1. New Economic Ideas Chris Anderson Randolph-Henry H. S.

2. After the French Revolution, Europe seemed upside down Undergoing a transformation: From a _________________________ to ____________________________ Middle class (MC) gained lots of wealth Working class (WC) lived in squalor Lots of reformers were trying to help the WC

3. “Hands Off” Reformers and owners did not agree Industrial owners thought they should control industry without government interference Believed government involvement would ___________________________ Laissez-Faire economics – Government keeps its “hands off” of industry

5. Adam Smith Scottish professor 1 st to explain capitalism (what is it????) and laissez-faire economics Wrote Wealth of Nations (1776) Justified a change from mercantilism (government restriction) to a more capitalistic (government free) industry **Labor is the main source of wealth, NOT $$

6. Supply and Demand: people only buy what they want or need; therefore businesses should produce what people buy With no government interference, businesses will compete to produce goods at the most inexpensive price “Invisible Hand”: the competition between businesses

7. Adam Smith

9. Thomas Malthus Had a pessimistic (gloomy) view of the economy English economist/preacher Wrote An Essay on the Principles of Population Growing population caused poverty (WHY??) Population was growing faster than food supply—ending in disaster Believed poverty to be unavoidable

10. Thomas Malthus

11. Draw the Malthusian Ceiling

12. David Ricardo English banker and economists “Iron law of wages”: believed that the rising population led to more workers competing for jobs Competition for jobs kept wages low Poverty unavoidable

14. Reformers Many people criticized laissez-faire economics Many want to make changes in industry 1.) William Wilberforce: British Parliamentary member Wanted to abolish slavery Make lives of the WC better

15. 2.) Lord Shaftsbury: Parliamentary member Wanted to reduce working hours for women and kids Both Wilberforce and Shaftsbury will get Parliament to pass laws regulating working conditions in GB – 1833: laws regulating employment of children in factories – 1842: law outlawing the use of women/kids in mines – 1847: Ten Hours Act—a 10 hour or less workday for women/kids in factories

16. William WilberforceLord Shaftsbury

17. 3.) Jeremy Bentham: Utilitarianism—true test of any action or institution is its usefulness to society What are some institutions that are useful to society????

18. 4.) John Stuart Mill: Believed the government should tax people’s income to redistribute wealth

19. 5.) Charles Dickens: Writer Used his works to attach industrialization Do you know any of his works????

20. Socialism Many believed that capitalism caused suffering Believe the struggle to make a profit caused misery Argue for socialism—workers own, manage, and control production

21. Utopian Socialism: Early socialist idea Wanted to create a society where everyone shares everything

22. Robert Owen: First to create a working utopia Believed competition caused suffering Cooperation would make life better

23. Karl Marx German philosopher Saw Utopian socialism as impractical Degrees in history and philosophy Forced to flee Prussia to France

24. Marx’s Theories: Based ideas in history, economics, and historical change History advanced through conflict, but economics was the major force At the base of every social order was production Everything in a nation developed around its economic base Most important part of the economic base was the creating of social classes

25. _____________________ controlled production (Would they every give it up???) Only give up control of production through ________________________ Conflict between the different classes was inevitable and unavoidable Class struggle pushed history forward

26. Marx said that Europe had experienced 4 stages of economic life: 1.) Primitive -people only produce what they need -no exploitation -tools develop, surpluses made, exploitation starts 2.) Slave -struggle between ___________ & ___________ 3.) Feudal -struggle between ___________ & ___________ 4.) Capitalist -struggle between ___________ & ___________

27. Marx believed capitalism to be temporary Was he correct?????? Believed a major crisis would occur in an industrialized nation where the government would take control of the Middle Class Government would create a society where the people owned everything—no private property, no class distinction, and eventually the government would __________________

28. Capitalism did not go away—still exists today Marx was wrong—lives got better for the Working Class (no need to rebel) Communism developed from Marx’s ideas