120final

Updated: Monday April 29, 2002:
You must learn about all of the people listed below,
especially the people with an asterix * by their name.

Until further notice, for the final exam,
based on class lectures and Fusfeld,
be able to write a few paragraphs on the
lives of the people listed below with
emphasis on explaining their key ideas
(Briefly: When and where they lived, their
upbringing and the general historical background.
In depth: show a thorough understanding of their
ideas and tie it to the historical background/significance).

You must learn about all of the people listed below,
especially the people with an asterix * by their name.

Also, check the web page every few days or so
for further updates on what to focus on for the final.

IN FUSFELD, FOCUS ON THESE LIVES

þ THOMAS HOBBES

þ JOHN LOCKE *

þ JEAN-BAPTIST COLBERT *

þ FRANCOIS QUESNAY *

þ ADAM SMITH *

þ DAVID RICARDO *

þ THOMAS ROBERT MALTHUS *

þ JEREMY BENTHAM *

þ ROBERT OWEN

þ JOHN STUART MILL *

þ KARL MARX *

þ VLADIMIR I. LENIN

þ JOSEPH STALIN *

þ HERBERT SPENCER *

þ JUSTICE STEPHEN J. FIELD *

8
IN FUSFELD, FOCUS ON THESE LIVES

þ ANDREW CARNEGIE

þ THORSTEIN VEBLEN *

þ POPE LEO XIII

þ THE FABIAN SOCIALISTS

þ MARY WOLLSTONECRAFT

þ JANE ADDAMS

þ AYN RAND

þ JOHN MAYNARD KEYNES *

þ JOHN KENNETH GALBRAITH *

The following are outlines that you may find useful:

FUSFELD CH 2
FROM A LOCAL TO A NATIONAL ECONOMY

þ NATIONAL POWER HAD TO BE BUILT FROM THE LOCALISM
OF THE MIDDLE AGES.

þ FOR THE ECONOMY, IT MEANT:

     þ UNIFIED MONETARY SYSTEM & COINAGE;
     þ NATIONAL SYSTEM OF WEIGHTS & MEASURES;
     þ ELIMINATION OF TOLLS ON ROADS & RIVERS;
     þ NATIONAL SYSTEM OF TAXES & TARIFFS.

þ THESE INSTITUTIONS SLOWLY FORGED BY NATIONAL
RULERS AGAINST OPPOSITION OF FEUDAL LORDS, WHO
TRIED TO KEEP CONTROL OVER THE ECONOMY OF THEIR
REGIONS.

þ IN THEIR BATTLE FOR CENTRALIZATION, MONARCHS
FOUND THESE ALLIES:

     þ RISING TOWNS AND CITIES -- THEIR MERCHANTS
       WOULD BENEFIT FROM WIDENING TRADE MADE
       POSSIBLE BY ABOLISHING LOCAL TRADE BARRIERS.

þ THESE MERCHANTS HELPED TO FINANCE THE KING'S
ARMY, NEEDED TO SUBORDINATE THE NOBILITY.

þ ALSO BOTH MONARCH & MERCHANTS BENEFITTED FROM
EXPANDED FOREIGN TRADE.

þ STATE GAINED FROM:

     þ TARIFF REVENUES;
     þ SALE OF TRADE MONOPOLIES;
     þ DEVELOPMENT OF STRATEGIC MILITARY INDUSTRIES
       --> SHIPBUILDING AND SHIP SUPPLIES, SAILORS,
       CAPTAINS & FROM GENERAL ECONOMIC GROWTH.

2
FROM A LOCAL TO A NATIONAL ECONOMY [C]

þ SMALL LANDOWNERS ALSO ALLIED WITH MONARCH --
STATE WAS A COUNTERWGT TO POWER OF THE BARONS.

þ INTERESTED IN COMMERCIAL AGRICULTURE -- NOT
BARONIAL WARS.

þ WANTED MONARCH TO MAINTAIN INTERNAL ORDER,
THEREBY PROMOTING INTERNAL COMMERCE.

þ IN SUM, THERE WAS A POLITICAL & ECONOMIC ALLIANCE
BETWEEN THESE GROUPS:

     þ CROWN
     þ MERCHANTS
     þ RURAL GENTRY
     þ PROFESSIONAL PEOPLE [LAWYERS, BUREAUCRATS]

þ THE POLICY THAT EMERGED WAS MERCANTILISM:

þ DEVELOPED MILITARY & NAVAL STRENGTH;

þ INCREASED NATIONAL WEALTH THRU DOMESTIC
PRODUCTION & FOREIGN TRADE;

þ MFG'G ENCOURAGED THRU SUBSIDIES, SPECIAL
PRIVELEDGES, PATENTS, MONOPOLIES;

þ FOREIGN TRADE STIMULATED THRU COLONIES &
HOLDING WAGES DOWN;

þ FOREIGN TRADE REGULATED THRU TARIFFS,
NAVIGATION LAWS, TRADE RESTRICTIONS;

þ AGRICULTURE FOSTERED IN ENGLAND BY TARIFFS
ON IMPORTS;

þ MUNITIONS INDUSTRY STIMULATED -- GUNS,
GUNPOWDER, SHIPS, SHIP SUPPLIES.

3
MONETARY POLICY OF THE MERCANTILISTS

þ IN ENGLAND, MUCH EMPHASIS ON EXPANSION OF MONEY
SUPPLY AS STIMULUS TO ECONOMIC GROWTH.

þ BARRIER TO ECONOMIC GROWTH = LACK OF HARD CASH
FOR CONSUMERS AND OF CREDIT FOR BUSINESS. RULERS
ALSO NEEDED TO BORROW, WOULD BENEFIT FROM CASH
AND LOW INTEREST RATES.

þ MODERN BANKING IN ITS INFANCY.

þ AVAILABILITY OF MONEY & CREDIT --> GOLD & SILVER
COIN.

þ MERCANTILISTS FAVORED EASY MONEY --> PLENTY OF
AVAILABLE CASH TO STIMULATE TRADE & KEEP INTEREST
RATES DOWN.

þ BUT HAD TO KEEP INFLATIONARY PRESSURES IN CHECK.
WHY?

þ RISING PRICES --> WORKERS REBEL.

þ RISING PRICES --> REDUCES FOREIGN DEMAND FOR
DOMESTIC MFGS --> EXPORTS DECREASE -->

     IMPORTS INCREASE --> EXPORT OF GOLD & SILVER
      --> MONEY SUPPLY AT HOME REDUCED -->
      DOMESTIC ECONOMY SLOWS.

þ ACCORDINGLY, MERCANTILISTS ENCOURAGED FAVORABLE
BAL OF TRADE --> EXPORTS >> IMPORTS -->
STIMULATED ECON GROWTH AT HOME.

HIGHLY REGULATED FRENCH INDUSTRY VS. UNREGULATED
ENGLISH --> ADVANTAGE TO GB

þ IN FRANCE, STRESS ON MAKING LUXURY PRODUCTS FOR
EXPORT -- SILKS, LINENS, TAPESTRIES, FURNITURE,
WINE.

þ FR. STRESSED CLOSE REGULATION OF QUALITY OF
GOODS.

þ UNDER JEAN-BAPTIST COLBERT [1619-83], NATIONAL
GUILDS SET UP TO REGULATE MAJOR INDUSTRIES.

     þ ONLY CRAFTSMEN WHO WERE GUILD MEMBERS COULD
       OPERATE, SUBJECT TO REGS OF NATIONAL
       ORGANIZATION.

þ ROYAL POWER ENFORCES GUILDS, ACTIVE TILL FR
REV.

þ IN ENGLAND, REGULATION OF DOMESTIC INDUSTRY WEAK
BECAUSE GOVN SHORT OF MONEY, NEVER STRONG ENOUGH
TO ENFORCE REGS.

þ MEDIEVAL GUILDS DISINTEGRATED, ESP. WHEN CLOTH
PRODUCTION DEVELOPED IN RURAL AREAS.

þ ENGLISH INDUSTRY FREE OF RESTRICTIONS.

þ ABSENCE OF GUILDS & GUILD REGS GAVE ENGLISH
INDUSTRY BIG HEAD START IN INDUST REV. OVER FR. &
OTHER CONTINENTAL COUNTRIES THAT HAD COPIED FR.

5
PHILOSOPHY OF THE MERCANTILISTS

þ WEALTH PRODUCED BY HUMAN EFFORT.

þ BUT WEALTH NOT REALIZED UNTIL THERE WAS TRADE &
COMMERCE --> UNTIL EXCHANGE OF GOODS ENABLED
PRODUCERS TO MAKE A PROFIT.

þ THUS, MERCANTILISTS STRESSED GROWTH OF COMMERCE
AS KEY TO INCREASED NATIONAL WEALTH.

