I. The Growth of Capitalism A.Laissez-faire: Economic policy of letting owners of industry and...
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Transcript of I. The Growth of Capitalism A.Laissez-faire: Economic policy of letting owners of industry and...
I. The Growth of Capitalism
A.Laissez-faire: Economic policy of letting owners of
industry and business operate without interference
from government. (“let do”)
1. Based in the ideas of French Economic philosophers
of the Enlightenment.
2. Argued against tariffs (taxes) on foreign goods.
3. Government regulations interfered with wealth
production.
A. Adam Smith: wrote The Wealth of Nations about a
free economy (free markets) and the 3 laws of
economics.
1. Law of Self-Interest- People work for their own good.
2. Law of Competition- forces people to make a better
product or someone else will.
3. Law of Supply and Demand- enough goods would be
produced at the lowest possible price to meet
demand.
A. Capitalism: An economic theory based on the beliefs laissez-faire
economics, Adam Smith and other economists.
1. Capitalism: An economic system in which the factors of production
are privately owned and money is invested to make a profit.
2. Thomas Malthus- population grows faster than food supply.
Without wars/epidemics to kill of extra people, most were destined
to be poor.
3. Laissez-faire thinkers opposed government efforts to help workers
such as the minimum wage/improved (regulated) working
conditions. They felt such regulations would lower profits and
interfere with the production of wealth.
I. Socialism: An economic system developed by individuals who
thought the government should intervene to improve people’s
lives.
A. Jeremy Benthem: introduced the idea of Utilitarianism in the late
1700s.
1. Utilitarianism: People should judge ideas, institutions and actions
based on their utility/usefulness.
2. Government should promote the greatest good for the greatest
number of people.
3. Government should only pursue policies that promoted this goal.
4. In general, an individual should be free to pursue his/her own
advantage without interference from the state.
A. John Stuart Mill: felt that it was wrong that
workers should lead such awful lives.
1.Wanted government policies that would lead to a
more equal division in profits.
2.Wanted a cooperative system of agriculture.
3.Give women the right to vote.
4.Governments should adopt policies to do away
with great differences in wealth.
A. Socialism: an economic system where the factors of
production are owned by the public (the government) and
operate for the good of all.
1. The government should plan the economy.
2. Government control of factories, mines, railroads and other
key industries would end poverty and promote equality.
3. Public (government) ownership would help workers who
were at the mercy of their employers.
4. On way to change society was by expanding the right to vote
(to the lower classes).
I. Communism- a radical form of Socialism developed by Karl
Marx and Friedrich Engles. Often Called Marxism.
A. The Communist Manifesto: 23 page pamphlet explaining
Marxism. 1848
1. Human society has always been divided into Haves and
Have Nots who are at war.
2. “Haves”= employers and owners called the bourgeoisie.
3. “Have Nots”=the workers or the proletariat.
4. The wealthy controlled all the means of production while
the poor labored under terrible conditions.
A. Marx believed that Capitalism would soon destroy itself.
1. Factories would drive small artisans out of business leaving
just a few in control of all the wealth.
2. The proletariat would revolt and seize control of the factories
and mills and produce what society needed.
3. Workers would share the profits and bring economic equality
for all people.
4. Workers would control the government in a “dictatorship of
the proletariat.”
5. Eventually, the state would disappear and a classless society
would emerge.
A.Pure Communism: complete socialism in which the
means of production – all land, mines, factories, railroads
and businesses would be owned by the people.
1. No personal property would be needed or allowed- all
goods and services would be shared equally.
2. Produced some revolts in 1848-1849 but they fizzled out.
3. 1900s- Revolutions in Russia (Lenin), China (Mao Zedong)
and Cuba (Castro).
4. Pure communism never emerged in these revolutions
only dictatorship.
A. Why didn’t workers revolt worldwide as Marx had
expected?
1. Marx and Engles believed that ONLY economic forces
dominated a society.
2. Failed to account for the influences of religion,
nationalism, ethnic loyalties and the desire for freedom.
3. The gap between the rich and poor widened but not in
the way Marx expected because conditions for the poor
improved because of the development of unions and
government reforms.
I. Labor Unions and Reform: Working people grew tired of long hours,
dangerous working conditions and low wages. By the 1800s, they
became more interested in politics and reform.
A. Unions: Formed to press for reform. Workers joined together in
voluntary labor associations (groups).
1. Unions spoke for all workers in a particular trade.
2. Collective bargaining: negotiations between workers (represented by
the unions) and employers.
3. Unions bargained for better working conditions and higher pay.
4. Strike: a collective refusal to work if owners refused union demands.
5. Skilled workers led the way because they could not easily be replaced.
6. Governments in both the US and Britain passed laws outlawing unions.
7. Workers joined unions anyway and they eventually became legal.
A. Other Reforms.
1. Governments began to investigate child labor and working
conditions.
2. Factory Act (England) 1833- made it illegal to hire children
under 9 years old. Kids 9-12 couldn’t work more than 8
hours. Kids 13-17 couldn’t work more than 12 hours.
3. 1842- Mines Act- prevented women and children from
working underground.
4. Unions eventually joined the fights to ban child labor
completely since it lowered wages for all workers.