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It is never easy to determine what causes new values to arise in human societies. New values do seem to have arisen in the early 20th century, but were they caused by urbanization or by something else? It is hard to know.
You can argue that urbanization did create new, more liberalized values. This came about largely because people were pulled out of their more traditional environments and put together in cities without the same sorts of social constraints that had existed before. Put into cities where people did not know one another and where there were people (like immigrants) with different values, it is natural that old values would fall away and new values arise.
In that way, we can argue that urbanization and the city environment played an important part in shaping new values.
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