Lesson Three: The Effects of Classical Liberalism

Duration - 1 block (80 mins + homework)

There were many positive outcomes of classical liberalism, such as the potential to amass great wealth, risk-taking and innovation.  However, although people were free to participate in the economy, many still lived in poverty.  As a result, people began to ask:

• Can someone who must work long hours for little pay just to survive truly be considered free?
• Is it fair that children who are poor are exploited by business owners, even though the children may choose to work?
• Are all people really equal when some (for example, women and visible minorities) do not have the same rights, such as the right to vote?
• Should not all individuals have the right to an education?

2

Classical Liberalism Produces Wealth

Before the Industrial Revolution began in 1750, most people lived in rural communities (the countryside). Manufacturing of products occurred mostly in people's homes. This was called the domestic system. For example, people spun thread on spinning wheels or wove cloth on small looms using their own hands or feet to power these simple textile machines.  Entrepreneurs went from home to home to collect the thread and cloth. Spinners and weavers were paid small amounts for their work.

Textile manufacturing had been done this way for hundreds of years. However, the domestic system was very slow and ineffective because neither the quality of the cloth nor the hours these people worked were controlled.

 Weaver

Spinner

With the coming of the Industrial Revolution, the production of goods became industrialized. That is, manufacturing began to use first water-powered then steam-powered machines in large factories. This was called the factory system. Textile factories produced large volumes of quality cloth goods in much less time than under the old domestic system.

Manufacturing moved from the rural areas into urban centres (cities). With the use of machines in factories, manufacturing became more efficient and profitable. Those entrepreneurs who had the knowledge and money to build factories and were able to compete successfully in the market earned large amounts of wealth.

Adam Smith's economic values of classical liberalism seemed to be working quite well. Entrepreneurs were making large amounts of wealth for themselves. As long as the government stayed out of the economy, things could not have been better. Indeed, governments tended to stay out of the economy, and few laws interfered with individual rights just as people such as John Stuart Mill had argued.

Textile Factory

London Slum

Imagine that your family had owned the same farm for generations, and then your father was forced to sell it and move your family to the city to find work. Your father, mother, younger sisters, and brothers all must work in a factory for your family to survive. The factory smells bad, there is no fresh air, it's filthy, and you see rats. Your mother and father are exhausted from the long hours as are your siblings, but you have no choice. All of you must work for wages that are just enough for your family to survive. You see people die of exhaustion and disease. Education to help you get ahead does not exist for workers. To you, only the factory owners are rich.

This movement of families from small farms to the industrial cities produced a large labour force for the new factories in the cities. For the working class, living and working conditions in the factory cities were deplorable and salaries were small