Adam Smith (English) Karl Marx (German) The Wealth of Nations Laissez-faire, or “hands-off,” approach to the economy No government intervention or regulation The Communist Manifesto Working-class would take power and create a class-less society Workers control the means of production Origins of Economic Philosophies

Free Market Economy Command Economy Business will create ideal conditions if free from interference “Invisible hand” Government makes all decisions about production and wealth distribution The Economic Spectrum

Democracy Communism Power is held by the citizens in a system with open elections Greatly expanded in the 1800’s to include all classes of people “Dictatorship of the proletariat” – suppress any pro-capitalist movement Redistribution of wealth The Political Spectrum

Socialism Communism Achieved through peaceful, democratic means Retain people’s support with political liberty and economic justice Only nationalize major industries Power only through revolution Suppress anything counter-revolutionary Government owns all production Socialism ≠ Communism  Socialism CAN occur in a democracy

A Third Way – Utilitarianism The goal of society should be “the greatest happiness for the greatest number” – Jeremy Bentham  Can a free market achieve this goal? Why or why not? Government regulation and involvement under certain circumstances Mixed economy – combining private ownership and tax-funded infrastructure and services  Where would you place the United States on this spectrum today? Democratic socialism – the two ideas can be combined

“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. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.” Adam Smith, “Wealth of Nations”

“I hope we shall...crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.” Thomas Jefferson

“The development of Modern Industry, therefore, cuts from under its feet the very foundation on which the bourgeoisie produces and appropriates products. What the bourgeoisie, therefore, produces, above all, are its own grave-diggers. Its fall and the victory of the proletariat are equally inevitable.” Karl Marx, “Communist Manifesto”

"Democracy cannot consist solely of elections that are nearly always fictitious and managed by rich landowners and professional politicians.” Ché Guevara, in support of democratic socialism

Democracy Flourishes Britain – change through reform  Reform Act (1832) & Bill (1867) – suffrage to more men  Slavery banned in all British colonies (1833)  Benjamin Disraeli – created modern Conservative party France  Third Republic – new National Assembly  Separated Church and State, stopped paying clergy  Ownership rights for married women  Failures  Dreyfus Affair – accused German spy denied rights  Antisemitism – persecution of Jews (led to calls for Jewish state)

Democracy Flourishes Germany  Reichstag – lower house of Parliament, universal male suffrage  Welfare state – social security programs (1880s) Italy  Statuto Albertino – constitution of 1848  Corruption leads to facism

Democracy Flourishes United States  Territory added in 1840’s – Texas, Mexican Cession, Oregon Country  Abolition of slavery – Emancipation Proclamation & 13 th amendment  Suffrage – African-Americans get right to vote in 1870

Modern Capitalism Corporations  Businesses owned by many investors who buy shares of stock Monopolies  Corporations merge to combine power and control market  Corporations in U.S. in 1898 – 1,800;  John D. Rockefeller – Standard Oil Regulations  Reaction to abuses of laissez-faire  “captains of industry” or “robber-barons?”  How does this compare to our current economic troubles?