þ THEY ALSO STRESSED EXPANSION OF MONEY SUPPLY AS
KEY TO INCREASED TRADE.

þ WHAT IS SOURCE OF WEALTH? MERCANTILIST -->
COMMERCE!

þ MOST POWERFUL NATIONS OF 16TH & 17TH C. -->
THOSE WITH OVERSEAS TRADE.

þ TRADE STIMULATED BOTH AGRI & MFGG, BRINGING
PROSPERITY TO ENTIRE NATION.

OPPOSITION TO MERCANTILISM

þ MERCANTILIST POLICIES FINE FOR GREAT MERCHANTS &
FINANCIERS OPERATING IN INTERNATIONAL ECONOMY.

þ BUT RISING AGRI & INDUSTRIAL INTERESTS FIND
MERCANTILISM NOT ALWAYS IN THEIR BEST INTEREST.

     þ SMALL BUSINESSES HEMMED IN BY MONOPOLISTIC
       PRIVELEDGES GRANTED TO FEW BIG TRADING
       COMPANIES.

     þ SMALL BUSINESSES & SMALL FARMERS RESENTED
       TAXES FOR MAINTAINING A NATIONAL POWER ALIEN
       TO THEIR INDIVIDUAL INTERESTS.

6
OPPOSITION TO MERCANTILISM

þ EXAMPLE: ENGLISH TAX COLONISTS TO PREVENT THEM
FROM SETTLING WEST OF ALLEGHENIES IN 1763. BR
GOVN WAS FAVORING INTERESTS OF HUDSON BAY CO.

þ AMERICAN COLONIES WERE STRIKING EX OF OPPOSITION
TO MERCANTILIST POLICIES.

þ IN EUROPE, THEORETICAL DEBATE: ECONOMIC GROWTH
BEST ACHIEVED THRU GOVN DIRECTION & REGULATION?
OR BY A FREE ECONOMY UNHAMPERED BY DIRECTING
FORCE OF MERCANTILIST GOVERNMENT?

þ FRANCE HAMPERED BY ALL SORTS OF REGS:

þ DETAILED GOV REGS ON PRODUCTION -- SPECIFIED
THREADS/INCH IN CLOTH MFG/

þ NUMEROUS TOLLS & TAXES

þ STRICT REG OF IMPORTS/EXPORTS

þ NOBILITY EXEMPT FROM TAXATION

þ MAJOR TAXES ON PEASANTS & INDEP FARMERS.

þ FR. GOVN INSPECTOR, VINCENT DE GOURNAY [1712-
1759], DISENCHANTED WITH GOVN REGS, ORIGINATED THE
PHRASE LAISSEZ-FAIRE, LAISSEZ PASSER ="FREE
ENTERPRISE, FREE TRADE."

7
THE PHYSIOCRATS

þ FRANCOIS QUESNAY --> ALL WEALTH FROM AGRICULTURE
--> FARMERS PAY RENT, WAGES, PURCHASES -->
SUPPORTS ALL SOCIAL CLASSES.

þ REG OF INDUSTRY & TRADE IMPEDED ECONOMIC
DEVELOPMENT BY HINDERING FLOW OF COMMODITIES &
INCOME.

þ ALL TAXES SHOULD BE PAID BY LANDOWNERS, NOT
FARMERS. WHY? LANDOWNERS NOT PRODUCTIVE. THEIR
LUXURIOUS WAYS DISTORTED FLOW OF INCOME.

þ PHYSIOCRATS --> INFLUENCED JEFFERSON & LINCOLN IN
THE U.S.

ECONOMIC LIBERALS

þ ADAM SMITH SYSTEMATIZED ECONOMIC LIBERALISM.

þ EARLIEST LIBERALS ATTACKED RESTRICTIONS ON
INTERNATIONAL TRADE & ADVOCATED AN END TO
TARIFFS, MONOPOLIES, REGS.

þ THEIR ARGUMENT: INDIVIDUAL SELFISH MOTIVES -->
PRODUCED BENEFITS TO SOCIETY.

þ FIRST ECONOMIC LIBERAL IN ENGLAND = DUDLEY NORTH
[1641-91]. WROTE DISCOURSE ON TRADE [1691].

     þ STRONG CASE FOR FREE TRADE.
     þ SAID FAVORABLE BAL OF TRADE NOT NEC.
       DESIRABLE.

þ TRADE GOOD BECAUSE:

          þ ADV TO BOTH PARTIES.
          þ PROMOTES DIV OF LABOR, SPECIALIZATION,
            INCREASED WEALTH.
          þ REG RESTRICTED TRADE, REDUCED REAL
               WEALTH/

8
ECONOMIC LIBERALS [C]

DAVID HUME [1711-1776]

þ ECON PROCESS WOULD CAUSE FAVORABLE BAL OF TRADE
TO DISAPPEAR.

þ MANY EXPORTS --> INFLOW OF GOLD & SILVER -->
MONEY SUPPLY UP --> PRICES RISE --> DECLINE IN
EXPORTS.

þ IMPOSSIBLE TO MAINTAIN FAV BAL OF TRADE.

þ LOGIC OF NORTH & HUME DESTROYED ARGUMENT FOR REG
OF FOREIGN TRADE.

BERNARD DE MANDEVILLE [1670-1733]

þ DUTCH DOCTOR, IMMIGRATED TO ENGLAND.

þ FABLE OF THE BEES 1704

þ ADVANCES IN CIVILIZATION --> DUE TO VICES, NOT
VIRTUES.

þ PROGRESS CAME FROM SELFISH INDIVIDUALS --> DESIRE
FOR EASE, COMFORT, LUXURY, PLEASURE.

þ PROGRESS NOT FROM DESIRE TO WORK HARD & SAVE OR
FROM BENEVOLENT CONCERN FOR OTHERS.

þ HOW TO ACHIEVE PROSPERITY? GIVE FREE PLAY TO
SELFISH MOTIVES OF INDIVIDUAL, LIMITED ONLY BY
JUSTICE.

þ VICE OF SELFISHNESS --> SPURS PEOPLE TO MAXIMIZE
THEIR GAINS, THEREBY ADD TO NATION'S WEALTH.

9
ECONOMIC LIBERALS [C]

þ IN SUM, WEALTH STEMS NOT FROM VIRTUE BUT FROM
VICE.

þ SELFISHNESS CREATES MKT --> DESIRE FOR EASE,
COMFORT, LUXURY.

þ SELFISHNESS SUPPLIES MKT --> SPURS PEOPLE TO MAX
GAINS BY SUPPLYING MKT.

þ THESE SELFISH MOTIVES LAUDED BY MANDEVILLE BECAME
THE BASIS OF ECONOMIC LIBERALISM.

     þ RATIONAL SELF INTEREST
     þ COMPETITIVE MKT FORCES
     þ LEAD TO SOCIAL BENEFITS

RICHARD CONTILLON IN 1720S WROTE AN ESSAY ON THE
NATURE OF COMMERCE IN GENERAL.

þ THINKING ABOUT ECONOMIC ORDER IN AN
INDIVIDUALISTIC SOCIETY.

þ RATIONAL SELF-INTEREST ON PART OF TRADERS
OPERATING IN COMPETITIVE MKTS LEAD TO COMPATIBLE
PRICES & QUANTITIES TRADED.

þ ECONOMIC LIBERALS --> SOURCE OF WEALTH NOT
COMMERCE NOR AGRICULTURE, BUT HUMAN LABOR.

     þ ALL NATURAL PRODUCTS MUST BE TRANSFORMED BY
       HUMAN EFFORT BEFORE THEY CAN SATISFY HUMAN
       WANTS.

þ WITHOUT HUMAN EFFORT, NATURAL PRODUCTS
WORTHLESS.

þ THIS IS CALLED THE LABOR THEORY OF VALUE.

þ GREATER INCENTIVE TO WORK --> THE GREATER THE
PRODUCTION OF WEALTH --> FASTER MOVEMENT TO
ABUNDANT SOCIETY.

10
ECONOMIC LIBERALS [C]

JOHN LOCKE [1632-1704], KEY ENGLISH PHILOSOPHER
OF CLASSICAL LIBERALISM

þ OVERVIEW OF 17TH CENTURY ENGLAND

þ THOMAS HOBBES [1588-1650] LEVIATHAN

þ PHILOSOPHER OF ABSOLUTE MONARCHY

þ LOCKE'S SECOND TREATISE ON GOVERNMENT [1690]

þ STATE OF NATURE

þ PURPOSE OF GOVERNMENT

þ PROTECT PERSONS
þ PROTECT PROPERTY

þ LABOR THEORY OF VALUE

     þ BY ADDING LABOR TO NATURAL RESOURCES, PEOPLE
       ADDED PART OF THEMSELVES TO FINAL PRODUCT,
       MAKING THE PRODUCT THEIRS TO USE OR CONSUME.

