Next topic: Transitioning from US1 to US2

1. Next topic: Transitioning from US1 to US2 LESSON FOCUS: To recognize and describe the ways in which the United States had CHANGED between the end Reconstruction (1880) and 1900. This era is commonly known as the “Gilded Age”; meaning that, on the surface, America was covered with gold, but beneath the surface was a much different America. America experienced great TRANSITION during this time . It is also an era that was teeming with CONFLICT. These last 20 years of the century are also known as the “reckless” decades or an “age of extremes”; decades in which our democracy seemed more like a PLUTOCRACY Beneath the surface there was an America that had rotted and decayed…socially, politically and economically.

2. The Problems of Industrialization and their Solutions Laissez-faire capitalism is the main reason why there was so much WEALTH and so much POVERTY in America by 1900. How could we solve the problems of poverty (restore more equality) while maintaining a person’s right to make money (freedom)?

3. Capitalism – What is it?

4. The Roots of Capitalism • Began as “mercantilism” (“favorable balance of trade”) • Capitalism grew to be the predominate economic system in Europe. • Religions at the time did not like the emphasis on private gain, BUT the 1700s emphasized the idea that people ought to be free to pursue their private interests, including economic interests. • Adam Smith'sThe Wealth of Nations (1776) -recommended leaving economic decisions to the free play of self-regulating market forces. • AKA No Government Involvement – “Laissez-Faire”

5. LAISSEZ - FAIRE CAPITALISMCreated the wealth of the Gilded Age! • 3 parts of capitalist society: • Capitalist/Bourgeoisie/Proletariat/ • Private ownership of the means of production • Prices of goods and services set by laws of supply and demand • FREE ENTERPRISE (no rules, no regulations) • Free market economy and open competition • Workers own their labor and sell it to the capitalist • Wages based on laws of supply and demand • NO GOVERNMENT interference in economic/business activity (laissez-faire/”hands off”) • What motivates the CAPITALIST? • Social Darwinism - the strong survive and the weak perish..

6. The INEVITABILITIES of Capitalism • Equal opportunity at the outset. • Accumulation of wealth by a few, not all. • Competition forces some participants to drop out. • This increases the labor supply, which means a higher demand for jobs = lower wages...and higher profits • Wealth becomes concentrated in even fewer hands • More competitors and participants are driven out of business • MONOPOLIZATION: when the capitalist controls the markets of an entire industry – There is little or no competition; game over! • Motivated by profit, the capitalist turns to international markets • And the steps are repeated… • Which elements of capitalism remain? • In the end, what has capitalism done to itself? • Which element of capitalism is responsible for this?

7. Capitalism - Pros • Minimal government intrusion into the public arena. • “social mobility” up or down, equal opportunity • Rewards merit, ability and achievement, regardless of birth station • Freedom to experiment, invent and produce • Wealth has an unlimited growth potential • Very Efficient

8. Capitalism - Cons • Corruption, greed, cold-heartedness, callousness, exploitative, dehumanizing, alienating, enslaving. • Creates gross class divisions • Gross economic inequalities • Truly unequal opportunity and life-chances • Creates alienation of people from their work and other people

9. Socialism – What is it? • Definition: An economic or political system that features govt. control of business and property, and equal distribution of wealth. • Theory: Private property is the source of the class divisions that place some people in positions of power and privilege, while condemning others to poverty and powerlessness (creating 2 distinct classes in society). • BUT Socialists feel that everything people produce, is in some sense a social product, and everyone who participates in producing a good is entitled to share in it. • SO IN SOCIALISM: • Society as a whole, not the private individual, should own and control property for the benefit of all.

10. The Roots of Socialism Karl Marx • In an industrial capitalist society there were 2 classes: • The capitalist/bourgeoisie and the proletariat • Marx felt capitalism was a progressive good but that it had outlived itself. Need a new type of society to continue the progression to human betterment • i.e. a classless society. • True freedom (which is freedom from exploitation and alienation, the freedom to develop one’s human powers to their fullest) can flourish only in a class-less society. • Basically, the Proletariat needs to start a revolution to overthrow capitalism and create a class-less social and communal society.

11. Socialism - Pros • Small gap between wealthy and poor • Equality • Workers have more ownership • No competition = kinder to each other

12. Socialism - Cons • Less motivation to work hard – rewards laziness • Less Efficiency • Money taken from those who have earned it through hard work • No motivation to invent

13. Decision time…. • Should the US continue following the same path of laissez-faire capitalism into the 20th century as it had in the past? • Should the US abandon laissez-faire capitalism and pursue a new, socialist path moving into the 20th century? • What other options did the US have?

14. DILEMMA • How do we repair the condition of American society around 1900? • How do we restore the principles of capitalism, which are gone because of monopolization of industries? • How do we restore the principles of a democracy that has evolved into a plutocracy? • Bottom line/new frontier: How do we promote a more equal society and maintain individual freedom? (Preamble’s themes)