2.1.4 Arguments for and against liberal capitalism

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Unit 2 Contents

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(a) The ‘liberal’ argument for industrial capitalism

The argument for capitalism, and in particular for nineteenth century industrial capitalism, has already been presented, more or less, on the previous page.  Look back at this and then do the following exercise.  You can then access a ‘response’ to it on a separate screen. (The idea is not to look at this first.)

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EXERCISE

In the light of the historical outline you have just read, what do you think is the argument which the advocates of industrial capitalism made in favour of it?

Make notes in order to try to answer this question.

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RESPONSE TO EXERCISE: Click here

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The main documents of CST (although not Pope Leo’s Rerum Novarum itself) have used a well known label to refer to the theory that seeks in that way to justify capitalism.  The label is ‘liberalism’, and employing this word in this way follows common nineteenth century usage.  In fact, ‘liberalism’ has come to have various partly different meanings in the 150 years since then.

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Reflection

What are your reactions to the term ‘liberalism’?

What is the range of its meanings?  Jot down on a piece of paper some of the meanings or applications you think it might have.

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‘Liberalism’ in that specific sense can also be referred to as ‘economic liberalism’ or ‘laissez-faire liberalism’.  The term ‘economic liberalism’ is appropriate because what is emphasized is that people should have liberty in their economic activities – liberty to buy and sell in markets.  The expression ‘laissez faire’ is French and means, ‘Let them do as they like!’  So ‘laissez-faire liberalism’ is the view that, in our economic dealings with one another, we should have freedom to do as we like.

Sometimes a third label is used for this version of liberalism: ‘classical liberalism’.  This is because when the word ‘liberalism’ was first coined in the nineteenth century, it was ‘economic liberalism’ that was meant by it – so this can be seen as the ‘classical’ version of this philosophy.

(b) The ‘socialist’ argument against industrial capitalism

Whereas ‘liberalism’ referred to the theory which was advocated in defence of industrial capitalism, what became for a long period the main set of views that were strongly against it were known by the label ‘socialism’.  Like liberalism, the term socialism has had quite a range of meanings. This is partly because one of the main defining features was simply opposition to capitalism!  Study of the various positions labelled socialism could quite easily prompt the reaction that the one thing they have in common is what they are against.

This said, as socialism emerged and became distinct during the nineteenth century, a main defining feature became advocacy of a view about property.  This view was that property, and especially large and valuable pieces of property like factories and other ‘means of production’, should not be privately owned by individuals.  Rather they should be collectively owned by people together, ideally on behalf of everyone together by (many thought) the government taking over ownership.  Socialism held that if there was such collective ownership of property, it could really be used for the benefit of everyone.  This was necessary because, socialists argued, capitalism in fact benefits only a few, mainly those who are already wealthy – the owners of capital.

Therefore, socialists opposed minimizing the obstacles to economic freedom.  On the contrary, they said that governments should direct or control the production of goods and services, so that this really is for overall benefit.  So in response to the emergence of industrial capitalism, socialism favoured the factories being taken out of the hands of wealthy private owners and being controlled by people together, usually in practice by the state.

There is much more that could be said about both ‘liberalism’ and ‘socialism’ than in these last few paragraphs.  We shall look at both more in later units.

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End of 2.1.4

Go to 2.1.5 The publication of Rerum Novarum

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