The balance between laissez-faire and progressive frameworks of governance has been shifting over time in American economic history. During the Laissez-faire model, (which started around 1880) American politicians began to withdraw their influence over corporations and other civilizational initiatives. The government limited its intervention to two main aspects namely, foreseeing agricultural development and providing financial support to entities constructing railroad systems. However, toward the late 19th century, the concentration of American industry into increasingly potent conglomerates sparked the expansion of a national movement of individuals in favor of economic reforms.
Many of the proponents of these reforms came from the business community, particularly from small enterprises. This progressive movement demanded government involvement in economic regulation to solve issues such as exploitation by monopolies. A breakdown of different initiatives tailored towards resolving conflicts during the progressive and “laissez-faire” models of governance along with a comparison between these two systems form the basis of this paper.
How Different Groups Tried to Resolve Political/Social Conflicts Between 1870 and 1940
The Sherman Antitrust Act, enacted by Congress in 1890 was tailored towards reviving a perfect competition market framework to address exploitation spurred by monopolies. Sixteen years later, legislation was enacted to guarantee appropriate food and medication labeling along with pre-sale meat inspection. This was designed to address unethical behavior in such firms and safeguard consumers’ health. Additionally, the Federal Reserve, founded by the government in 1913, aimed at regulating the circular flow of money between households and big financial institutions at that time. Later, between 1929 and 1939, (the Great Depression) the U.S. encountered the worst political and social crisis that was typified by unprecedented unemployment rates. The section below highlights some of the interventions used to resolve the different issues associated with the Great Depression during the progressive versus “laissez-faire” eras.
To buffer these crises, President Roosevelt and Congress approved several new regulations, such as those governing stock purchases, redrafting the right of employees through unionization, and establishing new wage bill guidelines. Additionally, the production and distribution of cosmetics, pharmaceutical medications, and food were subject to more stringent regulations. Modern legislations, which date back to the progressive and “Laissez-Faire” eras, targeted protecting consumers and upholding the rights of labor unions. Over the years, the structure of the American economy has changed as a result of these laws that have been in effect since 1930 (Cairnes, 2021). The section that follows discusses and compares these two eras and the prominent reforms witnessed in both of them.
Progressive Versus “Laissez-Faire” Models of Governance
Differences Based on Definition
The progressive movement is considered a significant political revolution that signaled the onset of new reforms in the 20th century. The ideology sought to restrict the power of big business in politics and advance social and political transformations. Many progressives championed the introduction of a system that was more democratic and accountable for the benefit of American society. These revolutionists supported legislation governing food safety, civil service reforms, and adherence to political rights for women and American workers. Following a string of media exposures that uncovered dubious corporate practices in the 1920s, the progressive movement started to question the authority of powerful corporations.
Contrarily, laissez-faire (sometimes referred to as the Gilded Age) was an economic ideology that reinstated the activities of self-interested entrepreneurs in a market who were thought to catalyze development and improve social welfare. The government played a negligible role in the economy as decision-making was decentralized. The laissez-faire government was limited to establishing appropriate legal frameworks for protecting property rights and sustaining healthy competition in different markets by reducing monopolistic dominance. This was due to the concerns that the federal interventions in matters of economic and social policy curtailed growth by misallocating resources. The segment that follows highlights more differences witnessed during these two models of governance.
Differences Based on Specific Reforms
Throughout the 1900s progressive era, the government significantly relied on its economic and military superiority to advance its foreign policy objectives. The Spanish-American war, which was the most notable operation during this time, increased American dominance in Cuba and the former Spanish territories of the Philippines and Puerto Rico. While the progressive Puerto Ricans in Puerto Rico saw the United States as an effective counterbalance to native sugar industry oligarchs, American forces in the Philippines were confronted with an armed revolt. This contrasted with the Gilded Age, whereby the government relied significantly on the railroad, mining, and banking sectors to meet foreign policy objectives.
During this time, the West, which was centered on farming and mining, grew quickly due to the influx of European immigrants. The significance of labor unions surged in the booming industrial cities whereas the two national economic downturns of 1873 and 1893 sparked more social and political change. However, the progressive movement started to be replaced by other groups of reformers in the 1920s. Progressive failures, such as increased women’s suffrage, occasionally discouraged advocates from pursuing additional change. As a result, the Republican Party attempted to create a completely new progressive coalition thus discouraging the original reformers even further. The party would subsequently be assimilated into Franklin Roosevelt’s larger New Deal alliance. As the Second World War drew more attention to foreign policy concerns, the interventionist debate took precedence over progressive interests thus strengthening the Laissez-faire model.
Contrary to the progressive era, Laissez-faire was typified by an acceleration industrialization, which resulted in a 55% increase in real wages between 1870 and 1889 and was distributed across the expanding labor force (Tacoma, 2021). The emergence of unionization oversaw an increase in workers’ average yearly pay by 47.6%, from $370 in 1881 to $550 in 1891 (Tacoma, 2021). After the American Civil War, the Southern states remained underdeveloped due to their overdependence on the production of products like tobacco and cotton which became less competitive in the foreign market. African-Americans in the South lost their political influence and voting rights towards the end of the Reconstruction era, and this crippled them economically till today.
Similarities
Gauging from similarities, both eras experienced significant urbanization as political machinery became more powerful. Unions pushed for a nine-hour workday and the elimination of child labor, while working-class activists advocated for gender reforms and equality, and changes in the public sector. Secondly, more school systems began to emerge as municipal governments in the Western and Northern states funded public schools, mostly in the elementary phase. Thirdly, both periods were characterized by a wide range of religious movements that increased in both congregation and affluence, with Christianity emerging as the dominant one. They all broadened the global scope through their missionary activities. Using the amassed wealth, Presbyterians and Catholics founded religious institutions, hospitals, and nonprofit organizations.
Conclusion
As highlighted in the introductory paragraph, there has been a significant shift in the balance between laissez-faire and progressive frameworks of governance throughout American economic history. Whereas the progressive movement sought to restrict the power of big business in politics and advance social and political transformations, Laissez-faire was typified by minimum government intervention. Political and social conflicts that emerged during these two eras were solved through different legislation and reforms. The study of progressive versus Laissez-faire models of governance highlighted throughout this paper can help readers understand America’s present-day economy by reviewing the conflicts experienced during and after the industrial revolution.