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Government regulation of economic life is not a new development. The national mercantilist systems of the 18th century provided for regulation of the production, distribution, and export of goods by government ministries; even during the 19th century, governments continued to intervene in the economy. The government of the United States, for example, from its inception in 1789, allotted funds or subsidies for the support of agriculture, maintained a system of tariffs for its own revenue and the support of domestic manufacturers, patronized the arts and sciences, and engaged in various kinds of public works to advance commerce and promote the general welfare. In France even more elaborate governmental schemes of economic regulation were practiced throughout the 19th century, including a variety of socialist experiments such as the Public Workshops that Louis Blanc established in Paris in 1848. In Britain the various factory acts of the 19th century represented an effort by government to improve slightly the working conditions in industry.
After World War II the ability of a government to regulate or control the economy became one of the chief tests of its success, and regulatory agencies multiplied to the point at which they are now often referred to as “the fourth branch of government.” The extent of the controls imposed on the economy is one of the principal distinctions between capitalist, socialist, and communist systems. In communist countries it is a matter of doctrine that the means of production should be owned and therefore controlled by the state. In Britain the Labour governments nationalized some major industries, including coal, steel, and the railroads, prompted partly by socialist doctrine and partly by the failure of British industry to remain competitive in international markets. This process was then reversed when the Conservative Party became ascendent. In the United States the government has involved itself in the economy primarily through its regulatory powers. In France the government has gone farther and has engaged in national economic planning in cooperation with private business organizations.
The regulation of industrial conditions and of labour-management relations has been a major concern of most Western governments. In the United States the first regulatory efforts in this field were made during the Progressive era at the turn of the 20th century, when the wages, hours, and working conditions of women and children in industry became a matter of public scandal. A little later the conditions, hours, food, and wages of merchant seamen were brought under government regulation; an eight-hour day was set for railway crews; and workmen’s compensation laws were instituted. With the Great Depression in the 1930s, minimum wages were introduced for workers in many industries, hours of work were set, and the right to collective bargaining was given legal sanction.
Regulation of transportation has been another major activity in most Western political systems, beginning with the railroads. In the United States their monopolistic practices attracted the criticism of agricultural interests and led eventually to the Interstate Commerce Act of 1887, which regulated railroad rates; subsequent legislation covered the hours, conditions, and wages of railroad employees, among other things. Other modes of land and air transportation have since been brought under regulatory controls implemented by government agencies.
In many European countries, major facilities of communication—telephone, radio, and television—are owned and operated by the government. In the United States, most of these facilities have remained in private ownership, although they are regulated by the Federal Communications Commission. The regulation by government of important instruments of public opinion such as radio, television, and newspapers has important implications for the freedoms of speech and press and other individual rights. In the United States and Great Britain, government censorship of the press and other media has been restricted to matters of national security. This is also generally true of other Western constitutional democracies. In many of the less-developed countries with authoritarian governments, very extensive controls are imposed on the press, and government-owned newspapers are often the principal sources of political news.
Other forms of government regulation of the economy involve the use of taxes and tariffs, the regulation of weights and measures, and the issuance of money.
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