Industrial Revolution

Industrial Revolution New Ways of Thinking Chapter 5, Section 4

Thomas Malthus • British economist • Explored effects of population explosion • Wrote Essay on the Principle of Population • Concluded that population increasing faster than food supply

Laissez-Faire Economics • Economic philosophers believed the government should not interfere with the free operation of the economy • This is called Laissez-Faire • “Government – stay out of the economy” • Let the market correct itself without passing laws or regulations

Adam Smith • Wrote The Wealth of Nations • Free, unregulated market would help everyone, not only the poor • Free market would produce more goods at lower prices because of competition among sellers • Competition brings prices down • Prices would be more affordable to many

Capitalism • Capitalism is an economic system • Factors of production (land, labor, and capital) are privately owned • Money is invested to make a profit • The sole goal of capitalism is to make more MONEY without due regard for the social effects on people and society

Thomas Malthus (economist) • Malthus predicted that population would outpace the food supply • Without wars, hunger and diseases to kill off the extra people, most were destined to be poor and miserable • An increase in population would cause greater suffering on the existing poor • Malthus urged families to have fewer children

Thomas Malthus • Malthus discouraged vaccinations (to promote disease and death) • If fewer people were vaccinated, more people would catch deadly diseases leading to a natural decrease in the world’s population • However, Malthus was proven wrong – population grew but the food supply grew faster • Living conditions did improve – people eventually had fewer children in western countries

Ricardo • Principles of Political Economy and Taxation (1817) • Believed a permanent underclass would always be poor • In a market system, if there are many workers and abundant resources, then labor and resources are cheap (too many workers drives DOWN the wages) • If there are few workers and scarce resources, then goods they are expensive (insufficient workers and scarce resources drives UP the price of goods) • Ricardo believed that wages would be forced down as population increased

Ricardo • Ricardo argued the Iron Law of Wages • Under the Iron Law of Wages, Ricardo argued that increases in a worker’s wages are futile (useless) • Why? • Because an increase in wages covered the necessities only • When wages were high, families had more children instead of raising the family’s current standard of living

Ricardo’s other beliefs • Opposed government help for the poor • Best cure for poverty is not government help but the free market economy (no restrictions)

Iron Law of Wages Wages Raised More Children Increased Workers Wages Fall Working People Produce Fewer Children

Utilitarianism • Jeremy Bentham (English philosopher) • People should judge ideas, institutions, and actions on the basis of their utility, or usefulness • Government should try to promote the greatest good for the greatest number of people • Government policies was only useful if it promoted this goal • People should be free to pursue his or her own advantages w/o government interference

Jeremy Bentham (stuffed in a museum)

John Stuart Mill • Led utilitarian movement (1800s) • Mill questioned unregulated capitalism • He believed it was wrong that workers should lead deprived lives that bordered on starvation • Mill wanted to help ordinary working people with policies that would lead to a more equal division of profits • He favored a cooperative system of agriculture • Mill favored increasing women’s rights (right to vote)

John Stuart Mill • Called on government to eliminate great differences in wealth • He pushed for reforms in legal and prison systems • Mill supported reforms in education

Socialists • Socialists condemned the economic evils of industrial capitalism • Capitalism created a gap between rich and poor • The rich became richer while the poor industrial working class became even poorer • Socialists focused on promoting collective equality for all social groups • Radical solution = socialism

Socialism • Under socialism, the people collectively, not private individuals, own and operate the means of production • Socialism believes in the basic goodness of human nature and a concern for social justice for all

Means of Production (land, labor, and capital) • Farms • Factories • Railways • Other large businesses that produced and distributed goods

Utopia Utopia is a name for an ideal community, taken from the title of a book written in 1516 by Sir Thomas More describing a fictional island in the Atlantic Ocean, possessing a seemingly perfect socio-politico-legal system. The term has been used to describe both intentional communities that attempted to create an ideal society, and fictional societies portrayed in literature. A perfect utopian society does not exist anywhere.

Utopians • Early socialists were called Utopians • Utopians attempted to create an ideal, equal society • Work was shared • All property owned in common • No difference between rich and poor • Fighting between people would disappear

Robert Owen (“Owenism”) • Owen established a model utopian community in New Lanark, Scotland • Refused to use child labor • Promoted laws to restrict child labor • Encouraged organization of labor unions

Karl Marx • German philosopher • He rejected utopianism as unrealistic goal • Teamed with Friedrich Engel to author The Communist Manifesto (1848) – bible of communism

Communism • Communism is an extreme form of socialism • Social classes would struggle and fight to control the means of production • The end of the fighting would leads to the creation of a classless society (no upper, middle or lower class) • All means of production (land, labor, capital) would be owned by the community, by the people – equally.

Marxism • History has always been about economic class struggle (between the “haves” and “have-nots”) • The “haves” always owned means of production and controlled societal wealth • “Haves” in society were the bourgeoisie (middle class) • “Have-nots” were the proletariats (working class)

Marxism • Class struggle would occur between the bourgeoisie (wealthy) against the proletariat (workers) • The proletariats (workers) would rise up and seize power and the means of production from the bourgeoisie • Proletariats would then set up a classless, communist society (all people would be equal and not belong to any economic class) • Class distinctions (upper, middle, lower) would disappear forever • Wealth and power to be equally shared • Marx hated capitalism believing it created wealth and power for a few people

The Communist Manifesto • “Workers of all countries, unite!” • (rallying cry/slogan and last words of The Communist Manifesto)

Social Democracy • Germany adopted Marxist beliefs to create a social democracy • Social democracy = a gradual transition from capitalism to socialism instead of a sudden (communism) violent overthrow of capitalism • Russian Revolution of 1917 ushered in communism, the more radical form of socialism • Marxism has been adopted in various countries on different continents

Predictions of Marx Failed • Marx predicted worldwide worker revolutions to end class struggles • But nationalism won out over working-class loyalty • People felt stronger ties to their own country than to an international communist movement • Few communist governments by end of 20th century • Nearly every economy included elements of free-market capitalism (even former communist countries)

Powerpoint Questions (22 points) • 1. What is the economic theory that believes the government should NOT interfere in the economy? • 2. According to Malthus, what were the natural methods to control population growth? • 3. What did Malthus predict about food and population? • 4. Why were wage increases useless according to Ricardo? • 5. All laws or actions should be judged by their utility or usefulness to society. This is called _________ and was promoted by ___________. (2 points)

Powerpoint Questions • 6. Who built a model utopian community in New Lanark, Scotland? • 7. What is socialism? • 8. Identify the means of production (3 points) • 9. Who teamed together to author the Communist Manifesto (1848)? (2 points) • 10. What is communism? • 11. The have-nots in communism were the ____, or working class.

Powerpoint Questions • 12. In a communist revolution, workers seize control of the ____________ and they set up a ________ society. (2 points) • 13. How is a social democracy different from communism? • 14. What was the slogan of Marx and Engels? • 15. According to Adam Smith, how does the free market lower prices for everyone?

The End

Industrial Revolution