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Understanding Reactions to Industrial Abuses

Explore the impacts of laissez-faire policies on society, capitalism's themes, and contrasting viewpoints of philosophers, with a focus on the positives and negatives of capitalism and socialism.

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Understanding Reactions to Industrial Abuses

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  1. 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. 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. 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. 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 disease • Do 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. 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?

  6. 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)

  7. 6) Utilitarianism – basic themes • - ALL things should be judged upon their utility, or USEFULNESS. • - Government is obligated to promote the greatest goodfor 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???)

  8. 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…

  9. 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

  10. 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…

  11. 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)

  12. 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)

  13. KARL MARX:

  14. 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)

  15. 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

  16. 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)

  17. 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%!

  18. Implications of declining union membership for society:

  19. Implications of declining union membership for society:

  20. 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 & grows • UK: 1880 (elementary) • US: 1918 (elementary)

  21. Can socialism and capitalism achieve a BALANCED coexistence? Can weSOCIALIZE needs, and CAPITALIZE wants? Utilitarianism?

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