Why did Classical Liberalism Begin? LETS FIND OUT. By Haley Humeny and Riane Borgfjord

 New ideas about human potential and human worth  A huge amount of investment capital and cheap labor and a large number of innovators who were encouraged by the possibility of reward. The industrial revolution came about due to the increase in production of technologies being made to decrease manual labor needed farm. This increase in the production of technologies allowed for employers who owned farms to make more profit by allowing them to employ less staff to work their land. Since there was less work for the people on farms they were forced to move to cities to find work. (ENCLOSURE MOVEMENT AND URBANIZATION OCCURRED) All of this led to the idea of Laissez-fair capitalism which meant that there would be no government involvement in the free-market. All of this put a big gap between factory owners and their workers, since the government had no relevance in the rules laid out by businesses, because it allowed factory owners to pay their workers to be paid whatever the owner decided he wanted to pay them. This no government involvement idea also allowed factory owners to employ people of any age, this includes people who may be 5 years-old and more.  All in all, The industrial Revolution led to ideas of : 1. Competition 2. self-interest, 3. private property 4. Economic freedom which have all become principles that were embraced by Classical liberalism.

 In Europe around the time of the Industrial Revolution, there existed a mercantilist economic system. The physiocrats who invented this system of Mercantilism, believed that this self-interest in economic affairs would benefit everyone.  Adam Smith, a Scottish political economist who was influenced by the physiocrats, disagreed with the current mercantilist system. (The Mercantilist system increased the wealth of the state but the majority of people within the state did not receive this same wealth, nor did they enjoy the labor. ) Adam Smith introduced the idea that individual self- interest in a free market would lead to a stronger economy and would benefit most people in society-(invisible hand). Free market and limited government involvement in the market place became the basis for laissez-faire capitalism, the system associated with classical liberalism.

 During the 19 th - century there was a dramatic change in class structure. Previously wealth had been derived from landownership, and the aristocratic class that controlled the land dominated the social structure.  As industrialization progressed, a new class of factory owners and other professionals arose; also known as the middleclass. These professional groups gained substantial wealth and challenged the aristocratic classes for power and position. The working class experienced many difficult circumstances and conditions as a direct cause of the upper classes perception of them.  These difficult circumstances led to people like Robert Owen. Robert Owen was a factory owner during the time of the industrial revolution who thought that the environment that people worked in shaped the individual and their ability to do work.  This shaped the idea of The Rule of Law, and more of the individual rights and freedoms related to Classical liberalism.

As a direct result of The Industrial Revolution the idea of a Laissez-Faire Capitalism brought about a free market and limited government involvement within that free market. This all became a major part of Classical Liberalism.

 Adam Smith, David Ricardo, and Thomas Malthus were all capitalist thinkers that helped shape the idea of Capitalism.  Capitalism is a system in which money would be invested in business ventures with a goal of making a profit.  Both Ricardo and Malthus believed that there would always be a permanent underclass of poor people, and those underclass people meant that there would be many workers willing to work for cheap. They also noted that there was an abundance of resources, this meant that there would be cheap resources as well as cheap labor. This led to the idea of Capitalism because it meant that people could make products cheaply and in great amounts and sell them to make huge profits.  This led more into the points of competition, self-interest, and economic freedom that are underlined as main points in Classical Liberalism

Marxism (Scientific Socialism, Communism)

 Karl Marx- Prussian-German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist.  Friedrich Engels- social scientist, author, political theorist, philosopher, and father of Marxist theory, alongside Karl Marx  Based upon the political and economical theories of Karl Marx and Friedrich Engels, Marxism was created.

 Marxism is defined by Encarta as “an economic system based on the private ownership of the means of production and distribution of goods, characterized by a free competitive market and motivation by profit.”  A socialist slogan would be, “from each according to his ability, to each according to his work.”  A communist slogan would be, “From each according to his ability, to each according to his needs.”  Marxism/Communism was what Karl Marx had hoped would over throw Capitalism. He wanted public property over private property and wanted to find what was best for all or most rather than just for the individual.

 Marx’s ideas spread throughout Europe in , at the peak of the industrial revolution.

 The idea of Marxism was born in Europe but first took effect in Russia.

 Karl Marx believed there were two types of people: the Bourgeoisie and the Proletariat.  Bourgeoisie- very wealthy capitalists and held down the Proletariats.  Proletariats- were the have-nots(poor people)  The wealthy were abusing the control they had over the means of production including the wages and working conditions, and Karl Marx believed this was wrong. He wanted a classless society, therefore the Proletariats were encouraged to rise up against the Bourgeoisie to hasten the establishment of Socialism.

 Classical liberalism- was more for capitalism, private property, and individual rights and freedoms. Wanted what was best for “self” and believed in no government involvement in market and limited govnment otherwise.  Marxism- communism(Karl hoped that communism would overthrow capitalism),and public property. Wanted what was best for the society as a whole and believed in government control over all of societies affairs.