Reforming the industrial world Chapter 9: Section 4

Setting the Stage The IR widened the gap between rich & poor in industrialized nations Business leaders believed govs should stay out of business & economics. Reformers felt govs needed to play a more active role to improve conditions for the poor. Workers also demanded more rights & formed unions to protect their interests

Laissez faire economics This refers to the econ policy of letting owners of industry & business set working conditions w/o interference. The policy favors a “free market unregulated by gov” Laissez fair econs arose with the philosophers of the Enlightenment. They criticized mercantilism or the idea that a nation grew wealthy by placing heavy tariffs on f/good.

Laissez faire economics cont. They argued that gov regulation only interfered with the production of wealth. They argued that if gov allowed free trade – the flow of commerce in the world market w/o gov regulation- the econ would prosper

Adam Smith Laissez faire economist Wrote Wealth of Nations in 1776 He believed that “econ liberty guaranteed econ progress” and as a result gov should not interfere. His theory rested on what he called the 3 natural laws of economics The law of self-interest – people work for their own good The law of competition – competition forces people to make better products The law of supply & demand –enough goods will be produced at the lowest possible price to meet demand

What is capitalism? An economic system in which the means of production are privately owned and money is invested in business ventures to make a profit. Must see chart on page 303 which shows the nexus between Adam Smith and Capitalism.

Thomas Malthus He wrote Essay on the Principle of Population Predicted pop would outpace food production Without checks on pop (war, epidemics…) poverty would increase Urged pop control and non interference by gov His predictions seemed to be coming true in the 1840s but never materialized Food supply increased Living conditions improved Fewer children

David Ricardo Agreed that poor were having too many children & when wages were high families had more children More children increased the supply of workers which led to lower wages & higher employment Held out no hope for escape from poverty “Dismal science” Both Malthus & Ricardo opposed gov assistance Best cure for poverty was “unrestricted laws of the free market” Individuals had to work hard & limit family size

Opposed to Gov Intervention Smith, Malthus & Ricardo all supported laissez faire capitalism and opposed gov efforts to help workers. They believed that creating minimum wages & better working conditions would upset the free market system, lower profits and undermine the production of wealth in society.

Support of Gov Intervention In contrast to laissez faire philosophy which advised govs to leave business alone, other theorists believed that gov should intervene They believed that gov must take action to improve people’s lives.

Utilitarians Jeremy Bentham – 1700s John Stuart Mill 1800s Role of gov was to promote the greatest good for the greatest number of people Urged gov involvement Ideas should be based on their “utility” John Stuart Mill 1800s Questioned unregulated capitalism – wrong for workers to live such deprives lives Believed in more equal division of profits Pushed for legal and prison reforms

Utopians – Robert Owen British factory owner & reformer New Lanark Built houses for workers Prohibited child labor under age of 10 Provided schooling New Harmony – supposed to be a utopia

Socialism In socialism the means of production are owned by the public and operate for the welfare of all. Socialists argue that gov should plan the economy rather than depend on free market capitalism to do the job They argue that gov control of factories, mines, rrs, & other key industries would end poverty and promote equality. Charles Fourier, Saint Simon & Louis Blanc were all socialists

Marxism: Radical Socialism Communist Manifesto 1848 History is conflict between “haves” and “have nots” History goes through cycles determined by economics “Haves” own all the means of production The oppressed proletariat will eventually violently overthrow the bourgeoisie See excerpt p. 302

Communism After violent revolution a “dictatorship of the proletariat” would be formed After abolition of economic differences a “classless society” would form. This is communism The state (a tool of the bourgeoisie) would then “wither away”. No government would be necessary

Revisionists Marx believed that econ forces alone dominated society. Time has shown that religion, nationalism, ethnic loyalties and a desire for democ reforms may be as strong as influences on history as econ forces. Non Marxists socialists believed that by winning the right to vote socialist goals would be achieved gradually by working within the system. Workers did win many reforms such as: Better working conditions Shorter hours Higher pay Workman’s compensation

Labor Unions To press for reforms workers joined unions Unions engaged in collective bargaining They bargained for better pay and working conditions and if refused they could strike Skilled workers led the way in forming unions because their special skills gave them extra bargaining power. Management would have difficulty replacing skilled workers

Union Evolution in Britain For years the British gov denied workers the right to unionize The Combination Acts of 1799 and 1800 outlawed unions and strikes Workers joined anyways Parliament eventually repealed the Combination Acts in 1824 By 1875 British unions had won the right to strike Built up membership of over a million

The American Federation of Labor In the US skilled workers had belonged to unions since the early 1800s. In 1886 several unions joined together to form the organization that would become the AFL. A series of strikes won the AFL higher wages & shorter hours

Reform Laws in Britain Eventually reformers and unions forced political leaders to look into the abuses caused by industrialization. New laws reformed some of the worst abuses: Factory Act of 1833 The Mines Act 1842 The Ten Hours Act 1847

Progressive Reforms in the US The National Child Labor Committee was organized in 1904 to end child labor Union members supported ban on child labor because they argued that it lowered wages for all workers Supreme Ct struck down fed’l law that banned child labor bc it interfered with states rights to regulate labor but eventually states themselves outlawed child labor

British Abolition Wm. Wilberforce was a religious member of Parliament who fought for abolition Slave trade ended in 1807 and slavery ended in 1833 in British empire. Antislavery activists had mixed motives. Moral reasons Cheap vs. slave labor became more economical

Fight for Women’s Rights Women paid less than men Formed women’s unions in the trades in which they dominated (e.g. garment industry) Became safety inspectors in factories where other women worked Jane Addams ran settlement houses in poor areas Worked for abolition Women’s movement in US began 1848 Seneca Falls Internat’l Council for Women in 1888 had delegates from 27 countries for 1889 meeting.

Reforms cont Public edu and prison reform ranked high Horace Mann favored free edu He believed edu was essential to prepare good citizenry and that republic depended on educated masses Prison reform involved emphasizing “rehabilitation”