CH. 9, SEC. 4: REACTIONS AGAINST INDUSTRIAL ABUSES

1) Laissez-faire government policy:

- free market policies*

- minimal to no government regulation of business

- minimal taxation (primarily for defense, infrastructure)

WHY?

To maximize PROFITS in as free a manner as possible

* Corporate leaders tend to favor unobstructed “free market” competition during times of growth &

economic expansion, BUT will also lobby for government intervention & assistance (i.e. bailouts, tax breaks) when free market profits are declining.

2) FAVORS laissez-faire policies:

Industrialists, business leaders, corporations, capitalists, advocates of free market ideology, political libertarians

WHY?

Allows businesses to set their own terms of production, and maximize profit with less spending that would otherwise be required from rules & regulations; prefer “less government”.

RESENTS laissez-faire policies:

Working class, some middle class, very few upper class

WHY?

These groups are either directly exploited by industrial conditions, or are morally opposed to its abuses (if not directly affected); they view the government as having a responsibility to actively improve economic & social conditions for all citizens.

3) Capitalism – basic themes– PRIVATE ownership of property/assets– Goal is to maximize INDIVIDUAL wealth & profit

(“law of self interest”)– The FREE MARKET will drive efficiency & progress

“law of competition” forces better goods & services

“law of supply & demand” will produce the right amount of products at the lowest price

… all of this will naturally happen as a result of the “invisible hand” of the market, rendering government involvement as unnecessary

– Multiple classes are a “natural” outcome (upper, middle, lower)

4) Capitalist philosophers:

I. ADAM SMITH: The Wealth of Nations (1776)

- Published original ideas of free market capitalism (identified in question #3)

II. THOMAS MALTHUS (1798)- World population will increase faster than food supply, leading to mass poverty & misery- Population growth will be continually limited by starvation, wars, and diseaseDo Malthusian thinkers have a credible argument? IF so, what can/should be done in response? By whom?

III. DAVID RICARDO (1817)

- A “permanent” underclass is to be expected, as ongoing population growth will always drive down wages as the supply of labor outpaces demand

5) Capitalism - positives and negatives:

(+) Drives economic growth

(+) Creates wealth

(+) Motivates creativity in production & innovation

(+) Provides more choice & availability of goods & services, at affordable prices

(-) COSTS of growth: - exploited workers (low wages, safety)- environmental damage / habitat destruction- resource depletion

(-) Disproportionate wealth (actual wage vs. a “living wage”)(-) Can a free market police itself against corruption? (-) Some unable to afford basic needs (if privatized)(-) Minimizes importance of labor(-) Does concentrated economic power replace democracy

with plutocracy?

PRIVATE BUSINESS – earns a…

PROFIT

(or LOSS)

Solution: build the business! (pricing, marketing, etc.)

GOVERNMENT – GOAL: break even; more often, result is a:

SURPLUS

“Solution”: Build a “rainy day” fund; grow gov services; reduce & pay off debt; cut taxes.

or DEFICIT

Solutions: CUT spending

RAISE revenues (raise taxes)

Stimulate economy (more taxes coming in w/o raising them)

6) Utilitarianism – basic themes- ALL things should be judged upon their utility, or

USEFULNESS. - Government is obligated to promote the greatest good for the greatest amount of people- Individuals should be free to pursue personal gain without government interference EXCEPT when the common good is undermined

Utilitarian Philosophers:I. Jeremy Bentham (see above)II. John Stuart Mill

- Favored more humane conditions for the working class- Favored government action to promote economic fairness- Favored a fairer distribution of business profits- Favored equal rights for women, including voting rights- Favored more universal education opportunities

III. Robert Owen:- Utopian working towns (failed… why???)

7) Socialism – basic themes

– Ideological response to the “ill effects of industrialization”

– Factors of production (i.e. property, assets) to be collectively owned, for the well-being of all citizens

– Government’s role is to actively manage the economy, “rather than depend on free market capitalism”, by assuming public ownership of major industries (nationalization, instead of privatization).

