PHILOSOPHY OF AMERICAN BUSINESS

Philosophy Philosophy is the study of general and

fundamental problems, such as those connected with existence, knowledge, values, reason, mind, and language.

During Industrialization, many people had ideas about how society should operate as it entered a more modern era.

Declaration of Independence

"We hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are Life, Liberty and the Pursuit of Happiness..." (Thomas Jefferson, "Declaration of Independence," 1776).

Many people began to equate the pursuit of happiness with the pursuit of wealth.

Three Ideas for Rich Industrialists

Idea 1: Social Darwinism Charles Darwin In 1859, Darwin

published published On the Origin of Species. His theory of evolution and "natural selection" was an innovative idea that captured the attention of scientists and philosophers around the world.

Darwin purposely avoided applying "natural selection" to

human societies.

More Social Darwinism Herbert Spencer took

Darwin's theories and applied them to human society. Spencer, not Darwin, was the first person to coin the phrase "survival of the fittest."

He believed that government intervention in the "natural" processes of human evolution, such as welfare for the poor, public education, and government healthcare, helped weak humans survive and, in the process, weakened the health of the entire race.

William Graham Sumner brought Social Darwinism to America.

He said that distinctions of wealth and status among men were the direct result of inherently different abilities, and that dividing society into rich and poor people was good because it eliminated weaker DNA from the gene pool (as natural selection does among animals and plants.)

American businessmen loved Social Darwinism because defended their business practices as "natural.“

It promoted “Laissez-faire” policies. (French for “Leave it alone.” A policy where the government should stay out of business practices.)

"The fortunes of railroad companies are determined by the law of the survival of the fittest." --James J. Hill, railroad owner

Idea #2: Self-Adjusting Economy

The idea of laissez-faire appealed to Scottish economist Adam Smith.

In 1776, Smith published The

Wealth of Nations. 

Smith's book is an argument in favor of allowing people to engage in trade, manufacturing or other activity without interference from government.

The main argument in The Wealth of Nations is pretty simply: People are naturally selfish.

When they engage in business, they do so in order to gain wealth and power. Despite the selfishness of these individuals, their activity is good for all of society.

The more goods they make or trade, the more goods people will have, the greater the competition.

Competition helps all people by providing even more goods and probably lower prices.

This competition creates jobs and spreads wealth.

Self-Adjusting Economy Explained

The rules of the economy are like the unchanging, everlasting laws of Nature.

They argued that individual self-interest was socially beneficial

They maintained that free competition was a permanent and necessary law of economics

They held that government was inefficient and should not be involved in economic matters

Dumb Economics Joke…Q. How many capitalists

does it take to change a light bulb?

A. None, they just wait for the invisible hand of the free market to do it for them!

Idea #3: Profit Motive Profit motive is the only reliable

incentive for action.

During the second half of the century, many American businessmen believed that the pursuit of profits improved the material and spiritual health of the nation.

Even as businessmen acquired enormous

power and influence in American society, their pursuit of personal profits also drove the economic growth, provided jobs to poor workers, and seemed to ensure the nation's prosperity.

Questions1. What are some problems people might have with the ideas of …

a) Social Darwinism?b) Self-Adjusting Economy?c) Profit Motive?

2. Who would thee ideas appeal to?

3. How do you think these ideas would affect poor people if they were followed?