Evolution of Liberalism: From Classical Free-Market to the Modern Mixed Economy

Comprehensive practice flashcards defining foundational economic and political concepts from the Evolution of Liberalism lecture, covering classical liberalism, industrialization, socialist alternatives, progressivism, and the modern mixed economy.

Mercantilism

The dominant European economic system during the 15th through 18th centuries based on the belief that global wealth is finite, requiring nations to maximize exports over imports and maintain strict government economic control.

Physiocrat

An 18th-century French economist who believed that agriculture was the source of all wealth, that agricultural products should be highly priced, and who advocated for free trade following a natural order.

Opportunity Cost

The value of what you lose when choosing between two or more options.

Invisible Hand

Adam Smith's term describing how self-interested individuals operating in a competitive free-market economy unintentionally promote the broader economic wealth and prosperity of the nation.

Capital

Any asset that is produced to generate profit.

Reserve Pool of Labour

Adam Smith's economic concept of the unemployed population, which serves as a necessary labor reserve for capitalists to draw from when expanding businesses without wage competition driving up labor costs.

Traditional Economy

An economic system in which the allocation of scarce resources and economic activity is determined by ritual, habit, or custom, offering stability but discouraging innovation.

Factory System

A method of mass manufacturing using machine labor, division of labor, and centralized industrial workplaces, first widely applied during the British textile industry boom.

Urbanization

The mass migration of populations from rural areas to cities, dramatically accelerating during the Industrial Revolution as workers moved closer to factories.

Factory Act 1833

British legislation that limited child labor hours in textile mills, restricting children aged 9 to 13 to $8$ hours a day and youth aged 14 to 18 to $12$ hours a day.

Mines Act 1842

British legislation that prohibited all women and girls, as well as boys under the age of 13, from working underground in mines.

Ten Hours Act 1844

British legislation restricting the maximum daily working hours of women and young workers in factories to no more than 10 hours a day.

Gilded Age

A period in the late 19th-century United States marked by rapid economic growth, mass European immigration, and extreme inequality resulting from unrestricted laissez-faire capitalism.

Harm Principle

John Stuart Mill's ethical and political doctrine stating that power can only be rightfully exercised over any member of a civilized community against their will to prevent harm to others.

Square Deal

President Theodore Roosevelt's policy agenda coined to signify that both organized labor and capital must be treated fairly, curbing the excesses of laissez-faire capitalism.

Sherman Anti-Trust Act

An 1890 United States statute designed to prohibit monopolies and preserve competitive markets, famously utilized under President William Taft in 1911 to break up Standard Oil.

Fiscal Policy

The government's management of revenue through taxation and regulation, determining public spending on goods and services to manage and influence the nation's economy.

Monetary Policy

The regulation of a nation's currency, money supply, credit availability, and interest rates by a governing monetary authority to promote stability and economic growth.

Socialism

An ideology reacting against classical liberalism that advocates for resources to be controlled by a national government, prioritizing public ownership and economic equality over private interests.

Utopian Socialists

Humanitarian reformers such as Robert Owen and Charles Fourier who advocated ending the social ills of the Industrial Revolution by peacefully establishing ideal, egalitarian communities.

Proletariat

In Marxist theory, the wage-earning working class who do not own the means of production and sell their labor power to survive.

Bourgeoisie

In Marxist theory, the capitalist property-owning class who own the means of production and profit from employing wage labor.

Command Economy

An economic system characterized by public ownership where central government planners make all major decisions regarding resource allocation, production methods, and distribution.

Leninism

The theoretical and practical application of Marxism in Russia by Vladimir Lenin, which established the Soviet Union and a dictatorship of the proletariat.

Consumerism

A socioeconomic phenomenon prevalent during the Roaring Twenties centered around the mass production, credit-financed purchase, and cultural desire for manufactured consumer goods.

Welfare Capitalism

A business practice pioneered by industrialists like Henry Ford that provided voluntary benefits, higher wages ($5$-a-day), and reduced work weeks to increase productivity and discourage unionization.

Inflation

A sustained rise in general price levels across an economy, translating directly to a decline in purchasing power over time.

Business Cycle

The recurrent fluctuation in economic activity over time, cycling through phases of growth and expansion (boom/peak) followed by contraction (recession/trough) and recovery.

Welfare State

A society where the state assumes primary responsibility for citizen well-being by providing a social safety net, including unemployment insurance, public pensions, healthcare, and education.

Mixed Economy

An economic system positioned between classical free markets and command economies, incorporating private property and profit incentives alongside government regulation and social safety nets.

Flat Tax

A taxation model rooted in classical liberal philosophy where all taxpayers pay the exact same percentage of their income regardless of how much they earn.

Progressive Taxation

A modern liberal tax system where the tax rate increases proportionally across tiered income brackets, requiring higher earners to pay higher percentages of their income.

Keynesian Economics

The macroeconomic theory developed by John Maynard Keynes asserting that free markets are not inherently self-correcting during downturns and require direct state intervention and spending to restore demand.