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LAISSEZ-FAIRE Major component of middle-class political thought during the 19 th century It was the idea that government should stay out of business affairs,

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Presentation on theme: "LAISSEZ-FAIRE Major component of middle-class political thought during the 19 th century It was the idea that government should stay out of business affairs,"— Presentation transcript:

1 LAISSEZ-FAIRE Major component of middle-class political thought during the 19 th century It was the idea that government should stay out of business affairs, that it should allow the marketplace free play to determine the direction and intensity of economic development It was developed first in England and then spread, along with industrial capitalism, to the rest of Europe and the United States

2 QUESTIONS FOR TODAY How did the idea of laissez-faire develop in England? Why did it take such a strong hold there? Was it ever really practiced there? If laissez-faire was never really implemented in the country where the idea was invented, then it must be relegated to the status of an utopian dream that looks good in theory but is impossible to apply successfully in reality

3 UNIQUENESS Because England was a pioneer in industrialization, its “take off” phase possessed several unique characteristics that later industrializing countries did not, and perhaps could not, possess

4 CAPITAL ACCUMULATION In order to catch up with already industrialized England, other countries had to rapidly accumulate and mobilize large amounts of capital –The best way to facilitate this process was to have the state play an active role –This meant laissez-faire had no foundation in the economic reality of these countries England had not been under any pressure to “catch up” during its industrial revolution –State was therefore not required to play a direct and active role in economic development Capital accumulation was a gradual process –Undertaken initially by wealthy landlords and merchants –Capital requirements were relatively small British industrialization depended on individual enterprise, not active state intervention

5 POSSESSIVE INDIVIDUALISM Thomas Hobbes, John Locke and James Harrington had developed theory of “possessive individualism” –Strongly defended the sanctity of private property and individual liberty –Argued that it was best for society to allow men the freedom to dispose of their private property as they say fit –Idea was already formulated before the Industrial Revolution

6 SUMMARY THUS FAR Two phenomena combined to make British unique in their commitment to laissez-faire –Metaphysical –Structural Laissez-faire therefore did have a certain degree of reality in 19 th century England –Forged from a combination of the objective conditions surrounding the world’s first industrial revolution and from the subjective influence of the old liberal tradition, many people viewed any form of state control of its citizens as a constraint on economic progress

7 THE CORN LAWS Corn Laws passed in 1815 to protect agricultural interests that were hurt by the drop in prices for agricultural products that followed the end of the Napoleonic Wars –Set up price supports and high import tariffs to keep prices for agricultural products artificially high

8 ANTI-CORN LAW LEAGUE Middle class reformers criticized Corn Laws as an impediment to the free activity of the marketplace Anti-Corn Law League formed in 1840s –Argued that Corn Laws had caused depression because high tariff on imported grain had made agricultural countries less able and willing to buy British manufactured products –Classic laissez-faire argument State interference in the economy had disrupted the free flow of commerce and caused unnecessary hardship Anti-Corn Law League Meeting

9 THE OTHER SIDE OF LAISSEZ- FAIRE Laissez-faire had another dimension which seemed to contradict the unrestricted play of free trade, individualism, and private property –The indirect role played by the British government in the economy For laissez-faire did not simply mean staying out of economic affairs –It also meant that the government had a responsibility to create the proper environment for free economic exchange

10 INDIRECT INTERVENTION IN THE 18 TH CENTURY Establishing England’s commercial power throughout the world –Through war against rivals, conquest, and naval protection Creation of stable institutional framework through which individual entrepreneurs could prosper –Uniform body of laws, guarantees of individual rights, destruction of barriers to social mobility Government orders for industrial products prepared England for economic growth in the 19 th century French and Indian War

11 SOCIAL POLICY Need to create the correct environment for economic activity collided with the negative effects generated by that activity Industrialization had broken down old forms of social control and new forms had yet to mature –Hence turbulent nature of early 19 th century Some forms of preindustrial behavior persisted –Popular sports, regional dialects, ignorance, various superstitions Seen as dangerous because they left workers open to radical agitation and reduced productivity Could not adopt a “hands off” policy to these social problems –Threat to “civilized” society and economic growth was too real –State had to intervene

