Economic Theory: How has industrial development changed living and working conditions? Adam Smith Karl Marx Friedrich Engels Thomas Malthus BACK David Ricardo Jeremy Bentham Robert Owen
Classical Economics: Adam Smith The Wealth of Nations Capitalism: Factors of production (land, labor, capital) are owned privately and money is invested to make a profit. Laissez-Faire Economics or free enterprise: Economic policy of letting owners of industry and business set working conditions without interference. Government protects life, liberty, and property
Classical Economics: Adam Smith Smith s Three Laws: Law of self-interest People work for their own good. Law of competition People will make a better product. Law of supply and demand enough goods produced at lowest possible price.
Classical Economics: Thomas Malthus Population growth will outpace the food supply. War, disease, or famine could control population. The poor should have less children. Food supply will then keep up with population.
Classical Economics: David Ricardo Iron Law of Wages. When wages are high, workers have more children. More children create a large labor surplus that depresses wages.
Classical Economics: Jeremy Bentham Utilitarianism: judge ideas, political policies and actions on the basis of their utility or usefulness to society. The goal of society is the greatest good for the greatest number. Ex: Make poverty undesirable by making poor houses unpleasant. Ex: Abolishing the Corn Laws in 1846: Eliminated tariffs on foreign corn, lowering corn prices for the lower class and help Ireland.
Classical Economics: John Stuart Mill John Stuart Mill Believed in laissez-faire, but criticized economic inequalities and injustices. Government should work for the well-being of all its citizens. Protect working children Improve housing and factory conditions Complete equality between men and women.
Early British Reform Laws Factory Act of 1819: Attempted to improve conditions for women and children; ineffective. Factory Act of 1833: Provided investigation and enforcement for the previous act s rules and reforms Mines Act of 1842: Prohibited women and children from working underground. Ten Hours Act of 1847: Workday for women and children limited to 10 hours in Great Britain. (1904 in USA)
Early Socialism General Ideas: Generally applauded the new productive capacity of industrialization Free market system could not produce and distribute goods as claimed Critical of mismanagement, low wages, maldistribution of goods, suffering from unregulated industrial system Organized as a community rather than a collective of individuals.
Practical Socialists Practical: Do not need to turn the world upside down but implement reforms to existing system. Saint-Simon: Rational management of wealth, property, and enterprise by a group of experts not their owners = alleviate poverty and suffering Did not support a redistribution of wealth. Louis Blanc: End wasteful competition Give the vote to the working class to improve life and conditions Government financed workshops to employ the poor
Utopian Socialists Utopian: Create a perfect, productive, enjoyable community where workers share processes of production and the rewards products Robert Owen: Give workers the correct surroundings, their character and productivity could be improved. Humane industrial environment. Charles Fourier: Eliminate boredom and worker fatigue by rotating tasks Create communities centered on eliminating boredom and dullness of industrialization. Robert Owen s New Harmony, Indiana c. 1824.
A Form of Socialism: Marxism Marxist Socialism or Communism Karl Marx -- German journalist who proposes radical socialism. Friedrich Engels German whose father owned a Manchester textile mill. The Communist Manifesto - 1848 Class struggle and revolutions develop from inequalities. Bourgeoisie middle class capitalists who owned the factories Proletariat the wage earning labor (working class) The Proletarians have nothing to lose but their chains. They have a world to win. Workingmen of all countries, unite. Capitalism will eventually destroy itself workers will revolt.
Communism: Complete Socialism Pure Communism: Live together cooperatively without being forced to do so. A society without classes No private property All goods and services shared equally. Today s Communism: Government controls all factors of production and economic From each according to planning. his abilities, to each according to his need. Ignores basic human rights
Assignment Directions: On a separate sheet of paper, create a Venn diagram that shows the similarities and differences between Capitalism, Socialism, and Marxism (Communism). Resources: Notes, Socialism/Communism hand out, Kagan textbook pages 575-764.