2Was there a Need for Reform? During the 19th century, the Industrial Revolution not only revolutionized the way things were made, but also created many problems.Make a list of the areas of society in which reforms were necessary.
3Tensions Created By the Industrial Revolution The gap between the rich and poor widenedBusiness owners/leaders argued that the government should stay out of economic affairs.Reformers argued the government needed to play an active role to improve the conditions for the poor.Workers demanded better wages, more rights, and protection.Workers form labor unions increase their influence, often times clashing with business owners
4The Philosophers of Industrialization & their Economic Philosophies Economic PhilosophyAdam Smithlaissez-faireThomas Malthuslaissez-faire capitalismDavid RicardoJeremy BenthamutilitarianismJohn Stuart MillRobert Owenutopian socialismKarl MarxMarxism/communismFriedrich Engels
5Laissez-faireTerm is French in origin— “let people do as they please.”Economic policy stemmed from the French economic philosophers of the Enlightenment.The Enlightened Philosophers argued:against government intervention in the economy and the use of placing heavy tariffs on foreign goods.that government regulations only interfered with production and wealth.if government allowed free trade, the economy would prosper
6Laissez-faireDefinition of laissez-faire: The idea that the government should not interfere with or regulate industries and business.An economic policy of letting owners and business set working condition without interference.This policy favors a free market unregulated by the government.What are the advantages/disadvantages of a laissez-faire economy?
7Adam Smith Professor at the University of Glasgow, Scotland Defended the idea of a free economy and free markets in his book, The Wealth of Nations (1776):Economic liberty = economic progressBelieved the government should not interfere with the economyAdam Smith
8Adam SmithHis arguments rested on what he called the Three Natural Laws of Economics:1. Law of self interest— People work for their own good.2. Law of competition— Competition forces people to make a better product.3. Law of supply & demand— Enough goods would be produced at the lowest possible price to meet the demand in a market economyAdam Smith
9CapitalismDefinition of capitalism: an economic system based on private ownership and on the investment of money in business ventures in order to make a profitThese ideas helped bring about the Industrial Revolution and supporters of capitalism believed its success was due in part by the fact that the government did not meddle in economics.
10The Philosophers of Capitalism Thomas Malthus( )David Ricardo( )
11Thomas MalthusSupported the basic ideas of Adam Smith and that natural laws governed economic lifeHis ideas, (along with David Ricardo’s,) were the foundations of laissez-faire capitalism.Thomas Malthus( )
12Thomas MalthusIn his essay, An Essay on the Principle of Population (1798), he argued that population tended to increase more rapidly than the food supply.Argued that without wars, famine, or epidemics to control the population, most people would be poor would suffer.Thomas Malthus( )
13Thomas MalthusHe urged people to have less children to avoid overpopulation and the chance of large families becoming poor and to avoid suffering.Predictions became a reality during the 1840s, though the food supply eventually increased, living conditions improved, and people began to have less children.Thomas Malthus( )
14David Ricardo A wealthy stockbroker Believed the poor had too many children.Elaborated on Malthus’s theory of economics in his book Principles of Political Economy & Taxation (1817):Believed a permanent underclass would always be poorMany workers + abundant natural resources = cheap labor & resources.David Ricardo( )
15David RicardoPrinciples of Political Economy & Taxation (1817) continued:Few workers + scarce natural resources = expensive labor & resources.Believed as the population increased, wages would decrease (workers paid less)David Ricardo( )
16Laissez faire thinkers, such as Adam Smith, Thomas Malthus, and David Ricardo all: Opposed government intervention in the economy, which included government efforts to help poor workers.Believed people should be left to improve their lot through thrift, hard work, and limiting the size of their families.Argued creating a minimum wage and better working conditions would:Upset the free market systemLower profitsUndermine the production of wealth in society
17Discussion: Laissez-faire Capitalism and the Philosophers How were “workers” viewed by people like Smith, Malthus, and Ricardo?How did they view the poor? Was their view favorable or unfavorable? Explain your answer.According to Malthus and Ricardo, what affect did population growth have upon society?What flaws (if any) can you find with laissez-faire capitalism?Could a society have a capitalist economy in which a government could impose restrictions? Explain your answer. (Hint: Think about the U.S. economy.)
18SocialismGrew out of the Enlightenment faith in progress, its belief in the goodness of human nature, and its concern with social justice.Supporters of socialism believed:Governments should intervene in businessWealthy people or governments had an obligation to take action to make peoples lives better (i.e. better wages, working/living conditions, distribute wealth/power equitably)Condemned the evils of industrial capitalism, which they argued, created the huge gap between the rich and the poor.In a society in which would operate for the benefit of all its members, not just for the wealthy.
19SocialismDefinition of socialism: an economic system in which the factors of production are owned by the public and operate for the welfare of all.Under socialism, people as a whole would own and operate the means of production—the farms, factories, railways, mines, and other large businesses that produced and distributed goods.
20Utilitarianism A form of socialism Definition of utilitarianism: the theory, proposed by Jeremy Bentham in the late 1700s, that government actions are useful only if they promote the greatest good for the greatest number of people.Idea that the goal of society should be to bring about the greatest happiness for the greatest number of people.This theory provided that the government intervene in business and the economy to bring about economic and social equality, fair working conditions, and improved living conditions.
