What Are We Learning Today?

2.7 Analyze ideologies that developed in response to classical

liberalism.

Ideologies Are Evolutionary• Ideologies are evolutionary; they adapt and

change in response to the political, economic, and social conditions and pressures of the society in which they exist.

• What is one life rule that you’ve changed over time because of life experience?

• In this curriculum outcome we will look at ideologies that developed as a reaction to classical liberalism and then the ways that liberalism itself evolved in response to these critics.

The Spread of Classical Liberalism

• During the 19th century, (1800s), classical liberals achieved great success in implementing their ideas.

• Industrialization & laissez-faire capitalism had transformed many Western societies, but not everyone benefitted equally from this transformation.

Classical Liberalism = Inequality

• Classical liberalism and the Industrial Revolution transformed British society. What was once a society based on agriculture with an interventionist gov’t, became a society based on industry, with a laissez-faire gov’t.

• Though this new British society was richer than ever before, it’s primary concern lied with industrial efficiency and wealth accumulation. It did not care about equality.

Not Everyone is Amused• Factories and businesses were designed to be

efficient and profitable, and workers were viewed as just one component of production.

• Decent wages and working conditions did not lead to increased efficiency and/or profits, so they were not considered. Since the gov’t had no role in the economy they had no responsibility to change things.

• As a result, not everyone saw classical liberalism and the Industrial Revolution as a good thing. What transpired were a # of new ideologies which opposed classical liberalism.

Socialism• The term socialism generally refers to any

ideology that believes that resources should be controlled by the public (gov’t) for the benefit of everyone in society and not by private interests for the benefit of private owners and investors.

• In order for their beliefs to be realized socialists advocate a high degree of state involvement in the control and direction of the economy. They believe that the gov’t should provide guaranteed employment & living standards. They value co-operation over competition and economic equality for all.

Socialism & Industrialization• The great wealth produced by industrialization

in the 19th century was seen by most as a wonderful achievement. What was lacking was a fair and just distribution of wealth to all who helped contribute, most notably the workers.

• The starting point for socialists was reform of the political, economic, and social structures of liberal society. Various movements arose that rejected the lack of humanitarianism and equality brought by classical liberalism but unlike many of these movements, socialism and various forms of it became actual ideologies.

What is a Utopia?

• The word utopia refers to any imaginary, perfect world meant to serve as a model for real life. It was brought up by Sir Thomas More, who in 1516 wrote the book Utopia, which outlined his idea of a perfect society.

• In the 19th century (1800s), Utopian socialism was applied to a school of socialist thought that directly opposed classical liberalism.

Utopian Socialists• Utopians were essentially humanitarians. They

called for an end to the dreadful conditions that the average worker in industrial capitalist countries experienced at the time.

• Utopian socialists were idealistic rather than pragmatic (practical), and were not radical (extreme) in the sense that they did not want to overturn the basic political, economic, and social systems of the time. Instead, they believed that education and improved working conditions could peacefully eliminate the worst aspects of capitalism and lead to an ideal socialist society where everyone was happy.

If you were to create your perfect utopian community, where everyone was happy,

what would it look like?

Robert Owen (1771-1858)

• Was a prominent utopian socialist who believed that the harshness of life under laissez-faire capitalism corrupted human nature.

• He wanted to put his beliefs of utopian socialism into practice and was able to do so by co-owning the largest cotton-spinning business in Britain. He used his community of New Lanark to demonstrate his utopian principles.

• 2nd half pg. 134

Education!• Owen was a big believer in education. He

established an education centre in his community where infants were cared for while the parents worked and children attended school until the age of 10 (rather than 5 or 6 which was the usual).

• Once done school these children worked 10-hour days rather than the usual 13, which left time for them to continue their education in the evening. Adult education was available and his community centre also sponsored free medical care, concerts, and dancing.

Improved Living ConditionsOwen also believed in improving the living conditions of his workers:

• Houses were renovated that were constructed for comfort rather than affordability.

• Streets were paved and cleaned. • Company shops with fair prices replaced private

ones that had charged higher prices. • Villages were landscaped and outdoor activities

were encouraged during leisure time. • Fines were imposed for disruptive social behaviour

(drunkenness).

A Cooperative Workplace

• Textile mills in Owen’s community were still horrific by modern standards, but Owen was unique in that he developed a co-operative spirit between management and labour, introducing incentives to reward good employees.

• The behaviour of workers was recorded by supervisors who displayed a coloured marker by each person’s workstation.

