Classical Liberalism and It’s Impact In Europe and North America
The Industrial Revolution made Liberalism and capitalism the dominant force in Europe. Economic
changes expanded the middle class and the promise of equal opportunity gave people a chance to
improve their standard of living and achieve material gain. The growth of business opportunities and
explosion of consumer products led to the belief that capitalism and progress were one and the same.
Classical Liberalism and its emphasis on private property, self interest and limited government
involvement in the affairs of the economy influenced the development of laissez-faire capitalism (1800’s),
which is usually associated with the Industrial Revolution (the transformation from a traditional agricultural
economy into an urban, factory system of production and the emergence of large-scale factory
production). The industrialization process began in Great Britain and spread throughout Europe. Between
1760-1850, including the late 19th century, major changes to production, manufacturing, transportation,
medicine, power and resource industries occurred.
The work of the British inventors and capitalists (bankers, factory owners, etc) in the 1800’s provided the
strongest argument for laissez-faire capitalism. British capitalists invested large sums of money to
purchase machines and create factories in which large-scale production could take place. Vast fortunes
were made and the middle class prospered.
Industrialization contributed to population growth, the rise of large towns and cities and the development of a
new social class structure. The middle class (entrepreneurs, traders, manufacturers, shopkeepers, lawyers,
bankers, factory owners, etc) became prominent and benefited most from the economic and material progress.
They believed that merit and competition should replace birth and patronage as avenues to social position and
political influence. Thrift and hard work were important and they tended to measure success and respectability
in terms of wealth and money. Yet for all their economic success they lacked effective political power. (property
requirements plus wealth) It was not until the 1830’s in Great Britain that they could vote for members of
parliament.
The Industrial Revolution did have its problems. Not all members of society shared in the progress. Until
governments created legislation to protect the factory workers and improve the living conditions in the cities, life
for the new class of industrial workers was demanding. Poor working conditions, low wages, long hours,
crowded living conditions, slums, poor sanitation were prevalent in the first phase of the Industrial Revolution.
Workers, including children, were exploited while rapid urbanization let to the creation of slums and poor living
conditions. In response, new ideologies competed for popular support. Among them were socialism and
Marxism. Each ideology attacked the new societal structures. The lives of workers during the Industrial
Revolution did not seem like progress to the followers of these ideologies.
For some, democracy was not considered capable of
solving the problems of the new society. The
conservative British statesman Edmund Burke
believed that the aims of society and the individual
were rarely the same. Political and economic stability,
he argued, lay with keeping power in the hands of the
upper classes. Karl Marx and other socialists believed
that democracy was a tool of the wealthy elite.
Democratic rights were restricted to property owners
and, as a result, the urban worker was no better off
then the rural peasant.
Some Key Figures
Robert Owen: A social reformer and one of the founders
of socialism and the cooperative movement. Owen's
philosophy was based on three intellectual pillars:

First, no one was responsible for his will and his own
actions because his whole character is formed
independently of himself; people are products of their
environment, hence his support for education and
labour reform, rendering him a pioneer in human
capital investment.

Second, all religions are based on the same absurd
imagination, that make man a weak, imbecile animal; a
furious bigot and fanatic; or a miserable hypocrite.

Third, support for the putting-out system instead of the
factory system
Jeremy Bentham: an English philosopher and legal and
social reformer. He is best known for his advocacy of
utilitarianism (the idea that the moral worth of an action is
determined solely by its utility in providing happiness or
pleasure as summed among all sentient beings.), for the
concept of animal rights, and his opposition to the ideas of
natural law and natural rights, calling them "nonsense upon
stilts." He also influenced the development of welfarism.
Bentham became known as one of the most influential of the
utilitarians, through his own work and that of his students.
Bentham's position included arguments in favour of
individual and economic freedom, the separation of church
and state, freedom of expression, equal rights for women,
the end of slavery, the abolition of physical punishment
(including that of children), the right to divorce, and free
trade. He also made two distinct attempts during his life to
critique the death penalty.
Karl Marx: a German philosopher, communist and
revolutionary whose ideas are credited as the foundation
of modern communism. Marx summarized his approach in
the first line of chapter one of The Communist Manifesto,
published in 1848: "The history of all hitherto existing
society is the history of class struggles." Marx argued that
capitalism would inevitably produce internal tensions
which would lead to its destruction. Just as capitalism
replaced feudalism, he believed socialism would replace
capitalism and lead to a stateless, classless society called
pure communism. This would emerge after a transitional
period called the "dictatorship of the proletariat": a period
sometimes referred to as the "workers state" or "workers'
democracy".
Edmund Burke: an Irish statesman and philosopher who
served for many years in the House of Commons of Great
Britain as a member of the Whig party. He is mainly
remembered for his opposition to the French Revolution. It
led to his becoming the leading figure within the
conservative faction of the Whig party, which he dubbed
the "Old Whigs", in opposition to the pro-FrenchRevolution "New Whigs" led by Charles James Fox. Burke
lived before the terms "conservative" and "liberal" were
used to describe political ideologies. Burke was praised by
both conservatives and liberals in the nineteenth-century
and since the twentieth-century he has generally been
viewed as the philosophical founder of modern
conservatism.
Mary Wollstonecraft: An eighteenth-century British
writer, philosopher, and feminist. During her brief career,
she wrote novels, treatises, a travel narrative, a history of
the French Revolution, a conduct book, and a children's
book. Wollstonecraft is best known for A Vindication of the
Rights of Woman (1792), in which she argues that women
are not naturally inferior to men, but appear to be only
because they lack education. She suggests that both men
and women should be treated as rational beings and
imagines a social order founded on reason
John Maynard Keynes: A British economist
whose ideas have profoundly impacted
modern macroeconomics and modern
liberalism, both in theory and practice. He
advocated interventionist economic policy, by
which governments would use fiscal and
monetary measures to mitigate the adverse
effects of business cycles, economic
recessions, and depressions. His ideas are
the basis for the school of thought known as
Keynesian economics.
We will be looking at Keynes and his
economic theories in much more detail later in
the text. Suffice it to say he is one of the
people, along with others such as Adam
Smith, Edmund Burke, Karl Marx, and others
who you will need to know.