þ LABOR --> PRODUCTION OF WEALTH

þ PRIVATE PROPERTY --> CORNERSTONE
OF LIBERAL IDEOLOGY.

þ ABSOLUTE VS. LIMITED GOVERNMENT.

þ ULTIMATE SOVEREIGNTY RESTS WITH THE PEOPLE

þ PHILOSOPHER OF THE RISING BOURGEOIS CLASS.

þ LATER ECONOMIC LIBERALS SAID FIRST REQUISITE FOR
NATIONAL ECONOMIC GROWTH WAS PROTECTION OF PRIVATE
PROPERTY:

     þ FOR UNLESS RIGHT TO PROPERTY SUSTAINED,
       INCENTIVE TO WORK REDUCED, PRODUCTION OF
       WEALTH DECREASED.

TURKISH VS. ENGLISH VIEWS ON PRIVATE PROPERTY

þ IN ANCIENT TIMES, TURKISH DOMAIN WEALTHIEST IN
WORLD --> FLOURISHING CITIES, PROSPEROUS
AGRICULTURE, WORLD-FAMOUS MFGRS, LARGE EXPORTS.

þ BUT DESPOTIC GOVN SEIZED WEALTH WITHOUT
JUSTIFICATION, IMPOSED EXCESSIVE TAXES.

þ BROUGHT AN END TO PROSPERITY --> TURKS UNWILLING
TO WORK OR TO ACCUMULATE CAPITAL BECAUSE IT WOULD
BE SEIZED.

þ ENGLAND WAS GROWING IN WEALTH BECAUSE INDIVIDUAL
INITIATIVE PROTECTED BY LAW THAT PRESERVED
INDIVIDUAL WEALTH. NO PROPERTY COULD BE TAKEN FOR
PUBLIC USE WITHOUT JUST COMPENSATION.

þ JUSTICE EVEN HANDED, NOT ARBITRARY.

12
CHARACTERISTICS OF ECONOMIC LIBERALS

þ SOME ECONOMIC LIBERALS WOULD GRANT BROADER POWERS
TO THE NATIONAL GOVERNMENT.

þ OTHERS STRESSED INDIVIDUAL INCENTIVES &
COMPETITION.

þ OTHERS STRESSED SUPPLY & DEMAND IN FREE MARKETS.

þ ALL AGREED ON:

þ NEED TO FREE INDIVIDUAL INITIATIVE FROM
MERCANTILIST RESTRICTIONS;

þ ON IMPORTANCE OF WORK IN PRODUCING WEALTH;

þ ON NEED TO PROTECT PROPERTY RIGHTS AS
CORNERSTONE OF ECONOMIC POLICY.

FUSFELD, CH 4

THOMAS ROBERT MALTHUS [1766-1834]

þ MAJOR PROBLEM IN EARLY 19TH C. BRITAIN =
CONCERN FOR THE POOR.

þ IN PREVIOUS CENTURIES, EACH PARISH CARED FOR ITS
OWN. TAX ON LANDOWNERS --> RELIEF FUNDS -->
PHILOSOPHY OF NOBLESSE OBLIGE.

þ BUT THIS ANCIENT SYSTEM OF POOR RELIEF BROKE
DOWN:

     þ WARTIME INCREASES IN FOOD PRICES;
     þ ENCLOSURES --> MANY MORE PEOPLE DISPLACED
          FROM THEIR SMALL PLOTS
     þ INDUSTRIAL REVOLUTION
     þ GROWING CITIES & POPULATION
     þ GROWING NUMBERS OF POOR.

þ CONSERVATIVE REACTION TO FRENCH REVOLUTION

     þ NEW MEASURES TO ALLEVIATE POVERTY
          IMPOSSIBLE.
     þ REFORM = ANATHEMA

þ YET GREAT INCREASE IN POOR --> BIG FINANCIAL
BURDEN ON LANDOWNERS.

þ PROBLEM OF POOR DUE TO THIS:

þ FOOD IS NECESSARY FOR MAN;
þ PASSION OF SEXES WILL REMAIN CONSTANT.

2
THOMAS ROBERT MALTHUS [1766-1834] [C]

þ "THE POWER OF POPULATION IS INFINITELY GREATER
THAN THE POWER IN THE EARTH TO PRODUCE
SUBSISTENCE."

þ STEPS TO ALLEVIATE POVERTY ARE FUTILE. WHY?

þ BECAUSE POP WILL INCREASE UNLESS CHECKED BY
MISERY OR VICE.

     þ FOR IF POOR GET MORE FOOD, THEY WILL HAVE
       MORE CHILDREN UNTIL FOOD/PERSON FALLS BACK
       TO SUBSISTENCE LEVEL --> THEN POP INCREASE
       TO STOP.

     þ WAGES ALWAYS TEND TO SUBSISTENCE LEVEL. WAGE
       INCREASE --> WORKER HAS MORE CHILDREN -->
       WORKER FALLS BACK TO SUBSISTENCE.

þ TM'S CONCLUSION: PAYING RELIEF TO POOR WON'T
ELIMINATE POVERTY, BUT WOULD MERE INCREASE INCOME
OF POOR, ENCOURAGE THEM TO HAVE MORE CHILDREN,
POOR FALL BACK TO SUBSISTENCE AGAIN.

3
THOMAS ROBERT MALTHUS [1766-1834] [C]

þ TM: OLD SYSTEM OF POOR RELIEF RESPONSIBLE FOR
POVERTY. SOLN: ELIMINATE RELIEF PROGRAM.

þ RELIEF TO POOR ALSO BAD FOR THESE REASONS:

     þ RELIEF --> POOR -->SHIFT OF WEALTH FROM
       THOSE WHO USED WEALTH PRODUCTIVELY TO IDLE
       POVERTY POP. --> SLOW ECON GROWTH.

     þ INSTEAD, THIS WEALTH SHOULD BE INVESTED IN
       PRODUCTIVE ACTIVITY --> PROVIDE JOBS &
       PRODUCT.

þ TM: POOR RESPONSIBLE FOR THEIR OWN POVERTY. TO
ELIMINATE POVERTY, HAVE FEWER CHILDREN. ONLY
SOLN: MORAL REFORM --> HAVE FEWER CHILDREN.

þ TM: LABOR UNIONS NOT SOLN: HIGHER WAGES --> MORE
CHILDREN --> BID UP FOOD PRICES --> WEALTH SHIFT
FROM BUSINESSMEN TO UNPRODUCTIVE LANDOWNERS -->
REDUCED CAPITAL FOR BUSINESS EXPANSION --> NATION
WORSE OFF IN LONG RUN.

þ TM APPROACH TERRIBLE FOR POOR, BUT GREAT FOR
CONSERVATIVES BECAUSE IT GIVES THEM GOOD
ARGUMENTS FOR DOING NOTHING.

þ TM'S PRINCIPLE OF POPULATION --> MAJOR BUILDING
BLOCK OF CLASSICAL ECONOMICS.

þ REMAINED BASIS OF WAGE THEORIES FOR CENTURY.

þ TM: PRODUCTION MUST INCREASE FASTER THAN POP. IF
THERE IS TO BE ANY MAJOR IMPROVEMENTS IN LIVING
STANDARDS.

þ EUROPE & N.A ACHIEVED THIS.

þ BUT IN MANY OTHER COUNTRIES, POP. GROWTH
EXCEEDS EXPANSION OF PRODUCTION.

4
DAVID RICARDO [1772-1823], BRITISH
CLASSICAL ECONOMIST

þ APOSTLE OF CAPITAL ACCUMULATION:

þ GROWTH OF CAPITAL = GREAT SOURCE OF ECONOMIC
EXPANSION.

þ ALL ECONOMIC POLICY --> SHOULD BE DIRECTED
TO EXPANDING IT.

þ ECONOMIC FREEDOM --> WAY TO MAXIMIZE PROFITS -->
PROFITS SOURCE OF INVESTMENT CAPITAL.

þ COMPETITIVE ECONOMY --> LEADS TO PROFIT-
MAXIMIZING INVESTMENTS.

þ ADVOCATED GOVN. POLICIES THAT BENEFITTED BUSINESS
--> MAX ECONOMIC GROWTH.

þ A MILLIONAIRE RADICAL, HE ADVOCATED:

     þ REFORMS IN BANKING & CURRENCY
     þ POOR RELIEF
     þ TARIFFS
     þ FREEDOM OF PRESS & SPEECH

þ AUTHOR OF THE INFLUENTIAL BOOK PRINCIPLES OF
POLITICAL ECONOMY AND TAXATION.

