1. Chapter 7 Section 4 New Ways of Thinking
Mr. Bellisario
Woodridge High School
October 10 & 11, 2013

2. Lesson Objectives
Describe laissez-faire economics and the beliefs of those who supported it.
Summarize the theories of socialism.
Explain Karl Marx views of the working class and the response to Marxism.

3. Laissez Faire Economics Physiocrats
Believed government should not interfere in the free operation of economy
Early 1800’s middle class business leaders embraced “hands-off”

4. Laissez Faire Economics Adam Smith
Wrote, Wealth of Nations (1776)
Believed in a free-market economy, no government intervention
Unregulated exchange of goods & services – would come to help everyone, not just the rich
Produce more goods at lower prices, making them affordable to everyone
Encourage capitalists to reinvest profits in new business

5. Laissez Faire Economics Thomas Malthus
Population would grow more than food supply
Checks on population
War
Disease
Famine
Urged families to have fewer children

6. Malthus’ Basic Theory

7. Laissez Faire Economics David Ricardo
“iron law of wages”
When wages are high, families have more kids
This meant a greater labor force
Led to lower wages & higher unemployment

8. Both Malthus & Ricardo felt…
Individuals should improve their lives through:
Thrift
Hard work
Limiting family size

9. Utilitarians
Goals - of society should be the greatest happiness for greatest number – Jeremy Bentham & John Stuart Mills

10. Utilitarians
Actions/laws are right if they bring happiness, wrong if they bring pain
Wanted government to help improve lives of working class
Factory workers
Had right to increase their own happiness
Government should step in when owners’ happiness hurt workers
Responsible for reforms from child labor to public health
But did not change society greatly
Goal was to end poverty & inequality

11. Socialism
People, as a whole, would own means of production (factories, farms, natural resources, transportation, etc., needed to produce goods)
Condemned (hated) capitalism (individuals own means of production)

12. Utopians Early socialists Built self-sufficient communities
Everything owned in common
All work shared

13. Socialism Robert Owen
Selected New Lanark, Scotland as model village & factory, based on cooperation
Limited child labor
Encouraged labor unions
Homes for workers
Schools for children
Still able to make a profit

14. Communism Introduced by Karl Marx & Frederick Engels
Communism – radical form of socialism
A German socialist-philosopher & German socialist whose father owned textile factory in England
Communist Believe
A very few wealthy individuals controlled a majority of poor
Felt Utopians were unrealistic

15. Karl Marx Wrote Communist Manifesto (1848)
Saw class struggle between bourgeoisie (middle class) and proletariat (working class) as unavoidable
Marxism:
“Haves” (capitalists, bourgeoisie) always owned means of production & controlled society & wealth
“Have nots” (poor, working class, proletariat) would take control of means of production & set up a classless communist society by overthrowing the “haves”