21The Philosophers of Utilitarianism Jeremy Bentham( )John Stuart Mill ( )
22Jeremy Bentham Modified the ideas of Adam Smith Introduced utilitarianism in the late 1700sHe strongly supported individual freedom, which he believed guaranteed the greatest happiness.Believed people should:Judge ideas, institutions, and actions on the basis of their utility, or usefulnessBe free to pursue his/her own advantage without interference from the state (government.)Jeremy Bentham( )
23Jeremy Bentham Bentham’s thoughts about the government: The government should try to promote the greatest good for the greatest amount of people.Government policy was only useful if it promoted this goal.Laws or actions should be judged by their “utility.”Did they [laws] provide more pleasure (happiness) than pain?Believed the government needed to be involved in the economy in certain circumstances.Jeremy Bentham( )
24John Stuart MillPhilosopher & economist, led the utilitarianism in the 1800sQuestioned unregulated capitalismBelieved it was wrong that workers led deprived lives and often meant starving to deathWished to help ordinary through governmental policies that would create an equal division of profitsJohn Stuart Mill ( )
25John Stuart MillWhile he believed in individual freedom, he argued the government needed to improve the harsh life of the working class.Like other utilitarian’s, Mill worked for reforms in many areas affecting workers, the poor, child labor, and public health.Favored cooperative systems of agricultureSupported women’s rightsJohn Stuart Mill ( )
26John Stuart MillSuffrage: argued workers and women should have the right to voteThese groups could then use their political power to win reforms.Pushed for governmental reforms in the following areas:the legal system, including prison systemseducation reformClass system: he wished the government would abolish the great disparity between the rich and the poor.John Stuart Mill ( )
27UtopiaDefinition of utopia: an ideal society; an imaginary land described by Sir Thomas More in his book Utopia—hence, an ideal place.In Greek, utopia means “no place.”In More’s book, greed, corruption, and war had been weeded out. Because there was no greed in Utopia, there was no need for money.Influenced the political and economic philosophy of utopian socialismSir Thomas More( )
28Utopian Socialism Early socialists were called utopians. Early socialists tried to build self-sufficient communities. In this community:all work and all property was owned in common.They believed that no difference between rich & poor = no fighting between people.Why do you think utopians were referred to as “impractical dreamers?”
29Robert OwenBorn a poor Welsh boy—later became a successful mill owner.He refused to use child labor.Lobbied the government to pass laws limiting child labor and encouraged the organization of labor unions.Robert Owen( )
30Robert Owen Owen’s vision of ‘Utopia’ Built a factory and a model village in New Lanark, Scotland.Built homes for workers, opened a school for children.Workers were generally treated well, illustrating an employer could offer decent living and working conditions while still running a profitable business.By the 1820s, people visited New Lanark to study Owen’s reformsRobert Owen( )
31The Philosophers of Marxism Definition of Marxism: A radical type of socialism introduced by Karl Marx, a German journalistFriedrich Engels( )Karl Marx( )
32Karl Marx A German journalist Agitated for reform as a young man. A socialist who despised capitalism, which he argued, created prosperity for a few and poverty for many.Forced to leave his homeland because of his radical ideas.First lived in Paris and then settled in London, where he met Friedrich Engels.Along with Engels, they outlined their economic ideas in a 23-page pamphlet called the Communist ManifestoKarl Marx( )
33Friedrich Engels A German socialist residing in London, England His father owned a textile mill in Manchester, England.Teamed up with Karl Marx, to outline their economic ideas in a 23-page pamphlet called the Communist ManifestoFriedrich Engels( )
34Marx & Engels: The Communist Manifesto Marx and Engels argued that human societies have always been divided into two warring classes:The middle class, “haves” or employers, called the bourgeoisieThe wealthy controlled the means of producing goodsThe working class, “have-nots” or employees called the proletariatThe poor performed backbreaking labor under terrible conditions.
35Marx & Engels: The Communist Manifesto The Industrial Revolution enriched the wealthy and impoverished the poor.Marx and Engels Predicted that the workers would overthrow the owners:“the proletarians have nothing to lose but their chains. They have a world to win. Workingmen of all countries unite.”
36The Future According to Marx Marx argued the capitalist system would destroy itself in the following ways:Factories will drive small artisans out of businessSmall number of manufacturers will control the wealth, causing a huge gap between classesThe large proletariat will revolt, seize factories & mills from capitalists
37The Future According to Marx Results of the proletarian revolt:Workers will share in the profitsEconomic equality will be established for allCooperative living & education will yield a classless society and the state/government will disappear.The final phase of Marxism is called communism
38CommunismDefinition of communism: an economic system in which all means of production—land, mines, factories, railroads, and businesses—are owned by the people, private property doesn’t exist, and all goods and services are shared equally.A form of socialism that sees class struggle between employers and employees as unavoidable.
39Short-Term Results of Communism :Many revolts in EuropeEuropean leaders put down revolts1900s:Marxism inspired revolutionaries in Russia (Lenin), China (Mao Zedong), and Cuba (Fidel Castro).These leaders adapted Marxism to their own specific situations and beliefs