þ 1815 --> GREAT DEBATE IN ENGLAND --> TO PRESERVE
ENGLAND'S AGRICULTURAL WAY OF LIFE OR NOT?

þ THE CORN LAWS --> THE IMPORT OF WHEAT INTO
ENGLAND

þ WHEAT & OTHER GRAINS = "CORN"
þ VS. "INDIAN CORN" OR "MAIZE"

5
DAVID RICARDO [1772-1823]

þ ENGLISH LAWS --> TO PROMOTE DOMESTIC AGRI WITHOUT
CAUSING MAJOR INCREASES IN PRICE OF FOOD.

     þ WHEN WHEAT PRICES FELL IN ENGLAND, TARIFFS
       RAISED ON WHEAT IMPORTS TO KEEP OUT FOREIGN
       GRAIN THAT WAS DEPRESSING DOMESTIC PRICES,
       HURTING DOMESTIC FARMERS.

     þ WHEN DOMESTIC PRICE OF WHEAT ROSE ABOVE
       CERTAIN LEVEL, IMPORT DUTIES REDUCED,
       KEEPING LID ON DOMESTIC PRICES.

þ AFTER WARS WITH FRENCH, WHEAT PRICES FELL &
FARMERS CLAMORED FOR HIGHER DUTIES, FEARING RUIN.

þ SOUND AGRI NEEDED FOR BR DEFENSE & NAT.
VIGOR.

þ REVIVAL OF PHYSIOCRACY.

þ BUT BUSINESS INTERESTS OPPOSED TO TARIFF
INCREASES --> RAISE FOOD PRICES --> FORCE WAGES
UPWARD --> REDUCED PROFITS--> DECREASED EXPORTS -
-> RUIN FOR ENGLISH INDUSTRY.

þ BUSINESS INTERESTS SAID ENGLAND'S FUTURE LAY WITH
INDUSTRIAL EXPANSION, NOT AGRI.

þ BUS. INTERESTS DEMANDED REPEAL OF CORN LAWS.

6
DAVID RICARDO [1772-1823] [C]

þ RICARDO ON BUSINESS SIDE OF ARGUMENT:

þ LAND OWNERS, NOT FARMERS, CHIEF BENEFICIARY OF
HIGHER WHEAT PRICES.

þ HIGHER PRICES --> CULTIVATION IN OTHERWISE
UNPROFITABLE AREAS --> RENTS WOULD BE RAISED IN
OLDER AREAS --> MORE NAT. INCOME TO LANDOWNERS -->
THIS PARASITIC GP WOULD USE INCOME FOR LUXURY
EXPENDITURES --> NOT FOR PRODUCTIVE INVESTMENT.

þ ENLARGE CULTIVATION WOULD DRAW CAPITAL & LABOR
AWAY FROM INDUSTRY, HINDERING INDUSTRY.

þ HIGHER FOOD PRICES ---> HIGHER WAGES --> HIGHER
MFGG COSTS --> REDUCED ENGLISH EXPORTS --> REDUCED
OUTPUT FOR ENGLISH MFGG.

þ ALSO, REDUCED PROFITS FOR MFGG --> SLOWER CAPITAL
ACCUMULATION & ECON EXPANSION.

þ IN SUM, RICARDO OPPOSED CORN LAWS, BUT NOT THEIR
COMPLETE REPEAL.

7
RICARDO'S THEORY OF ECONOMIC GROWTH

þ RICARDO DEVELOPED THEORETICAL MODEL OF THE
ECONOMY --> DEVELOPED A GENERAL THEORY OF
ECONOMIC GROWTH.

þ IN EARLY STAGES OF NATION'S GROWTH, POP. SMALL &
ONLY SMALL PORTION OF LAND CULTIVATED.

þ RENT PAID TO LANDOWNERS ONLY SMALL PART OF NAT.
INCOME, PROFITS TO FARMERS LARGE PART.

þ PROFITS PLOWED BACK INTO INDUST DEVELOPMT -->
GREATER DEMAND FOR LABOR --> POP GROWTH --> WHILE
WAGES REMAIN AT SUBSIST. LEVEL.

þ POP GROWTH --> EXPANSION OF CULTIVATED AREAS -->
RAISE FOOD PRICES TO COVER HIGHER COSTS OF
GROWING ON LESS FERTILE AREAS.

þ HIGHER FOOD PRICES --> LANDOWNERS RAISE RENTS IN
OLDER CULTIVATED AREAS.

þ ALSO, HIGHER FOOD PRICES --> EMPLOYERS PAY HIGHER
MONEY WAGES --> COST OF MFGG GOODS UP --> REDUCE
MFGG PROFITS --> REDUCED WEALTH FOR EXPANSION &
REDUCED INCENTIVE TO INVEST --> CAPITAL
ACCUMULATION SLOWING --> ECON GROWTH SLOWING -->
HALTING OF GROWTH AFTER MANY DECADES.

8
RICARDO'S THEORY OF ECONOMIC GROWTH

þ AT THIS MATURE STAGE, POP LARGE, CULTIVATION
EXTENDED, INDUSTRY DEVELOPED, PRODUCTION HIGH -->
BUT CAPITAL ACCUMULATION ADEQUATE ONLY FOR
REPLACEMENT OF CAPITAL, NOT FURTHER EXPANSION.

þ RICARDO BELIEVED THAT ECONOMY, IF LEFT ALONE,
WOULD ACHIEVE MAX. GROWTH POSSIBLE:

þ BUSINESS SHOULD BE FREED OF ALL RESTRICTIONS
THAT MIGHT REDUCE ABILITY TO MAX PROFITS.

     þ RIGHT OR WRONG, RICARDO'S THEORY WAS ON THE
       SIDE OF THE COMING RULERS OF THE SOCIAL
       ORDER, BUSINESS INTERESTS.

9
RICARDO AND THE INTERNATIONAL ECONOMY

þ RICARDO SHOWED THAT INTERNATIONAL SPECIALIZATION
WAS ADVANTAGEOUS TO ALL NATIONS.

þ DR ALSO SHOWED THAT TARIFFS TO PROTECT DOMESTIC
PRODUCERS INJURED THE NATION IMPOSING THEM.

þ FREE TRADE WAS ROAD TO ECONOMIC WELL BEING -->
DOMESTICALLY & INTERNATIONALLY.

þ DR: THE LAW OF COMPARATIVE ADVANTAGE:

     þ IF IT COSTS LESS TO PRODUCE COST IN ENGLAND
       THAN IT DOES TO PRODUCE WHEAT -- COMPARED
       WITH COSTS IN OTHER COUNTRIES -- PAYS FOR
       ENGLISH TO SHIFT TO CLOTH MFGG, EXPORT
       CLOTH, & IMPORT WHEAT FROM OTHER COUNTRIES.

     þ ENGLISH WORKER --> 1 DAY TO MAKE YD OF CLOTH
                      --> 2 DAYS TO GROW BUSHEL OF
                           WHEAT.

þ THUS, A BUSHEL OF WHEAT COSTS 2X YD OF
CLOTH.

     þ FRENCH WORKER --> 1 DAY TO MAKE YD OF CLOTH
                     --> 1 DAY TO MAKE BUSHEL OF
                         WHEAT.

     þ CONCLUSION: ENGLAND SHOULD MAKE CLOTH (1
       DAYS LABOR), EXPORT TO FR, TRADE IT 1 FOR 1
       FOR WHEAT, IMPORT THE WHEAT BACK TO ENGLAND.

     þ IN THIS WAY, ENGLISH WILL GET FOR ONE DAY'S
       LABOR, THE WHEAT IT WOULD OTHERWISE TAKE 2
       DAYS TO PRODUCE.

10
RICARDO AND THE INTERNATIONAL ECONOMY
[C]

þ FR WOULD ALSO GAIN: THEY PRODUCE WHEAT, , SHIP TO
ENGLAND, , TRADE ONE BUSHEL FOR 2 YDS OF CLOTH,
AND SHIP CLOTH BACK TO FR.

þ BOTH SIDES BENEFIT FROM THIS SPECIALIZATION &
FREE EXCHANGE.

þ ENGLAND WOULD PRODUCE & EXPORT MUCH CLOTH, BUT
OUTPUT OF WHEAT WOULD BE SMALL. THE OPPOSITE IN
FR.

RICARDO SAW WHOLE WORLD MOVING TOWARD
GREATER WEALTH

þ DR SAID THAT IN FULLY DEVELOPED ECONOMY, THAT THE
RETURN TO CAPITAL WAS LOW --> ONLY REPLACEMENT OF
WORN-OUT CAPITAL EQUIPMENT.

