1. Modern World History November 29, 2010

2.  Economic system based on private ownership and on investment of money in order to make a profit  Each business tries to provide goods and services that are better and less expensive than their competitors  Profit is the motive  Individual ahead of society

3.  Father of Capitalism  1723-1790  Scotland  Wrote The Wealth of Nations (1776)  “invisible hand” – belief that everyone’s self- interest would result in what is best for society  “ It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

4.  Laissez-faire (pronounced less-say-fair ) – French term that means “let go”  Both L-F and F.M. mean that the government should have very little control over business – business owners set the working conditions without government interference  Under pure L-F and F.M. government would not set minimum wage or child labor laws

5. POSITIVENEGATIVE  Progress  People motivated  More goods at lower prices  Freedom  Unequal distribution of wealth – rich vs. poor  Wealth & power in the hands of a few  Appeals to selfishness  Does not take into account social justice

6.  Reaction to the poverty, poor working conditions and inequality that arose during the Industrial Revolution  Society ahead of individual interest  Government actively involved in controlling the economy, including major businesses and resources (the “means of production”)  No private ownership

7.  A form of socialism  Economic system in which all means of production are owned by the people, private property does not exist, and all goods and services are shared equally  No class divisions  Equality between “haves” and “have-nots”  “From each according to his ability, to each according to his needs.”

8.  Father of Communism  1818-1883  Germany then England  Partner Friedrich Engels  Engels from wealthy family and managed a factory for family business  They wrote The Communist Manifesto (1848)

9.  Everything is based on economics – politics, law, social structures, family relations, religion  Bad effects of capitalism result in class struggle between bourgeoisie (owners of businesses) and proletariat (workers)  Eventually there will be violent struggle between bourgeoisie & proletariat and proletariat will win  Class divisions will disappear

10.  Capital = money and the people who have it  Labor = the workers – they make things of value but do not receive the profits  Essential Question: Should those who provide the money (capital) receive all the profits and labor receive none?  “The workers of the world have nothing to lose but their chains, workers of the world unite!” – Karl Marx

11. POSITIVENEGATIVE  No gap between rich & poor  Everyone equal  Society operates for the benefit of all  Destroys individual motivation  Does not reward individual effort  Assumes people willing to act for benefit of society

12.  Soviet Union practiced it from 1917-1991, as did countries in Eastern Europe that were controlled by Soviet Union  After 1991 Soviet Union broke up and capitalism spread (but countries had lots of problems shifting to capitalism)  Countries that are still Communist: China, Vietnam, Laos, N. Korea, Cuba

13.  On a separate sheet of paper: Why did Communism appeal to some people during the Industrial Revolution?