1. The Industrial Revolution Begins (1750-1850) New Ways of Thinking
WEX II
Chapter 19, Section 4

2. New Ways of Thinking
At the end of this section, I will be able to answer the following questions:
What economic ideas helped shape the industrial age?
What reforms did individual thinkers urge?
How was socialism linked to the Industrial Revolution?
Vocabulary: utilitarianism, socialism, communist, proletariat

3. New Ways of Thinking
What economic ideas helped shape the industrial age?
Laissez-Faire Economics was the belief that natural laws should be allowed to operate without interference
Business leaders believed in the “hand-off” approach

4. New Ways of Thinking Who was Adam Smith & what did he have to say?
He believed in the Free Market
He wrote “The Wealth of Nations”
He believed that a “free market” would eventually help everyone
Not just the rich

5. New Ways of Thinking How would the free market help everyone?
The free market would produce more goods at lower prices
This would cause the economy to grow
People would reinvest in new capital
This cycle would continue to grow
The proof of this idea was the success of the industrial age which had NO government intervention

6. New Ways of Thinking Who was Thomas Malthus?
Thomas Malthus wrote an “Essay on the Principle of Population”
He wrote,
“The power of population is [far] greater than the power of Earth to produce subsistence for man.”

7. New Ways of Thinking What did Malthus predict?
Population would outpace the food supply
The only checks on population growth were
War
Disease
Famine
The poor would suffer

8. New Ways of Thinking Was Malthus right? No, not really!
The food supply grew faster than the population
Living conditions improved for people in the western countries
In the 1900s, population growth wasn’t a problem for western countries
People began having fewer children

9. New Ways of Thinking Who was David Ricardo?
He was a British economist who agreed with Malthus and was concerned about the population growth
He wrote the ‘Iron Law of Wages”
What are wages?
Wages are the amount of money that people get paid for doing a job

10. New Ways of Thinking
What did David Ricardo say in his work Iron Law of Wages?
When wages are high
Families have more children
When families have more children, this increases the supply of labor
The increase in the supply of labor leads to lower wages & unemployment

11. New Ways of Thinking
Malthus & Ricardo don’t appear to be very optimistic about the future
This is why economics became known as the “dismal science”
Did they believe that government should intervene and help out the poor?
No!

12. New Ways of Thinking Were Malthus & Ricardo cruel? No!
They believed that the best cure for poverty was unrestricted laws of the free market
Individuals should be left alone to improve their conditions through
Thrift
hard work
limiting the size of the family

13. New Ways of Thinking
Did everyone agree with the Laissez-Faire approach?
No!
Many other people believed in the need for government intervention
For example, Jeremy Bentham was preaching utilitarianism.

14. New Ways of Thinking What is utilitarianism?
Utilitarianism is the idea that the goal of society should be the “greatest happiness for the greatest number of people”
Bentham believed that laws and actions should be judged by their “utility”
Did they provide more pleasure than pain?

15. New Ways of Thinking Who is John Stuart Mill?
He supported Bentham's belief that actions are right if they promote happiness and wrong if they cause pain.
He argued that unrestricted competition favors the strong over the weak
Government should help the poor
He wanted to give everyone the right to vote
He encouraged governmental reform

16. New Ways of Thinking Did most people agree with his position? No!
Most middle-class people rejected Mill’s ideas
(Remember, the middle class felt that people were poor because they were lazy)
Hi ideas started to be accepted in the 1800s
They are a significant part of government today

17. New Ways of Thinking
Some people believed the opposite of the Laissez-Faire approach
These people believed in socialism
Under socialism
People as a whole own and operate the “means of production”
Private individuals would not longer their factories, farms, railways, or businesses

18. New Ways of Thinking The Utopians piloted these socialistic ideas
Robert Owen set up a Utopian or ideal community in New Lanark Scotland
He built homes for his the workers
He built schools for the children
He treated his workers well
His business was a model that many people came to observe

19. New Ways of Thinking
Many people felt that the Utopians were too idealistic and not based in reality
Karl Marx presented a new approach
he called this approach “scientific socialism”
He claimed it was based on scientific study of history
He presented his ideas in the “Manifesto”

20. New Ways of Thinking
Karl Marx & Friedrich Engels get together and write a pamphlet
The Communist Manifesto
Communism is a form of socialism that sees class struggle between employers and employees as inevitable

21. New Ways of Thinking What did Karl Marx believe? He believed
History is a struggle of classes
The “haves” or bourgeoisie own the means of production
The “have-nots” or proletariat were the working class
History shows the constant struggle between the bourgeoisie & the proletariat

22. New Ways of Thinking Karl Marx presents his solution! He believed
that capitalism contains the seeds of it’s downfall
that eventually the workers will rise up and take control of the “means of production”
that this would lead to equality
He urged working men in all countries to unite

23. New Ways of Thinking What was the impact of communism?
Russian socialists embraced Marxism
Eventually Russia and China establish Communistic Governments

24. New Ways of Thinking What are the weakness of Marx’s teachings?
Although he said that his works were based on scientific laws, there were many errors
He predicted that the misery of the proletariat would set off a world revolution
However, the standard of living improved and a revolution didn’t take place

25. New Ways of Thinking Okay, let’s see if you get it…
What economic ideas helped shape the industrial age?
Laissez-Faire Economics
Adam Smith – Free Market System
Thomas Malthus – Population Growth
David Ricardo – Iron Law of Wages

26. New Ways of Thinking What reforms did individual thinkers urge?
Utilitarianism
Jeremy Bentham
John Stewart Mill
Utopians
Robert Owen
Communism
Karl Marx

27. New Ways of Thinking
How was socialism linked to the Industrial Revolution?
First time there were so many employees
Owners vs Workers
Workers were being abused and wanted to have rights!

28. New Ways of Thinking What is the meaning of utilitarianism?
Goal of society should be the greatest happiness for the most number of people
What is the meaning of socialism?
People as a whole would own and operate the “means of production”

29. New Ways of Thinking What is the meaning of communist?
Form of socialism that sees the struggle between employers and employees as inevitable
What is the meaning of proletariat?
Working class person

30. New Ways of Thinking
The End

31. New Ways of Thinking

32. New Ways of Thinking
The Invisible Hand - 60 Second Adventures in Economics (1/6)
The Paradox of Thrift - 60 Second Adventures in Economics (2/6)
The Phillips Curve - 60 Second Adventures in Economics (3/6)
The Principle of Comparative Advantage - 60 Second Adventures in Economics (4/6)
The Twin Paradox - 60-Second Adventures in Thought (5/6)
Rational Choice Theory - 60 Second Adventures in Economics (6/6)
The Invisible Hand - 60 Second Adventures in Economics (1/6)

33. New Ways of Thinking
Quick bio of Karl Marx