þ AS RETURN TO CAPITAL FELL IN ENGLAND, ENGLISH
INVESTORS WOULD SEEK HIGHER RETURNS BY INVESTING
IN LESS WELL DEVELOPED COUNTRIES ABROAD.

þ CAPITAL EXPORTS FROM MATURE ECONOMIES WOULD FLOW
QUICKLY TO NEWLY DEVELOPING COUNTRIES, WHO WOULD
BE BROUGHT TO HIGHER LEVELS OF PRODUCTION &
WEALTH.

þ THUS, CLASSICAL ECONOMISTS SUCH AS DR SAW THE
WHOLE WORLD GRADUALLY MOVING TOWARDS OPULENCE.

11
JEREMY BENTHAM AND INTERVENTIONIST LIBERALISM

þ JEREMY BENTHAM [1748-1832]

þ PUBLISHED FRAGMENTS ON GOVERNMENT IN 1776.

þ BELIEVED GREATER DEMOCRACY WOULD PROMOTE "THE
GREATEST GOOD FOR THE GREATEST NUMBER."

þ UTILITARIAN PHILOSOPHY.

þ EVERY ACT MORALLY VALUABLE TO EXTENT THAT IT
RESULTED IN HAPPINESS.

þ HUMAN ACTIONS BASED ON POLES OF PLEASURE & PAIN.
NATURE PLACED MANKIND ON UNDER TWO MASTERS:
PLEASURE & PAIN.

þ SOCIAL SYSTEM SHOULD MAX SOCIAL BENEFITS &
DISTRIBUTE THEM AS WIDELY AS POSSIBLE:

þ SMALL INCREASE IN HAPPINESS FOR MANY BETTER
THAN A LARGE INCREASE FOR A FEW.

þ COMPARISON OF MAGNITUDE OF BENEFITS & COSTS MUST
BE MADE TO DETERMINE BEST SOLN.

þ CAN HAPPINESS OR UTILITY BE QUANTIFIED?

     þ YES, SAID BENTHAM.
     þ OTHERS SAID NO, ONLY COMPARISONS CAN BE
       MADE:

þ I PREFER MARY TO JANE
þ I PREFER APPLES TO ORANGES

þ ABSOLUTE HAPPINESS FROM EATING APPLES
IMPOSSIBLE TO MEASURE.

JEREMY BENTHAM AND INTERVENTIONIST LIBERALISM
[C]

þ JB SAID PEOPLE IN FACT MAKE DECISIONS ON BASIS OF
UTILITY DERIVED FROM ALTERNATIVE COURSES OF
ACTION.

þ THIS HEDONISTIC CALCULUS WAS PRINCIPLE UNDERLYING
ALL HUMAN ACTION AND MEANS BY WHICH WELFARE OF
SOCIETY MAXIMIZED.

þ YET, PEOPLE ACT ONLY FOR THEIR OWN GREATEST
PLEASURE. WON'T THAT WORK AGAINST THE GREATEST
HAPPINESS OF ALL?

þ WITHOUT GOVN, YES. BUT GOVERNMENT CAN CHANGE THAT
CALCULUS. MORAL & LEGISLATIVE SANCTIONS CAUSE
INDIVIDUAL ACTIONS TO COINCIDE WITH THE PUBLIC
INTEREST:

þ SANCTIONS REWARD INDIVIDUAL ACTIONS THAT
BENEFIT ALL;

þ SANCTIONS PUNISH ACTIONS THAT DIMINISH
PUBLIC WELFARE.

þ JB VIEWED HUMANS AS PLEASURE MACHINES CONTINUALLY
CALCULATING THE PROS & CONS OF ALTERNATIVE
COURSES OF ACTION.

þ ASSUMPTION THAT INDIV DECISIONS WOULD LEAD TO MAX
PUBLIC WELFARE INHERENT IN ADAM SMITH & OTHER
CLASSICAL ECONOMISTS, BUT BENTHAM MADE EXPLICIT.

13
JEREMY BENTHAM AND INTERVENTIONIST LIBERALISM

þ CLASSICAL LIBERALISM OF 18TH CENTURY STRESSED
INDIVIDUAL FREEDOM AS ULTIMATE GOAL OF ALL
POLICY:

þ IT WAS REACTING AGAINST POL CENTRALIZATION &
ECON REG.

þ ANY RESTRICTION ON INDIV FREEDOM HINDERED
ACHIEVEMENT OF MAX WELFARE.

þ SMITH -->MIN ROLE OF GOVN TO POLICE,
JUSTICE, ARMS.

þ BENTHAM DISAGREED. SAID SMITH APPROACH BASED ON
ERRONEOUS IDEA THAT ONLY INDIVIDUAL ACTION COULD
CREATE WELFARE.

þ JB: ACTIONS OF ONE PERSON IN HIS OWN INTEREST
MIGHT REDUCE WELFARE OF OTHERS.

þ INSTITUTIONAL ARRANGEMENTS WITHIN WHICH PEOPLE
ACT COULD DETERMINE OUTCOME OF ACTIONS.

þ JB BELIEVED IN GOVN INTERVENTION TO IMPROVE
PEOPLE'S LIVES.

þ CLASSICAL LIBERALISM THAT HAD STRESSED
INDIVIDUALISM GAVE WAY TO AN INTERVENTIONIST
LIBERALISM (THE PHILOSOPHICAL RADICALS) THAT
STRESSED SOCIAL WELFARE. BENTHAM WAS ITS APOSTLE.

þ OTHER INTERVENTIONIST LIBERALS:

JAMES MILL DAVID RICARDO JOHN STUART MILL

new

JOHN STUART MILL [1806-1873]

þ 19TH-C BRITISH PHILOSOPER & ECONOMIST.

þ LEARNED GREEK AT 3, LATIN AT 8.

þ BY 14, HAD READ MOST GK & LATIN CLASSICS IN
ORIGINAL LANGUAGES.

þ BY 14, HAD ALSO READ WIDELY IN HISTORY, LOGIC,
MATH, SCIENCE.

þ BY 13, HAD STARTED TO READ THE ECONOMISTS, ESP.:

þ RICARDO þ MALTHUS þ BENTHAM

þ VERY IMPRESSED BY MALTHUSIAN POPULATION THEORY.

þ AT 17, ARRESTED FOR DISTRIBUTING PAMPHLETS
ADVOCATING BIRTH CONTROL & CONTRACEPTION, TO
IMPROVE WORKING CLASS.

þ AFTER SUFFERING FROM PERSONAL DEPRESSION, HE
DECIDED TO DEVOTE HIS LIFE TO POLITICAL & ECONOMIC
REFORM.

þ BECAME BEST KNOWN 19TH-C BR PHILOSOPHER.

JOHN STUART MILL [1806-1873] [C]

þ BOOKS BY J.S. MILL:

     þ A SYSTEM OF LOGIC [2 VOLS, 1843]
     þ ON LIBERTY [1859]
     þ CONSIDERATIONS ON REPRESENTATIVE GOVERNMENT
          [1861]
     þ UTILITARIANISM [1862]
     þ AUTOBIOGRAPHY [1873]
     þ PRINCIPLES OF POLITICAL ECONOMY [1848]

þ MILLS' MOST IMPORTANT ECONOMIC IDEA:

þ DISTINCTION BETWEEN PRODUCTION &
DISTRIBUTION.

þ PRINCIPLES REGULATING PRODUCTION OF WEALTH
ARE GROUNDED IN LAWS OF NATURE -- ARE BEYOND HUMAN
CONTROL.

þ BUT THE LAWS OF DISTRIBUTION ARE PARTLY
CREATED BY HUMAN INSTITUTIONS, THUS SUBJECT TO
CHANGE.

þ IRISH FARMERS POOR BECAUSE OF WAY LAND
DISTRIBUTED -- NOT BECAUSE OF A LAW OF NATURE.

þ IT IS NOT JUST THAT SMALL MINORITY OF MANKIND
SHOULD BE BORN TO ENJOYMENT OF ALL ADVANTAGES,
WHILE THE IMMENSE MAJORITY ARE CONDEMNED TO
NEVER-ENDING TOIL MERELY TO EARN BARE
SUBSISTENCE.

þ BELIEVED THAT LAISSEZ-FAIRE CAPITALISM WOULD BE
SUPERCEDED BY "COOPERATIVE PRODUCTION" -->
SOCIALISM.

JOHN STUART MILL [1806-1873] [C]

þ MILL WELCOMED:

þ WORKER COOPERATIVES þ WORKER-OWNED ENTERPRISES

þ ENLIGHTED ACTION WOULD BRING VOLUNTARY
ASSOCIATIONS [E.G. WORKER COOPERATIVES & PROFIT-
SHARING].