Using Coloured Markers• Workers received:

for bad behaviour

for indifferent (mediocre) behaviour

for good behaviour

for excellent behaviour

• This system improved productivity and the # of yellow and white markers increased.

• Robert Owen spent the rest of his life publicizing his beliefs, writing books, speaking all over Britain, and proposing factory reform (change) to Parliament. (Quote pg. 135)

Sweden: A Supermodel for America?

http://www.youtube.com/watch?v=tDAQWJbEl9U

Homework• You’ve all probably had a job where you’ve

slacked from time to time and not put in your best effort (except in school of course).

• I would like a one page plan where you come up with a system that would get you and your fellow employees to work harder at your job.

• I want the plan to be realistic and not outrageously costly. (Who knows, maybe I’ll use the best one and apply it to this classroom!!!)

More Radical Socialist Thought• Unlike Utopians, who wanted only to modify

classical liberalism, other socialist ideologies contemplated fundamental (essential) changes to society’s structure.

• This radical socialist intent was to encourage gov’ts and the institutions of capitalism: banks, industry, commerce (trade), and services to rethink their purposes and consider replacing the liberal ideology of individualism and limited gov’t.

What Socialists Agree On• Socialist thought ranges from moderate and

democratic social reform to radical revolutionary Marxism. Yet socialists essentially agree that:

- private ownership of the means of production permits exploitation

- the state (gov’t) should direct the economy to achieve economic equality

- society should be classless• While socialists share these common views,

they differ GREATLY in their ideas for how to go about transforming liberal capitalist society to a socialist one.

Who is Karl Marx?

Marxism• Marxism was

developed by Karl Marx (1818-1883), yet the term Marxism was never used by him. A group of French socialists coined the term in the 1880s. Karl Marx himself, on hearing about some of the things these so-called followers were doing, proclaimed that he was not a Marxist.

Bourgeoisie vs. Proletariat• Marxism is a radical (extreme) form of

socialism, often called scientific socialism or communism to distinguish it from other socialist ideologies.

• He believed in overthrowing capitalism and that the only way to do this was by means of a class struggle between the proletariat (workers) and the bourgeoisie (owners). Only through this workers’ revolution could necessary changes be made in society.

The Communist Manifesto• Marx worked with Friedrich Engels to write The

Communist Manifesto in 1848.

• It outlined that economics was the foundation of society and that the means of production, (such as factories and machinery), needed to be in the workers’ hands.

• Pg. 136-137 & Figure 4-6

• In practice, this meant the abolition (elimination) of private property and putting the means of production in the hands of the state.

Marxism in Practice• Countries such as the Soviet Union, China,

Cuba and North Korea each implemented Marxist ideas and communism by developing a centrally planned or command economy.

• In a free market, competition and the forces of supply and demand determine which goods are produced, how they are produced, and at what prices they are sold. In a command economy, the government makes these decisions. http://www.youtube.com/watch?v=jQtJHCxR6WQ

Socialism vs. Classical Liberalism• Politically, socialism struggled to make inroads

against classical liberalism. While moderate democratic socialism resulted is some very successful political parties in Europe, Marxist parties had much less success.

• However, by the 1930s Marxism had become very popular among world intellectuals and writers. While the Soviet Union enjoyed great prestige as it flourished economically during the Great Depression, the success of Marxism seemed to show that the idea of classical liberalism had failed.

What is Reactionary?

• The word reactionary is derived from the French word reactionnaire, which came into use at the time of the French Revolution to describe the opponents of the Revolution.

• Synonyms for reactionary are conservative or the Right, in reference to the political spectrum.

• Reactionary is the polar opposite of the term radical, which means extreme change (like how Marxism is based on).

Classical Conservatism

• Classical conservatism is an ideology that is reactionary, which means it supports a return to a previous state of affairs.

• It developed as a reaction to classical liberalism. It was founded by Edmund Burke as he viewed the events of the French Revolution from Britain.

Edmund Burke (1729-1797)• Burke was a contemporary of classical liberal

Adam Smith but he did not accept the beliefs and values of classical liberalism. Instead, he preferred the pre-industrial past.

• Burke was against values such as equality, individualism, and freedom but instead believed in established institutions that were run by the educated ppl of society who were necessary to control the irrational passion of the uneducated masses.

Classical Conservative Beliefs• Society is an organic whole that should be

structured in a hierarchical fashion with those best suited to leadership at the top, because ppl do not have equal abilities.

• Gov’t should be chosen by a limited electorate with special responsibilities, and privileges.

