1. Warm-up Questions 1.What was the Cult of Domesticity? 2.What do you think was the most significant effect of industrialization? 3.What were Adam Smith’s three natural laws of economics? 4.What was the basic philosophy of Karl Marx?

2. The Showdown: Marx vs. Smith

3. Setting the Stage Review – Working conditions – Three class system – Differences in the classes Business leaders- government stay out of economic affairs Reformers- government needs to play a role to improve conditions (Who would they represent?)

4. Laissez-faire Laissez-faire (French for “let do”)– economic policy of set working conditions without interference Instead of tariffs, free trade = growth of economy

5. Adam Smith (1723-1790) 1776 – Wealth of Nations – free markets, economy – Economic liberty = economic progress No government intervention http://3.bp.blogspot.com/_0viO- Dm52sM/SrU4REvDOWI/AAAAAAAAOlI/EVPgtF17jgE/s400/adam- smith.jpg

6. Smith’s Three Natural Laws of Economics The law of self-interest—people work for their own good. The law of competition—forces people to make a better product. The law of supply and demand—enough goods will be produced at the lowest possible price to meet demand in a market economy.

7. The Invisible Hand http://geoffmartin.files.wordpress.com/2008/10/invi sible-hand2.jpg

8. Result of laissez-faire Capitalism- Factors of production privately owned while money is invested to make profit. Fueled the Industrial Revolution. Philosophers like Smith opposed efforts to help poor, minimum wage, and improved working conditions – Thought would upset the free market system

9. The counterargument: Socialism In opposition to laissez-faire, advocates thought government should intervene. Factors of production owned by the public and are for the welfare of all. Economy should be planned. – End poverty, promote equality

10. Marxism: Radical Socialism Karl Marx (1818-1883) – German journalist – Communist Manifesto http://economistsview.typepad.com/photos/uncategori zed/2007/10/29/karl_marx.gif

11. The Communist Manifesto Written by Marx and his partner Friedrich Engels Argued society divided into warring classes – Middle Class “haves”—bourgeoisie – Lower Class “have-nots”—proletariat According to Marx, during industrialization the rich got richer and the poor got poorer

12. Marx cont. Marx believed that Capitalism would destroy itself and eventually government would wither and a classless society would remain. This is what Marx called Communism. – Everything owned by the people and shared equally, no private property http://users.erols.com/mwhite28/communis. htm http://users.erols.com/mwhite28/communis. htm

13. Who said it? “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.” “Necessity is blind until it becomes conscious. Freedom is the consciousness of necessity.”

14. What is going on in the cartoon? Who might it be trying to appeal to? – Who would be affected by it? What is it trying to say? http://www.marxists.org/subject/ art/visual_arts/satire/crane/crane 1.htm