þ MILL DID NOT BELIEVE THAT AN ECONOMY ORGANIZED
AROUND

     þ INDIVIDUAL ENTERPRISE
     þ PRIVATE PROPERTY
     þ FREEDOM OF CONTRACT
     þ MINIMUM OF GOVN ACTION

WAS THE FINAL CONSUMMATION OF ECONOMIC PROGRESS.

MAJOR THEMES OF CLASSICAL ECONOMICS

þ INDIVIDUAL ENTERPRISE

þ PRIVATE PROPERTY

þ FREEDOM OF CONTRACT

þ MINIMUM OF GOVERNMENT ACTION

þ ECONOMY HAS CHANGED FROM RICARDO'S TIME

þ FROM INDUSTRIAL REV --> MATURE
INDUSTRIAL CAPITALISM

þ THE MALTHUSIAN POPULATION TRAP STILL RELEVANT:

     þ ADVANCED INDUSTRIAL NATIONS --> RISING
       OUTPUT HAS NOT TRIGGERED POP. GROWTH, WHICH
       PREVENTS INCOME/PERSON FROM RISING.

     þ BUT MANY LESS-DEVELOPED COUNTRIES ARE
       FINDING POP. GROWTH IS EATING UP GAINS OF
       ECONOMIC EXPANSION --> BILLIONS MIRED IN
       POVERTY.

þ MEANWHILE, ADVANCED COUNTRIES GROW WEALTHIER:

þ CAPITAL ACCUMULATION + TECH. CHANGE -->
GREATER WEALTH

þ 1945-70 --> GREATEST GROWTH IN WESTERN CIV.
þ 1970-90 --> SLOWED GROWTH, STAGNATION

     þ RAPID TECH. CHANGE --> DEPLETION OF
       EXHAUSTIBLE RESOURCES + ENVIRONMENTAL
       EFFECTS.

þ INSTABILITY TO PRODUCTION SECTOR OF ECONOMY.

þ ACCELERATED TREND TOWARD BIG BUSINESS.

FUSFELD -- CH. 5

EVENTS BETWEEN 1775-1825 --> BACKGD FOR
RISE OF MODERN SOCIALISM

þ INDUSTRIAL REVOLUTION -- KEY.

     þ RISING LIVING STANDARDS
          þ CAPITAL INVESTMENT
          þ INDUSTRIALIZATION
          þ HIGHER PRODUCTIVITY

þ OPPORTUNITIES FOR GREAT WEALTH FPR
NEW MIDDLE CLASS (BOURGEOISIE)

þ FACTORY WORKERS PAID LOW WAGES:

     þ WAS MUCH UNEMPLOYMENT IN RURAL AREAS.
     þ THUS WORKERS ACCEPT LOW WAGES.
     þ LONG WORK HRS.
     þ WOMEN, CHILDREN EMPLOYED.
     þ FACTORY DISCIPLINE HARSH

þ OFTEN, COMPANY-OWNED STORES OFTEN HAD EXCLUSIVE
SELLING RIGHTS TO EMPLOYEES.

þ ESP. COMETITITVE WERE COAL & TEXTILE INDUSTRIES.

     þ INTENSE PRICE COMPETITION.
     þ COMPETE BY SQUEEZING LABOR COSTS.
     þ ESP. SEVERE IN 1ST HALF OF 19TH C.

EVENTS BETWEEN 1775-1825 --> BACKGD FOR
RISE OF MODERN SOCIALISM [C]

þ SHARP CONTRASTS BETWEEN

þ GROWING WEALTH OF NEW INDUSTRIALISTS & BANKERS.

þ POVERTY OF WORK FORCE IN FACTORIES IN
SLUM-RIDDEN CITIES.

þ INDUSTRIALIZATION HAD PROMISED ABUNDANCE.

þ BUT A STARK CONTRAST BETWEEN IDEALS & REALITY.

þ FRENCH REV OF 1789 HAD PROMISED "LIBERTY, EQUALITY, &
FRATERNITY."

     þ FR. OVERTHREW PRIVILEGES OF OLD ORDER, MARCHED
       ACROSS EUROPE TO SWEEP AWAY REMNANTS OF FEUDALISM
       & ARISTOCRACY.

þ NEW BELIEFS IN FREEDOM & EQUALITY --> SEEMED OT BE
USHERING IN AN AGE OF DEMOCRACY

EVENTS BETWEEN 1775-1825 --> BACKGD FOR
RISE OF MODERN SOCIALISM [C]

þ BUT DEFEAT OF NAPOLEON BROUGHT REACTION & REPRESSION --
> REESTABLISHMENT OF OLD SYSTEM OF PLACE & PRIVILEGE.

þ PARLIAMENTARY GOVN IN BR. & FR.

þ BUT PARTICIPATION LIMITED TO PROPERTIED PERSONS.

þ WORKING PEOPLE EXCLUDED FROM VOTE.

þ DEMOCRACY FINE FOR MIDDLE CLASS, BUT DANGEROUS IF
EXTENDED TO WORKER.

þ INDUSTRIAL REV. & FR. REV. HAD RAISED HIGH HOPES FOR

þ AN END TO EXCESSIVE TOIL;
þ TRIUMPH OF BROTHERHOOD & EQUALITY.

þ HOPES DASHED BY DARKNESS OF POST-NAPOLEONIC REACTION.

þ POSTWAR DEPRESSSIONS --> GREATER POVERTY THAN
BEFORE.

þ UNEMPLOYED WORKER HAD NO PLOT OF LAND TO GROW
CROPS ON.

þ TO EARLY SOCIALISTS, PRIVATE OWNERSHIP OF FACTORIES

     þ SOURCE OF SOCIETY'S ILLS.
     þ OWNERS SAT BACK & GREW WEALTHY WHILE THE MASSES
       WORKED.

þ AND WEALTHY WIELDED POLITCAL POWER.

ROBERT OWEN [1771 - 1858], UTOPIAN

þ ROOTS OF EARLY SOCIALISM TYPIFIED BY ENGLISHMAN, ROBERT
OWEN.

þ WORKED IN BR. TEXTILE INDUSTRY, STARTING AT 10.
TEXTILE-MILL MGR AT 19.

þ BY 26, OWEN HAD BOUGHT TEXTILE MILLS AT NEW LANARK,
SCOTLAND.

þ BEFORE OWEN, THIS IS HOWMILLS AT NEW LANARK MANAGED:

þ THIEVES, DRUNKARDS, CRMINALS PART OF LABOR FORCE.

þ CHILDREN FROM ORPHANAGES

þ WORKDAY -- 6 AM - 7 PM.

þ COMPANY TOWN --> WOODEN 1-ROOM HOUSES.

þ OWEN --> VERY RELIGIOUS. BELIEVED WORKERS IN NEW LANARK
WERE BAD BECAUSE OF THEIR ENVIRONMENT/

ROBERT OWEN'S NEW LANARK, SCOTLAND:
A MODEL INDUSTRIAL TOWN

þ OWEN'S GOAL: TURN NEW LANARK INTO MODEL COMMUNITY:

     þ NO CHILD UNDER 10 CAN WORK.
     þ WORKDAY FIXED AT 10.5 HRS.
     þ SCHOOL IN EVES FOR WORKING CHILDREN.
     þ SET UP NURSERY SCHOOLS FOR YOUNG CHILDREN.

þ "REGISTER OF CHARACTER" FOR ADULT WORKERS. THIS
RECORDED:

          þ DRUKENNESS
          þ ILLICIT SEXUAL BEHAVIOR, ETC.
          þ PUBS DISAPPEARED.
          þ ILLIGITIMACY DROPPED.

þ AN ELECTED COMMITTEE INSPECTED HOMES FOR
CLEANLINESS.

þ ESTABLISHED A FUND FOR THE INJURED, SICK, AGED -->
WORKERS CONTRIBUTED 1/60TH OF THEIR WAGES.

þ SAVINGS BANK EST. TO ENCOURAGE THRIFT

     þ OWEN EST. STORE THAT SOLD FOOD & OTHER QUALITY
       GOODS AT MUCH LOWER PRICES THAN PRIVATE
       SHOPKEEPERS.

HOW SUCCESSFUL?

þ HIS PLANTS LOCATED IN SURPLUS-LABOR AREA.

þ HIS WAGES WERE BELOW AVERAGE:

þ MEN --> $2.40/WK þ WOMEN --> $1.50/WK

þ HIS PATERNALISTIC METHODS BROUGHT HIGH LABOR
PRODUCTIVITY.

þ IN 1819, HIS PROFITS = 12.5 %/INVESTED CAPITAL.

