Evolution of Liberalism (Ch. 4)

Question 1

What impact did the Industrial Revolution have on Britain’s adoption of Classical Liberalism?

Answer 1

The Industrial Revolution led to Britain embracing Classical Liberalism both economically and politically, benefiting the emerging entrepreneurial middle class but not uniformly favoring all societal groups or garnering universal support for its principles.

Question 2

What is Social Darwinism and its connection to capitalism?

Answer 2

Social Darwinism is a theory applying Darwin’s “survival of the fittest” concept to economics, serving as a justification for laissez-faire economics based on the scientific theories of the time, most notably in late 19th and early 20th century USA.

Question 3

What was The Gilded Age in America?

Answer 3

• Period of rapid economic growth and industrialization in America
• Massive European immigration
• Railroads opened up the US to commercial farming
• American economy pulls ahead of Europe
• Corruption becomes rampant: “Robber Barons” are accused of enriching themselves through exploitation of workers and corrupt politics
• Wealthiest 2% of Americans owned more than a third of the country’s wealth - America had the highest workplace accident rate in the world

Question 4

What ideologies emerged in opposition to Classical Liberalism due to the Industrial Revolution? Why?

Answer 4

• New ideologies opposing Classical Liberalism arose due to negative consequences like poor living conditions, child labor, and lack of worker protection.
• These included Luddites, Chartists, various forms of Socialism (Utopian, Democratic, Scientific/Communists), and Classic Conservatism
• This led to the evolution of Classical Liberalism to address workers’ rights, union creation, and child labor restrictions.

Question 5

What were the liberal responses to opposition against Classical Liberalism in political terms?

Answer 5

Political responses included the Reform Bills of 1832, 1867, and those in 1884 and 1885, which extended voting rights to middle and working-class men and introduced free and compulsory education. These changes reflected a shift towards greater worker representation and social welfare.

Question 6

How did the Factory Acts and similar laws abroad address workers’ rights? What did this indicate?

Answer 6

• The Factory Acts in Great Britain aimed to improve working conditions
• In Germany, laws were passed which provided insurance for work-related injuries
• The US passed the Sherman Anti-Trust Act to preprevent monopolies and the collusion between competing companies in an industry

These indicate a shift towards protecting workers and promoting fair competition.

Question 7

What is Welfare Capitalism and its features?

Answer 7

• Liberals, in particular laissez-faire capitalists, came to accept that they needed to recognize the rights of workers and the need for a social conscience.
• Welfare Capitalism is the term used to describe a classical liberal economic system combined with government legislation to give protection to workers.

Some examples are:
* Limited working hours
* Minimum wage
* Social programs or ‘safety nets’ for workers such as pensions and medical insurance
* The right to join labour unions

Question 8

How did Teddy Roosevelt address trust and business regulation?

Answer 8

Roosevelt tackled trusts by investigating Standard Oil for unfair practices and passed the Elkins Act (1903) and Hepburn Act (1906) to stop railways from offering preferential treatment. He also enacted the Meat Inspection Act and Pure Food and Drug Act in 1906 for food safety.

Question 9

What were the key platforms of Teddy Roosevelt’s National Progressive Party?

Answer 9

The National Progressive Party, formed by Teddy Roosevelt, advocated for universal suffrage, workers’ rights, a federal public health department, and environmental conservation.

Question 10

What progressive initiatives did William Taft pursue?

Answer 10

William Taft continued Roosevelt’s work by breaking up monopolies, using the Sherman Anti-Trust Act against Standard Oil, and passing the Mann-Elkins Act (1910) to regulate railroads and telecommunications. He also tackled the sugar and tobacco trusts.

Question 11

What were Woodrow Wilson’s contributions to the Progressive Era?

Answer 11

Woodrow Wilson established the Federal Reserve and Federal Trade Commission, reduced tariffs with the Underwood-Simmons Act, introduced a federal income tax, implemented child labor laws, an eight-hour workday for railroad workers, and supported government loans to farmers. He also supported women’s suffrage and nominated the first Jewish person to the U.S. Supreme Court but failed to protect African American rights adequately.

Question 12

What role did credit unions play in the financial sector after WWI?

Answer 12

Credit unions provide alternatives to big banks, offering a cooperative approach to banking (ex. the Desjardins Group, North America’s largest federation of credit unions). This shift towards cooperative banking forms part of the broader evolution of Classical Liberalism, especially in response to the limitations of Laissez Faire economics post-WWI.