• Leaders should be humanitarian, their role includes the responsibility to care for the welfare of others.

• The stability of society is the paramount concern, to be achieved through law and order and the maintenance of the customs and traditions that bind society together.

Burke & Tyranny

• While Burke supported established gov’t, he did not support tyranny (oppression) in any form.

• Thus, while he viewed the American Revolution (1775-1783) as a success since it led to an orderly gov’t, he despised the French Revolution (1789-1799) and it’s mass executions, civil disorder, wars against foreign countries, and failure to establish a stable gov’t. He believed this revolution to be a result of uninformed ppl who should not have a say in their gov’t.

Burke & “Will of People”• Burke believed gov’t should be left to those who

naturally understood their duties to the country and the ppl, those with experience and wisdom.

• He predicted that Rousseau’s concept of the “general will of the people” was an unrealistic, unnatural, and ultimately dangerous idea that would lead to rule by the mediocre, uneducated, and disinterested. This would lead to complete chaos.

Homework

• Read the “Voices” section on pg. 138-139 in your textbook.

• Answer fully questions 1, 2, 3 and 5 (half a page response total).

What Are We Learning Today?

2.8 Analyze the evolution of modern liberalism as a response to classical

liberalism.

Classical Liberalism’s Response

• Classical liberals begrudgingly came to see some of the merits of their opponents’ views and began to recognize that some modifications were necessary.

• The basic premise (foundation) for these modifications was that laissez-faire capitalists needed to consider the rights of workers and develop a social conscience.

Welfare Capitalism• Refers to a classical liberal economic system

combined with a gov’t that uses legislation to give workers protections such as limited working hours, minimum wage, and a safety net with features such as pensions and medical insurance.

Not an Easy Transition• The legislative journey to workers’ rights was a long

one but slowly in places like Britain and Germany laws that decreased working hours, provided leave for illness and maternity, and provided insurance for job-related injuries began to form.

• From today’s perspective, these moves might seem logical to us and an acceptable approach to correcting the excesses of capital liberalism but at the time it was tough to achieve as capitalists did not want to give way to a new way of thinking about society’s responsibilities.

Who are the faces on Mount Rushmore?

Theodore Roosevelt (1901-1909 American President)

• Was a reformer (wanted change) who showed his desire to curb the excesses of laissez-faire capitalism early in his presidency.

Describe a typical strike. Why do workers strike? What is the

usual process?

An Unheard of Response• When a mining union in northern Pennsylvania

walked out on their job demanding shorter working days, pay raises, and benefits, the mine owners flatly refused and called on Roosevelt to bring out the American army against the workers. Instead, Roosevelt refused the request and even threatened to call out the army against the owners if they refused to negotiate. This type of threat had been unheard of and forced the owners into arbitration (negotiation) until a settlement was reached.

The Square Deal

• Roosevelt coined the term “square deal” at this time. This term signifies that BOTH labour (the employees) and capital (the employers) must be treated fairly.

• This was a completely different mindset for the time.

WW I Changes Thinking• Original principles of welfare capitalism were

mainly oriented towards the workplace. Thus, most welfare capitalism legislation did not include issues such as child poverty, disability, housing, education, etc.

• Also, with the arrival of WW I a few years later, people were less concerned about workers’ rights when there was a war to win. Gov’ts became concerned with the war effort and were pro-classical liberalist because they needed the support of industrialists to provide sufficient war supplies.

What were the Roarin’ 20s?

The Roarin’ 20s• During the 1920s, mass production and

consumer spending reached new heights. Unemployment was low, wages were increasing, many were able to afford their own homes, and it seemed like this progress would last forever. This was a time of communication innovation, consumer explosion as ppl bought fridges and radios, and the beginning of the automobile culture.

WW I Helps American Farmers• Because of WW I, French grain fields were

destroyed by trench warfare. America’s western lands were opened to more and more settlers, and grain production was increased dramatically to feed the ppl of Europe. When the war ended in 1918, American fields continued producing and this continual increase lifted the entire economy.

• Also, many ppl were buying “on time,” that is, paying for their purchases on credit. Credit was used to purchase stocks as well, and the stock market was rife with potential profit.

http://www.youtube.com/watch?v=RJpLMvgUXe8

The Great Depression• Then, something unexpected happened. Grain

fields of France began producing again and American grain prices crashed. People began to frantically sell their stocks and the stock market crashed soon after on October 29, 1929.

• Soon, banks failed as ppl withdrew their money, factories closed as ppl could no longer afford to buy goods, and unemployment skyrocketed. International trade declined as countries instituted tariffs (taxes) to protect domestic manufacturing.