ROBERT OWEN [1771 - 1858], UTOPIAN

þ OWN REALIZED THE NEED FOR INDUSTRIAL SELF-GOVERNMENT BY
THE WORKERS.

þ 1N 1816, OWEN WROTE ONE OF LANDMK BOOKS OF SOCIALIST
MOVEMENT, THE NEW VIEW OF SOCIETY

þ AT THIS TIME, ENGLAND WAS DEBATING FIRST FACTORY ACT TO

     þ LIMIT HRS OF WORK
     þ EST. MIN. AGE FOR CHILD LABOR.
     þ OWN LOBBIED HARD FOR BILL, BUT DISAPPOINTED IT DID
       NOT ADEQUATELY COVER CHILD LABOR.

þ OWEN DISSAPOINTED OTHER EMPLOYERS DID NOT IMITATE
NEW LANARK.

OWEN FOUNDED NEW HARMONY, INDIANA IN 1824.

þ COOPERATIVE COMMUNITY.
þ LAND OWNED IN COMMON BY PEOPLE.
þ BUT THE COMMUNITY FAILED.

þ OWEN PUSHED THE FOUNDING OF COOPERATIVE RETAIL STORES
IN ENGLAND:

þ BEGINNING OF CONSUMERS' COOPERATIVE MOVEMENT IN
ENGLAND & SCANDINAVIA.

þ OWEN ALSO PUSHED PRODUCERS' COOPERATIVES -- WORKERS WHO
OWNED THEIR FACTORY.

þ PROJECTS DID NOT SUCCEED.

þ IN SUM, OWEN A VISIONARY WHO SOUGHT TO REFORM SOCIETY
THRU WORKER-OWNED COMMUNMITIES & ENTERPRISES:

     þ PROFITS NOT PERMITTED.
     þ EXPECTED LIFE OF INDIVIDUAL WOULD HAVE LARGER
       MEANING THRU COOPERATIVE LIFE OF GROUP.

þ BUT AN INDIVIDUALISTIC ERA --> DOOMED TO FAIL.

7
KARL MARX [1818-1883]

þ BORN IN GERMANY, FATHER A PETTY LEGAL OFFICIAL.

þ STUDIED PHILOSOPHY & RELIGION AT UNIV. OF BERLIN.

þ DOCTORAL DISSERTATION --> ON THE STOIC & EPICUREAN
ROOTS OF CHRISTIAN DOCTRINE.

þ BECAME AB ATHEIST --> BARRED HIM FROM UNIVERSITY
CAREER.

þ SO MARX WENT INTO JOURNALISM, BECAME EDITOR OF LIBERAL
COLOGNE NEWSPAPER IN 1842.

þ BECAME CONVINCED OF ECONOMIC BASIS OF POLITICS:

þ UNDERLYING POLITICAL THEORIES & POLITICAL POWER
-- > ECONOMIC INTERESTS OF VARIOUS GPS IN SOCIETY.

þ MARX'S NEWSPAPER SHUT DOWN BY GOVN --> MARX TO PARIS --
> MARRIED --> MIXED WITH SOCIALISTS.

þ MARX GREATLY INFLUENCED BY PIERRE JOSEPH PROUDHON
[1809-1865], A SOCIALIST LEADER.

þ P SAID "PROPERTY IS THEFT" & THAT WHOLE PRODUCT OF
INDUSTRY SHOULD GO TO WORKER.

þ P SAID THAT PRIVATE OWNERSHIP OF MEANS OF
PRODUCTION ENABLED CAPITALIST TO APPROPRIATE WEALTH THAT
RIGHTFULLY BELONGED TO THE WORKER.

þ THIS CONCEPT WAS BASIC TENET OF 19TH-C SOCIALISM
& KEY TO MARX'S VIEW OF CAPITALISM.

KARL MARX [1818-1883]

þ IN PARIS MARX ALSO MET FREIDRICH ENGELS [1820-1895],
SON OF WEALTHY GERMAN TEXTILE MFGR, WHO OWNED MILLS IN
GERMANY & ENGLAND.

þ ENGELS SUPPORTED MARX & HIS FAMILY FOR NEXT 35
YRS.

þ MARX EXPELLED FROM FRANCE AT REQUEST OF PRUSSIAN GOVN.

þ MARX & ENGELS TO BRUSSELS IN 1848. WROTE THE COMMUNIST
MANIFESTO

þ MARX WENT TO LONDON, WHERE HE SPENT REST OF HIS LIFE:

     þ MOST TIME SPENT DOING RESEARCH IN BR. MUSEUM &
       WRITING HIS GREAT WORK, DAS CAPITAL.[VOL I, 1867,
       VOL II, 1885].

þ MARX TOOK LEADING PART IN THE INTERNATIONAL, AN
INTERNATIONAL ALLIANCE OF SOCIALIST PARTIES.

þ MARX GAVE REVOLUTIONARY SOCIALISM ITS THEORETICAL FDN.

9
KEY MARXIAM IDEAS

þ ECONOMIC RELATIONSHIPS ARE DRIVING FORCE OF ANY
SOCIETY.

þ RELATIONS OF PRODUCTION --> DEPEND ON MATERIAL POWRS OF
PRODUCTION.

þ ECONOMIC STRUCTURE OF SOCIETY --> SUM TOTAL OF
RELATIONS OF PRODUCTION --> THE FDN ON WHICH RISE THE
LEGAL & POLITICAL SUPERSTRUCTURE & DEFINITE FORMS OF
SOCIAL CONSCIOUSNESS.

þ MODE OF PRODUCTION --> DETERMINES SOCIAL, POLITICAL,
SPIRTUAL PROCESSES OF LIFE.

þ CAPITALIST VS WORKER --> THESE TWO CLASSES, BOURGEOIS
& PROLETARIAT, STAND IN OPPOSITION, SINCE CAPITALIST CAN
PROSPER ONLY IF WORKER IS EXPLOITED.

þ MARX'S ATTACK ON CAPITALISM BEGAN WITH HIS LABOR THEORY
OF VALUE.

þ TRUE VALUE OF ANY PRODUCT = AMOUNT OF LABOR USED
IN ITS PRODUCTION.

þ LABOR NOT PAID THE FULL VALUE OF THE PRODUCT -->
THUS EXPLOITATION.

þ CAPITALISM --> GIGANTIC MECHANISM IN WHICH LABOR TIME
OF WORKER --> PROFITS --> CAPITAL.

þ LABOR TIME IS OWNED BY WORKER.
þ BUT CAPITAL IS OWNED BY CAPITALIST.
þ THUS, CAPITALIST CLASS GROWS INCREASINGLY WEALTHY OUT
OF LABOR OF WORKING CLASS.

10
KEY MARXIAM IDEAS [C]

þ EXPLOITATION OF WORKER ALSO HAS PSYCHOLOGICAL EFFECT --
> ALIENATION

     þ WORKER SEPARATED FROM TOOLS OF PRODUCTION.
     þ WORKER SEPARATED FROM THE PRODUCT.
     þ PREVENTS FULL DEVELOPMENT OF THE SELF.

þ RESULT: PERVASIVE ALIENATION THAT DEHUMANIZES ALL
PERSONAL & SOCIAL RELATIONSHIPS.

þ MONEY PAYMENTS TAKE PLACE OF HUMAN FEELINGS.

þ RESULT: A SOCIAL & PSYCHOLOGICAL PATHOLOGY THAT
PERVADES ALL CAPITALIST SOCIETY.

þ OTHER KEY MARXIAM IDEAS:

     þ BASE-SUPERSTRUCTURE THEORY
     þ CLASS WARFARE
     þ FEUDALISM --> CAPITALISM --> SOCIALISM -->
        COMMUNISM

FUSFELD, CH 6
1
HERBERT SPENCER [1820- 1903]

þ RISE OF SOCIALISM & ITS DEMAND FOR SOCIAL JUSTICE
FORCED THE EXISTING ORDER TO RAISE ITS DEFENSES.

þ ONE ANSWER TO MARX & SOCIALISM: 19TH C PHILOSOPHY
ON INDIVIDUALISM.

þ THIS DEVELOPED AS THE IDEOLOGY OF A BUSINESS
CIVILIZATION BETWEEN 1850-WWI.

þ TWO LEADING PROPONENTS OF INDIVIDUALISM:

     þ ENGLISH PHILOSOPHER HERBERT SPENCER
       [1820-1903]
     þ AMERICAN SOCIOLOGIST, WILLIAM GRAHAM SUMNER
       [1840-1910].

þ DARWIN DISCUSSED EVOLUTION IN TERMS OF NATURAL
SELECTION.

þ THE ORIGIN OF SPECIES 1859

þ SPENCER COINED THE PHRASE: "SURVIVAL OF THE
FITTEST."