12 ENVIRONMENTAL REFORM Saw social, political, and cultural environment of the working class as the source of most social problems –Primary goal of state intervention was the improvement of this environment Included municipal improvements, model working class housing, sanitation reforms, ect. –Examples were Factory Acts of 1831 and Ten Hour Act of 1833 Model Housing

13 MORAL REFORM Considered values and behavior of workers to be the big problem –If worker morals could be “uplifted,” then their productivity would increase and threat of disruption would diminish Sunday school Movement

14 BEGINNING OF THE WELFARE STATE? On the surface, environmental and moral reform seemed to contradict the principle of laissez-faire The main purpose of this sort of state interference was to create and protect a climate favorable to free enterprise –They were not welfare policies based on the principle that the state had a duty to guarantee a certain level of existence for all its citizens –Intended to make the world safe for laissez-faire

15 LIMITS OF LAISSEZ-FAIRE Reality of laissez-faire was powerful in early 19 th century England –Influenced the structure of industry –Conditioned men to mistrust state intervention in their individual and business affairs –It determined the type, extent, and purpose of state intervention But the fact that the principle of non-intervention had to be suspended on occasion to protect free enterprise illustrates the limit of the reality of laissez-faire –Workers were not always willing to let themselves be bounced around by the free play of the marketplace In response, they organized, embraced socialist ideologies, and sometimes resorted to violence –This forced state to intervene to protect individualism and private property

16 IRELAND Was a conquered country in the 18 th century –Mass of population were Roman Catholic peasants who rented land from a minority of Protestant English landlords Many of whom were absentee owners who lived in England They lacked “improving” zeal of English landlords and squeezed their Irish tenants as hard as possible for their income

17 HORRIBLE CONDITIONS Condition of Irish peasants was horrible –Lived in wretched huts made of mud –Did not even have shoes –Many reports describe hopeless poverty But Irish population skyrocketed from 3 million in 1725 to 4 million in 1780 to 8 million in 1840 –Despite the fact that nearly 2 million had left between 1780 to 1840

18 REASON 1: THE POTATO Principle food of Irish peasants by late 18 th century –Rise of the potato was caused by population growth which forced peasants to find ways to wring as many calories as possible from a given piece of land Potatoes allowed for larger families than previously –Single acre planted in potatoes could feed a family of six for a year It would take 4 acres of grain and pasture to do the same thing –Potatoes could also be grown in areas where grain could not Boggy wastelands

19 REASON 2: EARLY MARRIAGE Since they only needed an acre or two to support a family, Irish youths married early –Had more children than they would have had if they had married later –Condemned to a life of extreme poverty Lived on potatoes for their entire life

20 REASON 3: EXPLOITATION Landlords, not peasants, owned land –Peasants could only lease land for short periods No guarantee lease would be renewed and therefore no incentive for peasants to make improvements Poverty was therefore inescapable in Ireland and at least having a family made it a little more bearable –Children, although a liability when they were young, were a person’s only chance of survival in their “golden years”

21 THE GREAT FAMINE Potato crop was susceptible to disease –Potatoes could not be stored for more than a year so there was nothing to fall back on when a crop failed –Problems with crop began in the 1820s Great Famine –1845, 1846, 1848, and 1851—crop totally fails –Widespread starvation, mass epidemics, and cannibalism

22 DEVASTATION Losses were staggering –Population should have grown from 8 to 9 million between 1845 and 1851 It instead dropped from 8 to 6 ½ million during this period –Net loss of 2 ½ million 1 million left for U.S. 1 ½ million died –British efforts at famine relief were too little and too late Government continued to collect taxes and landlords continued to demand their full rents –Peasants who could not pay were evicted without mercy

23 A NEW EQUILIBRIUM Ireland was only country in Europe to experience population decline during the 19 th century –Only had 4 million people in 1911 –Became source of continual out-migration Nobody moved there but lots of people left –Became country of late marriage and celibacy As landlords discouraged potato farming and converted much of the land to pasture

24 SUMMARY Ireland is excellent example of what happened when a country experiences rapid population growth without industrialization –Result is terrible poverty, starvation, epidemics Total demographic catastrophe –Probably would have happened in England too if its population explosion had not been accompanied by industrialization The alternative to industrialization was catastrophe

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