Fundamental Principles of Public Finance


Goals of the Laissez-Faire System Government creates a climate for free competition amongst citizens within the national community through: • Maintenance of law and order (protection services); • Enforcement of contracts by law courts (legal protection); • Protection of private lives; • Protection of private property (legal/social protection); • Defence of national community against any enemy (protection services).


Note Free and unregulated economic competition is allowed within the limitations above. This means that this style of government tries hard to place few, if any, restrictions on trade, while at the same time encouraging competition at every level of the economy.


Social Welfare Goals: Socialistic Approaches The industrial revolution saw the beginning of the use of machinery on a large scale in production. It started in Britain in the 18th century, and spread through Western Europe, North America, Japan and eventually the rest of the world. The industrial revolution transformed every aspect of daily life in some way. Most notably, income and population began to exhibit unprecedented and sustained growth. While people were more likely to be able to get jobs, these were often under strict working conditions with long hours of labour for relatively little pay. Unfortunately, child labour became very popular in the industrial revolution as they could be forced to work in very dangerous conditions for much lower pay than adults, sometimes for 13 hour days.


In short, workers were exploited. There arose a plight (bad conditions and a dilemma) which came about from the frustrations of the workers and the worsening conditions of employment. Because workers were now living and working together in large groups, it became much easier for labour to form organisations or trade unions to advance the interests of working people. Workers slowly began demanding better conditions of work, better pay and more protection from their employees. An ideology of socialism arose in which governments were asked “to create circumstances within which individuals could develop his/her social welfare and physical being” (Gildenhuys 1993:6). Suddenly the government became responsible for satisfying these demands. Socialism was born and finally led to the Russian Revolution in 1917, which in turn led to communism.


Case Study: The Russian Revolution While we generally talk about the Russian Revolution, there were actually two revolutions in Russia in 1917. The first revolution in February overthrew the Tsar (essentially the King of Russia), and installed a provisional government. The second revolution in October saw a political party called the Bolsheviks seize power under Vladimir Lenin and implement communism. After the second revolution, civil war erupted in Russia, which only ended in 1923.


The Russian revolution occurred because workers were expected to work for long hours with poor sanitary conditions and with overcrowded housing. Most workers were expected to work for 11-12 hours a day for six days a week. Peasants were also very badly treated, and believed that the land should belong to those who work it. Finally, Russia’s involvement in World War I, led to a large number of casualties, and heavy defeats for Russia, leading to the Russian army mutinying.


5


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100  |  Page 101  |  Page 102  |  Page 103  |  Page 104  |  Page 105  |  Page 106  |  Page 107  |  Page 108  |  Page 109  |  Page 110  |  Page 111  |  Page 112  |  Page 113  |  Page 114  |  Page 115  |  Page 116  |  Page 117  |  Page 118  |  Page 119  |  Page 120  |  Page 121  |  Page 122  |  Page 123  |  Page 124  |  Page 125  |  Page 126  |  Page 127  |  Page 128  |  Page 129  |  Page 130  |  Page 131  |  Page 132  |  Page 133  |  Page 134  |  Page 135  |  Page 136  |  Page 137  |  Page 138  |  Page 139  |  Page 140