Question 13

How did the principles of Classical Liberalism face challenges after WWI?

Answer 13

After WWI, the principles of Classical Liberalism, particularly Laissez Faire economics, encountered significant challenges that led to the creation of the welfare state, marking a significant shift in economic policy and practice.

Question 14

What characterized the Roaring 20s in terms of economic policy and societal trends?

Answer 14

• The Roaring 20s was a time of rebuilding after WWI
• Country focused on economic prosperity and eager to distance itself from political upheaval in other parts of the world
• Lots of consumer spending on cars, alcohol and stocks
• Even though there were some changes made, Welfare Capitalism - laissez-faire economics was still dominate

Question 15

What were the main causes of the Great Depression?

Answer 15

• The Great Depression was not caused by a single event, but it was a direct result of the free market economic system
• There was an over-reliance on credit (buying on margin)
• Increased spending by consumers and producers
• The loans the government needed to give Germany to help repay the Treaty of Versailles were an issue
• Overproduction of wheat and dropping prices hurt the agricultural industry

Question 16

Define:

Buying on Margin

Answer 16

Borrowing money to purchase stocks assuming the prices will continue to rise

Question 17

What happened in October, 1929?

Answer 17

• The amount of people buying on margin further inflated the stock prices so companies’ stock values were not their actual worth
• When the prices finally stopped rising in October 1929 people began selling to take profits before prices dropped
• This profit taking led to a further drop in prices making more people sell their stocks
• This panic selling caused prices to fall even more

Question 18

How did the public react to the economic collapse during the Great Depression?

Answer 18

• Many people in North America lost confidence in the capitalist system and began supporting political organizations with collectivist ideologies
• This led to greater social unrest, including protests, the On-to-Ottawa Trek, and the Regina Riots.

Question 19

Due to ____________ ________,markets were almost completely unregulated

Answer 19

Due to laissez-faire economics, markets were almost completely unregulated

Question 20

What was the fundamental belief of Keynes regarding the market system?

Answer 20

Keynes believed in the basics of the market system but saw the economy as inherently unstable. He proposed regulating the flow of money to address the business cycle’s issues through fiscal and monetary policies, emphasizing government regulation over control.

Question 21

What are the components of a Keynesian response to the business cycle?

Answer 21

During booms, the government should slow the economy by reducing buying power (increase taxes, interest rates, and decrease spending). During recessions, it should stimulate the economy by increasing buying power (decrease taxes, interest rates, and increase spending). This approach involves managing budget surpluses and deficits to regulate economic fluctuations.

Question 22

What are the key features of Keynesian Economics?

Answer 22

Keynesian Economics involves active government intervention in the economy to ensure a fair income distribution, business regulations, and an emphasis on demand creation for goods and services, known as DEMAND SIDE economics.

Question 23

How did Franklin Delano Roosevelt use Keynesian policies?

Answer 23

Roosevelt applied Keynesian policies to stimulate the economy following the 1929 stock market crash, introducing the Alphabet Agencies. Despite improvements, a 1930s drought caused setbacks, and it was ultimately the demand from supplying the war in Europe that ended the economic downturn.

Question 24

How did Canada recover from the Great Depression?

Answer 24

In Canada, Liberal PM Mackenzie King replaced Conservative PM Bennett, involving the government more in the economy through social programs, infrastructure projects, and the creation of Crown Corporations like CBC and the Bank of Canada, along with the introduction of UIC and Family Allowance.

Question 25

Why is the Great Depression considered a failure of classic liberal economics?

Answer 25

The Great Depression exemplifies the failure of classic liberal economics due to its inability to prevent economic instability and mass hardship without significant government intervention and regulation, contrasting with classical liberalism’s emphasis on minimal government involvement.

Question 26

How do Keynesian strategies differ from classical liberal ideals?

Answer 26

Keynesian strategies diverge from classical liberal ideals by advocating for significant government intervention in the economy, including fiscal and monetary policies to regulate economic cycles, rather than relying solely on market forces.

Question 27

Do Keynesian policies reflect individualist or collectivist ideology?

Answer 27

Keynesian policies reflect a more collectivist ideology, emphasizing the role of government in ensuring economic stability and a fairer distribution of income, contrary to the individualist focus of classical liberalism on minimal government intervention.