19.4: New Ways of Thinking

I. Laissez-Faire Economics  A. Physiocrats = enlightenment thinkers who argued that natural laws should be allowed to operate without interference Government should not interfere with the economy Government should not interfere with the economy Early 1800s = middle class business leaders embrace this idea Early 1800s = middle class business leaders embrace this idea  B. Adam Smith = proponent of Laissez-Faire Economics Authored The Wealth of Nations = argued that free market would… Authored The Wealth of Nations = argued that free market would… Produce more lower pricesProduce more lower prices Encourage capitalists to reinvest in economyEncourage capitalists to reinvest in economy

II. Thomas Malthus  A. Also a Laissez-Faire Economist  B. Predicted population would outpace the food supply Believed only “checks” on population were natural…war, disease and famine Believed only “checks” on population were natural…war, disease and famine Believed population increase would cause the poor to suffer Believed population increase would cause the poor to suffer Urged families to have fewer children, discouraged charity and vaccinations Urged families to have fewer children, discouraged charity and vaccinations

III. David Ricardo  A. Also supported Laissez-Faire Economics  B. Wrote “Iron Law of Wages” Said working class would never escape poverty Said working class would never escape poverty Wages would never keep up with cost of living (real wages vs. net income) Wages would never keep up with cost of living (real wages vs. net income) Said when wages were high people had more children instead of raising their standard of living Said when wages were high people had more children instead of raising their standard of living

I. Utilitarians  A. Jeremy Bentham = British philosopher and economist who advocated utilitarianism Strongly supported Individual Freedom, thought it guaranteed happiness Strongly supported Individual Freedom, thought it guaranteed happiness Saw a need for government involvement in certain circumstances Saw a need for government involvement in certain circumstances  B. Goal of Society = “the greatest happiness for the greatest number”  C. All laws or actions should be judged by their “utility” (Do they provide more pleasure than pain?)  D. John Stuart Mill = wanted government to step in to improve lives of the working class Government should prevent own those who run business from harming workers Government should prevent own those who run business from harming workers Proposed giving the vote to women and workers Proposed giving the vote to women and workers

II. Socialists  A. Focus = the good of society as a whole  B. Condemned Industrial Capitalism = believed it created a gap between rich and poor  C. Socialism = people as a whole would own and operate the means of production, rather than individuals Primary concern = “social justice” Primary concern = “social justice”  D. Theory = no gap between rich and poor meant no fighting/conflict  E. Early socialists were called Utopians Robert Owen = set up a model community in New Lanark, Scotland Robert Owen = set up a model community in New Lanark, Scotland

III. Karl Marx  A. Karl Marx = German philosopher who devised theory of “scientific socialism”  B. Helped author The Communist Manifesto = argued that….1)Economics was driving force in history 2)continuous conflict between the “haves”and “have nots” Haves = “Bourgeoisie”, owned means of production Haves = “Bourgeoisie”, owned means of production Have-nots = Proletariat, working class Have-nots = Proletariat, working class  C. Communism = form of socialism that would lead to a classless society where all means of production would be owned by the community

II. Karl Marx Cont…  D. Marx’s Prediction = Coming conflict between the Proletariat and the Bourgeoisie Coming conflict between the Proletariat and the Bourgeoisie Proletariat would be triumphant Proletariat would be triumphant Workers would set up a classless, communist society Workers would set up a classless, communist society Wealth and power would be equally shared Wealth and power would be equally shared