Download Part 2a Chapter 4

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 10hour 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 Conditions
•
•
•
•
•
Owen 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 socalled 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=jQtJHCxR6W
Q
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 demandside 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!