The dominance of laissez-faire Flashcards
State the ideas within laissez-faire.
Free competition, individual enterprise, and the minimum of state interference in the economy.
What were the ideas of laissez-faire often interlinked with?`
Social Darwinism - ‘survival of the fittest’ to the sink-or-swim values of commercial competition and free markets.
What happened from 1865 - 1890?
Laissez-faire capitalism drove forwards the massive expansion of the economy and ride of the great ‘barons’ of American business in steel, oil, sugar, tobacco, public utilities, and above all, the railroads.
Who was William Graham Sumner?
The most prominent American theorist of Social Darwinism and extreme laissez-faire ideas. He regarded millionaires as ‘the naturally selected agents of society’.
Who supported Sumner’s views?
His positive views of laissez-faire were supported by many leading churchmen, who argued that ‘Godliness is in league with riches’. Such views were reinforced by the often lavish philanthropy of super-rich individuals like JD Rockefeller.
How was laissez-faire positive for some small and medium sized firms?
In some areas of the economy, such as textiles and the garment industry, these firms competed and prospered in competitive markets.
But what was the dominant tendency of laissez-faire?
The consolidation of competing enterprises into large-scale units which rapidly became monopolies. ‘Free’ competition was often an illusion at odds with reality.
How did these big businesses succeed?
They ruthlessly limited any chance of genuine competition by merging with actual or potential rivals, driving small firms out of business.
Give a classic example of this merging of business.
Cornelius Vanderbilt’s consolidation of the New York Central and Hudson River Railroad into an integrated, monopolistic network.
What did JD Rockefeller openly admit?
That his Standard Oil Trust ‘wanted only the big ones, only those who have already proved they can do a big business. As for the others, unfortunately they will have to die’.
What did Rockefeller’s words reflect?
The brutal realities of the free market, but the markets that he and other industrial giants created were far from ‘free’.
Why were these markets far from ‘free’?
- They were rigged in favour of large-scale enterprises.
- They were not free of ‘state interference’. Big businesses depended heavily on government support for business.
How did state and federal governments intervene with big business?
They set tariffs at the levels business wanted, passed laws to approve railroad and banking schemes, and turned a blind eye to corruption and malpractice.
When was Andrew Carnegie’s book released, what was it called and what did it state?
1886 - The Triumph of Democracy - He marvelled at the success of America and the great achievements made possible by the ideas of laissez-faire.
