Challenges to Laissez-Faire

Proponents of government restraint and unbridled individualism did not go unchallenged. Critics of laissez-faire created an alternative ideology for those who sought to organize workers and expand the role of government as ways of restricting capitalists’ power over labor and ordinary citizens.

Lester Frank Ward attacked laissez-faire in his book Dynamic Sociology (1883). A largely self-taught man who worked as a civil servant for the federal government, Ward did not disparage individualism but viewed the main function of society as “the organization of happiness.” Contradicting Herbert Spencer, Ward maintained that societies progressed when government directly intervened to help citizens—even the unfor-tunate. Indeed, society could initiate “the systematic realization of its own interests, in the same manner that an intelligent and keen-sighted individual pursues his life-purposes.” Rejecting laissez-faire, Ward argued that what people “really need is more government in its primary sense, greater protection from the rapacity of the favored few.”

Some academics supported Ward’s ideas. Most notably, economist Richard T. Ely applied Christian ethics to his scholarly assessment of capital and labor. He condemned the railroads for dragging “their slimy length over our country, and every turn in their progress is marked by a progeny of evils.” In his book The Labor Movement (1886), Ely suggested that the ultimate solution for social ills resulting from industrialization lay in “the union of capital and labor in the same hands, in grand, wide-reaching, co-operative enterprises.”

Two popular writers, Henry George and Edward Bellamy, added to the critique of materialism and greed. In Progress and Poverty (1879), George lamented: “Amid the greatest accumulations of wealth, men die of starvation.” He blamed the problem on rent, which he viewed as an unjustifiable payment on the increase in the value of land, what he called “unearned increment.” His remedy was to have government confiscate rent earned on land by levying a single tax on landownership. Though he advocated government intervention, he did not envision an enduring role for the state once it had imposed the single tax. By contrast, Bellamy imagined a powerful central government. In his novel Looking Backward, 2000–1887 (1888), Bellamy scorned the “imbecility of private enterprise” and attacked industrialists who “maim and slaughter workers by thousands.” In his view, the federal government should take over large-scale firms, administer them as workers’ collectives, and redistribute wealth equally among all citizens.

Neither Bellamy, George, Ward, nor Ely endorsed the militant socialism of Karl Marx. The German philosopher predicted that capitalism would be overthrown and replaced by a revolutionary movement of industrial workers that would control the means of economic pro-duction and establish an egalitarian society. Although his ideas gained popularity among European labor leaders, they were not widely accepted in the United States during this period. George referred to Marx as “the prince of muddleheads.” George and other critics believed that the American political system could be reformed without resorting to the extreme solution of a socialist revolution. They favored a cooperative commonwealth of capital and labor, with the government acting as an umpire between the two.

Review & Relate

In the late nineteenth century, how did many Americans explain individual economic success and failure?

How did the business community view the role of government in the economy at the end of the nineteenth century?