, but for men only

• Women weren’t permitted to vote until much later (depending on the nation) and, in some cases, still do not have the right to vote

UNIVERSAL SUFFRAGE

Canadian Enfranchisement

• Vote given to all citizens of European descent – both

men and women… The Dominion Elections Act (1920)

• In 1929, the Canadian government recognized the right of women to be run for and be appointed to public office

• First Nations were not given the vote or run for office until 1960 (Inuit were awarded this right in 1950, but most were unable to exercise this right as poling stations were not set up in the North until the 1960s)

• The last group to receive the franchise was prison inmates in 2002.

• Bhutan -- One vote per house. Although this applies to both men and women, in practice it currently prevents many more women from voting than men.

• Lebanon -- Partial suffrage. Proof of education required for women, not required for men. Voting is compulsory for men; optional for women.

• Brunei -- No suffrage for men or women. This country is ruled by a monarchy. Neither men nor women have the right to vote or to stand for election.

• Saudi Arabia -- No suffrage for women. The first local elections ever held in the country occurred in 2005. Women were not given the right to vote or to stand for election.

• United Arab Emirates -- No suffrage for men or women. The Parliament is officially appointed and there are no elections. Neither men nor women have the right to vote or to stand for election.Can you suggest why these nations may not be overly supportive

of suffrage in general and female suffrage in particular?

• Feminism, at its simplest, is the belief that men and women are to be treated equally in all respects

• Initially most people thought the rights of ‘man’, meant ‘men

• Women were expected to work as hard as men, and were a source of cheap labour, as they were usually paid much less.

• Gradually, women became more involved in the public sphere, becoming involved in politics; anti-poverty campaigns and child labour movements; they were also active in temperance societies, which fought against the abuse of alcohol…..led to prohibition in the USA

FEMINISM

http://www.youtube.com/watch?v=aZMbTFNp4wI

http://www.youtube.com/watch?v=w6NJoaduP5I

AFFIRMATIVE ACTIONHas modern liberalism gone too far??

• Affirmative action refers to policies that take factors including "race, color, religion, gender, sexual orientation, or national origin“ into consideration in order to benefit an underrepresented group "in areas of employment, education, and business", usually justified as countering the effects of a history of discrimination.

• Affirmative action is intended to promote equal opportunity. It is often instituted in government and educational settings to ensure that minority groups within a society are included in all programs. The justification for affirmative action is that it helps to compensate for past discrimination, persecution or exploitation by the ruling class of a culture or those minorities that are seen as more “economically challenged”