Commy Fear!!!• Political leaders in the democracies were

baffled by the Depression and were concerned that their citizens would turn to socialism or, even worse, towards communism.

• A great example was the coal worker’s strike in 1932 in Crowsnest Pass. This strike turned into 1 of the most bitter strikes in Canadian history and at one point the worker’s even joined the Workers Unity League, an organization sponsored by the Communist Party of Canada. Eventually the strike was resolved after 7 months but the whole ordeal appeared to be a “red conspiracy” to gov’t and capitalists.

Keynesian Economics• As the 1930s progressed,

the recession deepened and no one knew what to do about it.

• Finally, John Maynard Keynes (1883-1946), a British economist, came up with a new economic theory. He believed that classical economic theory, the basis for the market economy, was fundamentally wrong.

Classical Liberal Economic Theory• Classical liberals believed that if supply and

demand were in balance that there would be full employment.

• Keynes said that the Great Depression proved that this was not true. Balance between supply and demand didn’t necessarily result in full employment. This is because in times of stress, ppl saved their money and failed to invest in the economy, thereby creating and prolonging a recession.

Supply & Demand• According to classical economic theory the

market is driven by the simple laws of supply and demand. When goods are plentiful, prices go down. When they are scarce, prices go up.

• Classical economists believe that since we know the market is cyclical and that it can rise and fall, then it is our responsibility to save for the bad times. There is no reason for the gov’t to get involved because individuals should be responsible for their own financial success.

Consumer Demand• Keynes believed

that the economic cycle was caused by one main factor: consumer demand. He felt that if the gov’t could affect this demand then they could limit the unpredictability of the market.

Keynes’ Response• During the inflationary “boom” times Keynes

said gov‘ts should spend less money and increase taxes and interest rates, thereby leaving less money in ppl’s pockets. Ppl spending less would soften the “boom” of the economy.

• During a recession the gov’t should spend more money and reduce taxes and interest rates, leaving more money in ppl’s pockets that they then could spend or invest in the economy. This would lessen the severity of the recession.

• Figure 4-11 pg. 146 & 147

What is a deficit? What is a debt?

Deficit Spending• A deficit occurs when the gov’t spends more

money than it makes. Deficit spending was key to Keynes’ theory because the gov’t was to spend a lot of money in times when taxes were low (during recessions).

• Yet this action of the gov’t was supposed to kick-start the economy once again. Then, it was the gov’ts responsibility to save their money in boom times to offset the money lost during the recessions.

Monetary & Fiscal Policy• Monetary policy refers to actions taken by the

central bank of a country to control the supply of money. The most common tools used in monetary policy are raising or lowering interest rates, and printing or destroying money.

• Fiscal policy refers to the direct taxing and spending functions of gov’ts. Gov’ts can raise or lower taxes, and raise or lower their spending on projects and programs. Gov’ts are usually the biggest single spender in a modern economy, so these decisions have a direct effect on the economy of a country.

Demand-Side Economics

• Keynes believed his application of monetary and fiscal policy would lessen the effects of booms and recessions yet would still leave the free-market largely intact.

• Keynes’s theory became known as demand-side economics. He argued that even in a liberal democratic society, gov’ts could and should play an important role in safeguarding all citizens from economic uncertainty.

Welfare State & Great Depression

• The movement from welfare capitalism to the welfare state was spurred by the Great Depression.

• The Great Depression became a catalyst (means) for change and what began to emerge was modern liberalism as we know it today.

What is the Welfare State?

• The welfare state is a state in which the economy is capitalist, but the gov’t uses policies that directly or indirectly modify the market forces in order to ensure economic stability and a basic standard of living for its citizens (seen as further left than welfare capitalism, contains a mixed economy).

• Keynesian economics is a great example of this.

FDR & the “New Deal”• Franklin D. Roosevelt was the president of the

US from 1933-1945. He was the first politician to convert to Keynes’ theories.

• He implemented massive public works programs that put ppl to work, which became known as the “New Deal.”

• New Deal programs provided emergency relief to Americans, reformed the banking system, and attempted to invigorate agriculture and the economy.

Emergence of Modern Liberalism• This new attitude toward the gov’ts role in the

economy represented the beginning of the shift to the welfare state and a mixed economy, where free-market principles are combined with some degree of gov’t intervention.

• By the late 1950s and 1960s, the welfare state was a reality in most democratic countries including Canada, and modern liberalism was in place.

• Welfare State = Modern Liberalism!