Economic Liberalism, Capitalism and the Rise of Socialism

Economic Liberalism and the Capitalist Revolution

The Industrial Revolution and the capitalist revolution allowed the passage to the liberal economy. Its principles were: private property, free enterprise, free contract, free system regulation, and the free market (liberalisme econòmic).

Basis of Liberalism

The main theoretician was Adam Smith, who defended individual initiative and private enterprise. He held that wealth came from work, and that if the economy were left to operate freely, individual initiative would lead to growth. Pessimistic liberalism also arose. David Ricardo and John Stuart Mill drew up the final synthesis of classical liberalism.

The Capitalist Economic System

Its rules of operation were based on the theories of economic liberalism. The craft industry was replaced by a massive production of merchandise. The factory system required large quantities of capital to create companies that could operate and develop the banking system and the stock exchanges. The economic change was accompanied by social transformations: a rural society gave way to an industrial society, and a stratified society gave way to a class-based society with improving living standards.

Social Classes

The industrial revolution and the political changes that accompanied it brought about a new social structure consisting of:

• Lower classes: integrated by various sectors (day laborers and peasants), and the proletariat appeared. The proletariat was made up of the workers of modern industry, whose wages were barely enough to survive, often living in poverty in the cities.
• Middle classes: these grew steadily and were formed by merchants, artisans and tradespeople. Skilled workers who needed specific training also appeared. The services sector offered many new occupations, with growth in the number of technicians and specialized training. Liberals also appeared among civil servants.
• Upper classes: made up of merchants, industrialists and landowners, who applied modern techniques to agricultural exploitation, along with the self-employed.

Ideological Bases of the Labor Movement

Utopian Socialism

Marx called these thinkers "utopian" because they considered that the ideal society could be achieved without revolution, through solidarity, philanthropy and fraternal defense of industry. Their aim was a viable and peaceful solution to class conflict, not a social struggle between bosses and workers. Three main ideologues stand out: Saint-Simon, Charles Fourier (who criticized private property) and Robert Owen.

Marxist Socialism

Marx analyzed the contradictions of the capitalist system. He held that the struggle between classes was the engine of social change throughout history, and that social relations arising from production determined the socioeconomic structure. Marx outlined the stages of the forms of production. Marxist socialism postulated the conquest of political power by the proletariat, replacing the capitalist system with another in which there would be no social classes, and the transition from the bourgeois state to the dictatorship of the proletariat. Marxism was the main ideology of revolutionary movements during the second half of the nineteenth and the twentieth centuries.

Anarchism

The anarchist theorist Mikhail Bakunin held that anarchism was not aimed only at the industrial proletariat but at all oppressed sectors of society. Its revolution sought the total destruction of the state, with the immediate objective of overthrowing the bourgeois social order, the state and its instruments of control.