Transcript Liberal Responses to objections

LIBERAL RESPONSES TO
OBJECTIONS
NORTH AMERICAN
EVOLUTION OF CLASSICAL
LIBERALISM
SOC 30-1: Readings pg. 142-153; 196-212
SOC 30-2: Readings pg. 125-139
The Liberal Response

Critics of classical liberalism often demanded
 Workers’
Rights
 Social Conscience by Capitalists
 Labour Unions
 Social Programs / Safety Net

Eventually, entrepreneurs began to respond to these
demands, although not always out of the goodness
of their hearts
 Happy
workers = good workers
Welfare Capitalism


“A classical liberal economic system combined with a
government that uses legislation to give workers
protections such as limited working hours, and a
minimum wage, and a safety net with features like
pensions and medical insurance”
Note the increasing role of the government.
However, the government needs to keep its hands
out of the economy in general
The Factory Acts in Britain

Are brought in from 1810-1900
 Changes

take 100 years to happen!
Each act
 Decreased
working hours
 Increased age of child employment
 Limited hours of work
 Gave illness and maternity leave
 Gave insurance for some job accidents
(1880’s)
 Old age assistance
Theodore Roosevelt
President from

1901-1909


He wished to curb the
excesses of laissezfaire capitalism
In May 1902, he was
asked to call the army
out on 50,000 striking
mine workers.
He responded by
threatening to use the
army on the employers
instead!
Theodore Roosevelt

Roosevelt insisted that the factory owners present a
Square Deal to the employees
 The
mine owners were forced into arbitration and a
compromise settlement was reached

However, Roosevelt discovered that the two
American political parties (The Republicans and the
Democrats) were quite resistant to his changes
Theodore Roosevelt


So in 1912, Roosevelt created the National
Progressive Party
Based on a new kind of liberalism: Progressivism
 Called
for universal suffrage
 Further legislation to protect workers’ rights
 Minimum health and safety standards
 No child labour
 Minimum wage = living wage

But, the onset of WWI halted much of Roosevelt’s
momentum
Taft and the Sherman Anti-Trust Act



Roosevelt’s successor, William Howard Taft
pursued progressivism
In particular, he focused on breaking up
Trusts – that is, monopolies
The Sherman Anti-Trust Act prevented the
creation of monopolies between companies
In 1911 – the Standard Oil company was
forced to break up into 34 smaller companies
 We see a greater amount of government
regulation in the economy

Taft and the Sherman Anti-Trust Act

But, this legislation was occasionally to break up
Labour Movements and Labour Unions (not the act’s
original intent)
 Labour
Movements are organized groups of workers
advocating for improved rights

The Clayton Act in 1914 solved this problem
 Boycotts,
strikes, picketing, and collective bargaining
remained legal so long as they were peaceful
The Great Depression
The Collapse of Laissez-Faire Economics
The Roaring Twenties

Following the devastation of WWI there was a
period of rampant consumerism in the USA
 Consumerism
is the bulk production of cheap products
combined with high levels of Consumer spending
 Example: Cars (1918: 300,00
1929: 1.9 million)


The US distanced itself from Europe, allowing their
economy to rapidly grow
The quote on page 201 in the 30-1 textbook
illustrates how Europeans viewed American society
The Roaring Twenties

There were also major changing social values
 Women’s
Suffrage
 In
1918 Canadian women get the right to vote
 In 1920 American women get the right to vote


A more urban population
Although there was greater equality, there was also
greater income disparity
 Increasingly,
the rich became richer and the poor
poorer

Anti-immigration sentiment and racial discrimination
The Roaring Twenties

A return to laissez-faire economics was bolstered by
 The
First Red Scare (1917-1920)
 The
public fear of communism
 The colour red being associated with the Bolshevik Red Army
of the Russian Revolution
 Political
Conservatism
 Isolationism
– a retreat from involvement in other countries’
affairs, especially European countries
 Nativism – the promotion of policies that favour the existing
dominant culture in a country and reduce immigration
 A reduction of government involvement in the lives of citizens
The Great Depression


Throughout the 1920’s, stock prices continually rose,
so people borrowed money to purchase stocks on
the assumption that they would continue to rise
But in 1929, stock prices peaked and investors
began to sell their stocks
 However,
this triggered a landslide and soon stocks
were plummeting as investors continually sold off their
stocks

