The downside to capitalism The honeymoon doesn’t last

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Capitalism – cons Disadvantages Consumers can be manipulated by advertising Prices and incomes might not reflect what is best for society Business cycle experiences many ups and downs (= considerable unemployment) Monopolies and oligopolies can emerge that charge unreasonable prices Extreme income inequality results Industry cost-cutting can lead to environmental problems Insecurity is present on a large scale Difficult to break out of cycle of poverty

Examples of the problems created by capitalism Lack of concern for the workers, seen in industrialization nations from Great Britain’s factories, US slavery, sweatshops in Asia The Great Depression, the 1990s dotcom bubble, the 2008 global recession, Enron… Competition does not mean a level playing field for all companies (eg WalMart, Standard Oil) Global climate change brought about by the increasing consumerism promoted by capitalism

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The rejection of liberalism

Fear of Freedom Classical liberal ideas had transformed society, but not everyone benefitted equally Injustice or natural law (depends on your perspective) Rapid transformation of economic systems = focus on efficiency and profit over humanity Protest – Luddites Economic liberal attitudes changed much more quickly than political or humanitarian attitudes (rebound)

Conditions for the Working Class (During the early part of the Industrial Revolution) child labor (women and children paid less) 12-16 hour days limited or no breaks for meals corporal punishment fear of losing job living miles away from the factory poor living conditions short life span

"Sarah Golding was poorly and so she stopped her machine "Sarah Golding was poorly and so she stopped her machine. James Birch, the overlooker, knocked her to the floor. She got up as well as she could. He knocked her down again. Then she was carried to her house.......she was found dead in her bed. There was another girl called Mary......she knocked her food can to the floor. The master, Mr. Newton, kicked her and caused her to wear away till she died. There was another, Caroline Thompson, who was beaten till she went out of her mind. The overlookers used to cut off the hair of any girl caught talking to a lad. This head shaving was a dreadful punishment. We were more afraid of it than any other punishment for girls are proud of their hair." An interview in 1849 with an unknown woman who worked in a cotton factory as a child. 

Conservative reaction to the negative aspects of classical liberalism “reactionary” – origin: French revolution (opposition to revolution, conserve the monarchy) Edmund Burke: Society has a natural hierarchy which does not allow for equal political rights (less educated/experienced = less able to participate) Therefore, economic inequality can be justified Leaders should be humanitarian, but stability is the primary concern

Socialism Focus: equality through government intervention (to varying degrees) Cooperation vs competition Utopian Socialists - modifying classical liberalism Robert Owen – New Lanark Louis Blanc – socialist communities John Stuart Mill – liberal philosophy – including the need for labor legislation to protect workers against the abuses of the laissez-faire capitalist system. Some of the first government interventions during the Industrial Revolution included labor regulations The creation of unions (often very difficult at first) gave the workers a stronger voice

The need for unions Triangle Shirtwaist Fire London Match-worker’s Strike

Aspects of Socialism in Canada Public ownership of property ideals of equality and economic strength is promoted (usually in areas of national importance, areas of high risk or to protect employment) Joint ownership is often favored Government controls and subsidies Redistribution of wealth social programs and progressive taxation, direct and indirect taxation (GST, airline fuel taxes)

Sweden – democratic socialism Very similar to Canada’s economy, however it is more socialized More unionized – attitude of cooperation instead of competition “Cradle to Grave” – services span lifetime (prenatal care to university tuition to senior’s pensions) Indicative Planning – 5 year plans Differ from Communist five year plans as they are created by labor, management and government to indicate where the economy should go

Three Economic Questions – according to socialists What goods/services to produce: consumer demand and government determination of goods citizens need How to produce the goods/services: competition with some government help if necessary Who should the goods/services be distributed to: government ensures economic equality by providing basic goods and services for everyone, goods/services also produced for those who can afford them

Stop and reflect – journal entry What is your opinion of capitalism? In your answer, include a reflection on: What are the basic tenants of classical economic liberalism (capitalism)? What are the benefits of capitalism? What are potential problems created by capitalism? Is the rejection of capitalism and acceptance of socialism a better way?