þ "THOSE ORGANISMS WHICH ARE BEST FITTED TO THEIR
ENVIRONMENT ... WILL SURVIVE. THE LEAST FIT
WILL DIE OUT, LEAVING THE STRONGEST AND BEST."

þ TO SPENCER, SUCH WAS THE ROUTE TO PROGRESS: THE
WEAKEST INDIVIDUALS & LEAST-USEFUL SOCIAL
INSTITUTIONS DIE OUT.

HERBERT SPENCER [1820- 1903] [C]

þ SO AS NOT TO INTERFER WITH THIS NATURAL
EVOLUTION, GOVERNMENT WAS SEEN AS A NECESSARY
EVIL, WHOSE POWERS SHOULD BE SEVERELY LIMITED TO:

     þ PROTECTION OF PEOPLE;
     þ PROTECTION OF PROPERTY;
     þ ENFORCEMENT OF PRIVATE CONTRACTS.

þ IN SPENCER'S VISION FOR SOCIETY, THERE SHOULD BE:

     þ NO GOVN REGULATION OF INDUSTRY;
     þ NO STATE CHURCH;
     þ NO ORGANIZED COLONIZATION;

þ NO RELIEF FOR THE POOR;
þ NO SOCIAL LEGISLATION;

     þ NO PUBLIC MINT;
     þ NO GOVERNMENT-OWNED POSTAL SYSTEM;
     þ NO PUBLIC EDUCATION.

þ INDIVIDUAL ACTION SHOULD BE UNFETTERED.

þ NOTHING SHOULD INTERFER WITH THE NATURAL
SELECTION OF THE FITTEST:

þ NOT EVEN PUBLIC SANITATION, WHICH PROTECTS
AND THEREBY PERPETUATES WEAKER TYPES.

þ SPENCER'S PHILOSOPHY HAD A GREATER IMPACT IN U.S.
THAN IN ENGLAND.

3
WILLIAM GRAHAM SUMNER, AMERICAN DISCIPLE
OF HERBERT SPENCER

þ HERBERT SPENCER'S FOREMOST AMERICAN FOLLOWER WAS
EPISCOPAL MINISTER & YALE ECONOMIST WM. GRAHAM
SUMNER.

þ WITHIN SOCIAL SYSTEM, INDIVIDUALS RISE & FALL:

þ PERSON WITH ABILITY & DRIVE WILL RISE.

þ CONCENTRATED WEALTH JUSTIFIED, FOR IT WAS USED TO
PRODUCE FOR OTHERS.

þ ECONOMIC ELITE WAS JUSTIFIED: THEY WERE THERE
BECAUSE THEY HAD PRIVIDED THE GOODS & SERVICES
SOCIETY WANTED.

þ SUMNER, THEN, APPLIED EVOLUTIONARY IDEAS TO
SOCIETY.

þ UNRESTRAINED INDIVIDUALISM GOOD, FOR ONLY
SOCIAL GOOD COULD COME FROM COMPETITION.

þ GREAT CONCENTRATIONS OF WEALTH ARE GOOD. FOR
THAT WEALTH OS PUT TO GOOD USE FOR OTHERS.

þ NO NEED TO SHOW CARING OF SOCIAL
RESPONSIBILITY FOR OTHERS:

          þ FOR ANYONE DESTROYED BY COMPETITION
            COULD BE CONSIDERED UNFIT, NOT CAPABLE
            OF MAKING A LARGE ENOUGH CONTRIBUTION
            TO THE SOCIAL ORDER TO SURVIVE.

4
U.S. SUPREME COURT JUSTICE STEPHEN J. FIELD
[1816-1899]

þ THE PHILOSPHY OF INDIVIDUALISM WAS APPLIED TO
ECONOMIC AFFAIRS MOST FULLY IN THE U.S.

þ THE CIVIL WAR [1861-65] PERMITTED THE INDUSTRIAL
INTERESTS OF THE NORTHEAST TO ACHIEVE DOMINANCE

þ THESE ACTS PASSED:

     þ THE MORILL TARIFF OF 1861 -- RAISED TARIFFS.
     þ THE HOMESTEAD ACT OF 1862
     þ THE PACIFIC RAILWAY ACTS OF 1862 & 1864
     þ THE NATIONAL BANKING ACT OF 1863

     þ ALL THIS SET STAGE FOR DOMINANCE OF PRIVATE
       ENTERPRISE IN A BUSINESS-ORIENTED
       CIVILIZATION.

þ THE PHILOSOPHY OF UNRESTRICTED INDIVIDUALISM CAME
TO BE EMBODIED IN THE CONSTITUTION.

þ MOST RESPONSIBLE WAS SUPREME COURT JUSTICE
STEPHEN J. FIELD.

þ BORTHER OF CYRUS FIELD --> 1ST TRANS-
ATLANTIC TELEGRAPH CABLE.

þ GOLD RUSH TO CA --> JUDGESHIP --> STATE
   LEGISLATURE --> STATE SUPREME COURT BY 1857 -->
   CHIEF JUSTICE OF CA SUPREME COURT IN 1859 -->
   LINCOLN APPOINTS FIELD TO SUPREME COURT IN 1863
   --> HELD POSITION FOR 34 YRS.

5
U.S. SUPREME COURT JUSTICE STEPHEN J. FIELD
[1816-1899] [C]

þ FIELD PUSHED THE PROTECTION OF PRIVATE PROPERTY &
FREEDOM OF BUSINESS ENTERPRISE.

þ TO DO THIS HE INVOKED THE 14TH AMENDMENT, ARGUED
THAT IT APPLIED NOT JUST TO INDIVIDUALS, BUT TO
CORPORATIONS.

þ 14TH AMENDMENT =

þ PASSED IN 1868 TO PROTECT NEWLY FREED
SLAVES.

     þ "NO STATE SHALL MAKE ... ANY LAW WHICH SHALL
       ABRIDGE THE PRIVELEGES ... OF CITIZENS OF
       THE U.S.; NOR SHALL ANY STATE DEPRIVE ANY
       PERSON OF LIFE, LIBERTY OR PROPERTY, WITHOUT
       DUE PROCESS OF LAW."

þ FIELD BECAME MOST IMPORTANT SPOKESMAN FOR U.S.
SUPREME COURT FOR THE VIEW THAT THE CONSTITUTION
GUARANTEES INDIVIDUAL & BUSINESS ENTERPRISE
AGAINST GOVERNMENT INTERVENTION.

þ SLAUGHTERHOUSE CASE OF 1873:

þ LA PASSED LAW INTENDED TO PROTECT PUBLIC
HEALTH IN NEW ORLEANS.

þ IT LIMITED OPERATION OF SLAUGHTERHOUSES,
GIVING A MONOPLY TO A SINGLE CO.

þ LAW OPPOSED BY BUTCHERS & CATTLE DEALERS.

6
U.S. SUPREME COURT JUSTICE STEPHEN J. FIELD
[1816-1899] [C]

þ SLAUGHTERHOUSE CASE [C]

     þ ARGUED THAT THEY HAD BEEN CUT OUT OF
       BUSINESS WITHOUT DUE PROCESS OF LAW,
       CONTRARY TO 14TH AMENDMENT.

     þ IN DISSENTING OPINION, FIELD ARGUED THAT
       RIGHT TO OPERATE A SLAUGHTERHOUSE OR ANY
       OTHER BUSINESS WAS RIGHT THAT COULD NOT BE
       REMOVED BY GOVN.

þ BY 1886, WHOLE COURT CAME TO ACCEPT FIELD'S
POSITION.

þ IN 1880S, A CA COUNTY IMPOSED SPECIAL TAXES ON
THE SOUTHERN PACIFIC RAILWAY. UNDER 14TH
AMENDMENT, THESE TAXES WERE DECLARED INVALID.

þ BECUASE OF FIELD'S STANCE, MUCH STATE LEGISLATION
REGULATING BUSINESS WAS STRUCK DOWN:

     þ REG. ON HOURS OF WORK.
     þ REG. ON CHILD LABOR.
     þ REG. ON FACTORY CONDITIONS, ETC.

þ IN SUM, AT A TIME WHEN INDUSTRIAL GROWTH WAS
CREATING MANY NEW PROBLEMS, THE PHILOSOPHY OF
UNRESTRICTED LAISSEZ-FAIRE WAS THE LAW OF THE
LAND IN THE U.S.

þ LITTLE INTERFERENCE WITH PRIVATE ENTERPRISE
WAS PERMITTED.

þ ANDREW CARNEGIE WAS THE EMBODIMENT OF THE
PHILOSOPHY OF INDIVIDUALISM.

7
IN FUSFELD, FOCUS ON THESE LIVES