An Age of Reforms Chapter 9 Section 4

The Philosophers of Industrialization Laissez faire- refers to the economic policy of letting owners of industry and business set working conditions without interference. - that policy favors a free market unregulated by government. Adam Smith- a professor at the University of Glasgow, Scotland, defended the idea of a free economy, or free markets, in his 1776 book The Wealth of Nations. Thomas Malthus and David Ricardo were supporters of Smith’s basic ideas. -They believed natural laws governed economic life. Capitalism- is an economic system in which money is invested in buisness ventures with the goal of making a profit. Thomas Malthus argued that population tended to increase more rapidly than the food supply in An Essay on the Principle of Population David Ricardo- wrote the book Principles of Political Economy and Taxation. He believed that a permanent underclass would always be poor.

Rise of Socialism Utilitarianism- the theory, proposed by Jeremy Bentham in the late 1700’s, that government actions are useful only if they promote the greatest good for the greatest number of people. Robert Owen- improved working conditions for his employees. He traveled to the U.S and and found a cooperative community in New Harmony, Indiana. He intended this to be Utopia, or a perfect living place. Socialism- an economic system in which the factors of production are owned by the public and operate for the welfare of all. Karl Marx- A German journalist introduced a type of socialism called Marxism Communism- an economic system in which all means of production- land, mines, factories, railroads, and buisnesses- are owned by the people, private property does not exist, and all goods and services are shared equally.

Capitalism Vs. Marxism Progress results when individuals follow their own self interest. Businesses follow their own self interest when they compete with one another for the consumer’s money. Each producer tries to provide goods and services that are better and less expensive than those of competitors. Consumers compete with one another to purchase the best goods at the lowest prices Market economy aims to produce the best products and the lowest prices Government should not interfere in the economy. All great movements in history are the result of an economic class struggle The “haves” take advantage of the “have nots” The industrial revolution intensified the class struggle Workers are exploited by employers The labor of workers creates profit for employers The capitalist system will eventually destroy itself. The state will wither away as a classless society develops.

Labor Force Unions- an association of workers, formed to bargain for better working conditions and higher wages. Collective Bargaining- Negotiations between the workers and their employers. Strike- to refuse to work in order to force an employer to meet certain demands Skilled workers led the way in forming unions because their special skills gave them extra bargaining power. The union movement underwent growth in Great Britain and the U.S. British unions had shared goals of raising wages and improving working conditions. In 1866, several unions joined together and they formed the organization (AFL), or the American Federation of Labor. This later won members of AFL higher wages and less hours.