– Profits to be spent on social programs to “end poverty and promote equality”

– Reasoning: Workers CREATE wealth through their labor, and are therefore collectively entitled to it (rather than owners keeping all of it); no labor = no production

– Can be democratically promoted via the right to vote, OR…

8) MARXISM – basic themes–“Radical Socialism”: a violent, global revolt is

the only way workers can take over the means of production (economic fairness cannot be obtained via voting or negotiation)

–History is an enduring conflict between the “haves” and “have nots”:

(the bourgeoisie vs. the proletariat)–Unless the working class rises up, the rich will

get richer, the poor will get poorer… widening wealth gaps

8) MARXISM – basic themes (continued):– Capitalist system is destined to destroy itself: Large producers would eliminate & absorb small producers (seeking monopolistic control) Too few producers would control too much wealth The larger working class would revolt, seize

control of all production, and achieve economic equality (“from each according to their ability, to

each according to their need”) Result: a “dictatorship of the proletariat”, in

which the working class collectively controls the government, giving way to…

9) COMMUNISM – basic themes:– The “end stage” of Marxist ideology– The “dictatorship of the proletariat” enters a stage of

“cooperative living and education”, after which…– The state (organized government) “withers away”,

giving way to…– A “classless society”

No nations, no borders, no governments… just cooperative worker collectives across the world producing for the mutual benefit of all…

Utopian?! (recall: Robert Owen)

10) Original Marxist publication:

The Communist Manifesto (1848)

… inspired 20th century revolts in:

Russia (1917)

(Lenin)

China (1949)

(Mao Tse-Tung)

Cuba (1959)

(Fidel Castro)

KARL MARX:

11) Marxist flaws:“Economic forces alone dominated society”… always true?

• Humans motivated by things OTHER than $: Religion (Marx: “opiate of the masses”) Nationalism (patriotism - loyalty to nation) Ethnic Identity (other ethnic groups are easier

targets of violence than owners… prevents worker cooperation!)

• Many workers focused on democratic political reform (i.e. union organizing, voting), rather than using violence

• Rich got richer, but not all poor got poorer, as the middle class slowly grows (although, income gaps did widen)

• Popular hope, optimism for SOCIAL MOBILITY, rather than risk violent revolt (belief that conditions will improve)

• Effects of EMIGRATION... some people left!

• Human greed, corruption (prevents cooperative action)

12) LABOR UNIONS – Goals (WHAT do they want?): - Better wages

- Shorter hours - Safety

- Job security - Generally: better working conditions!

13) Union methods (HOW do they try to get what they want?):- Collective Bargaining: negotiate with owner- Strike: withhold labor

… no guarantees of success… compromise is best outcome

14) WHY were labor unions formed (instead of seeking alternative methods of addressing worker grievances)?

- Utilize biggest strength: numbers - Take direct action (rather than wait for gov. action)

- Initially, had no alternative means of political expression (working class lacked voting rights)

15) Gov responses to unions during early industrialization:Unions lack legal recognition, are outlawed as a “threat to social order & stability” (i.e. British Combination Acts of 1799 & 1800), BUT…

This slowly changes during the 1800’s, and into the 1900’s:- Legal status in UK (Combination Acts repealed in 1824)- Right to strike (UK, 1875)- US lags behind: AFL (American Federation of Labor) wins some hard-fought gains in 1886 (but unions not legal until 1935: Wagner Act)

Unions will influence the slow pace of government reforms in response to the worst abuses of industrialism throughout the 1800’s & 1900’s. So, how strong are they today?

11%!

Implications of declining union membership for society:

Implications of declining union membership for society:

16) Slow social reform and progress:

Slavery Abolished! (UK: 1843; US: 1865)…for moral reasons… or economic? low wages cheaper than slave labor!

Child Labor Reduced & restricted (UK: 1833; US: 1938)

 Women’s rights Improves.. especially suffrage

(voting rights: UK: 1918 & 1928; US: 1920) 

Public education Expands & growsUK: 1880 (elementary)US: 1918 (elementary)

Can socialism and capitalism achieve a BALANCED coexistence?

Can we SOCIALIZE needs, and CAPITALIZE wants?

Utilitarianism?