This event is known as the Stock Market Crash in
1929
The Great Depression



Investors who had borrowed money to purchase stocks
found themselves with huge debts and their investments
worthless
Banks in turn began to call in loans and many people
who had over-extended their credit went bankrupt
Large groups of people also began to pull their money
out of the banks, worried about the security of their
savings

This led to Bank Runs – when large numbers of depositors
try to withdraw their savings, causing the bank to go
bankrupt
The Great Depression

How could this have happened?
“As mass production has to be accompanied by mass
consumption, mass consumption, in turn, implies a distribution of
wealth – not of existing wealth, but of wealth as it is currently
produced – to provide men with buying power equal to the
amount of goods and services offered by the nation’s economic
machinery. Instead of achieving that kind of distribution, a
giant suction pump had by 1929/30 drawn into a few hands an
increasing portion of currently produced wealth…But by taking
purchasing power out of the hands of mass consumers, the savers
denied to themselves the kind of effective demand for their
products that would justify a reinvestment of their capital
accumulations in new plants.” – Marriner S. Eccles
Social Effects of the Great Depression

People supported political organizations with
collectivist ideologies
 The
Co-operative Commonwealth Federation (CCF) in
Canada

Social Unrest
 Severe
drought severely harmed farmers (Dust Bowl)
 Poverty and unemployment led to strikes and unrest
 See the On-to-Ottawa Trek on page 208 in the 30-1
textbook

Questioning the ideals of classical liberalism
John Maynard Keynes
Keynesian Economics and the solution to the
Depression
We jump now to our philosophers notes
Roosevelt’s New Deal
The New Deal

Following the principles of Keynesian Economics, FD
Roosevelt instituted a massive public works program in
the USA to put people to work
“Our greatest primary task is to put people to work. This is
no unsolvable problem if we face it wisely and
courageously. It can be accomplished in part by direct
recruiting by the Government itself, treating the task as we
would treat the emergence of a war, but at the same time,
through this employment, accomplishing greatly needed
projects to stimulate and reorganize the use of our national
resources.” – FD Roosevelt
The New Deal: First Wave

Public Works projects
 Build
roads
 Create state and national parks
 Fight forest fires
 Plant trees

The banking system was stabilized
 Insurance
for individual bank deposits
The New Deal: Second Wave

Goal is to redistribute power
 Unions
encouraged
 Large scale public works projects
 Regulation of publicly traded stocks
 Creation of a social safety net
 Social
Security system for the elderly which continues today
 Agricultural
 Reduces
Adjustment Act (1933)
farm output, thereby raising prices
The New Deal

Revolutionary for two reasons:
 Extends
government involvement and intervention
farther than it had ever been before
 Belief
that the government can soften the “boom and bust”
cycle of a market economy
 Extension
of liberal principles beyond industrialists. The
average citizen is now included in liberal principles

This is the shift from classical liberalism to
modern liberalism
Criticisms
Does this
sound
familiar?
The Great Depression in Canada
Originally Prime Minister Bennet did little do aid
the economy, but seeing FDR’s New Deal working
in the USA he attempted to make changes.
However, his motions were struck down by the
courts and he lost the next election
Canada’s Mixed Economy


Under the government of
William Lyon Mackenzie King,
the Canadian government
became more involved in the
economy
Unlike the USA, the Canadian
central bank took over control
of the country’s money supply,
using interest rates to curb
inflation
Canada’s Mixed Economy


King used social programs and crown
corporations to create a welfare state
C.D. Howe, who worked under King in all areas of
government, implemented major changes in many
areas of the Canadian economy
 Establishing
Trans-Canada Airlines in 1937 (later
became Air Canada)
 Create the Canadian Broadcasting Corporation (CBC)
 Reformed the CNR which was heavily in debt

His changes became crucial at the outset of WWII
In Summary

The transition from classical to modern liberalism is
based on the idea of the welfare state.
Assignment

Create a chart with three columns.
 First
Column: list the examples of classical liberal
principles and practices covered in this section of the
textbook on the first slide
 Second Column: list the examples of modern liberal
principles and practices
 Third Column: identify the reasons for any specific shift
in principles