Chapter 7 Section 4 New Ways of Thinking

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Chapter 7 Section 4 New Ways of Thinking Mr. Bellisario Woodridge High School October

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

Lesson Objectives • Describe laissez-faire economics and the beliefs of those who supported it.

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

Laissez Faire Economics Physiocrats • Believed government should not interfere in the free operation

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”

Laissez Faire Economics Adam Smith • Wrote, Wealth of Nations (1776) • Believed in

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

Laissez Faire Economics Thomas Malthus • Population would grow more than food supply •

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

Malthus’ Basic Theory

Malthus’ Basic Theory

Laissez Faire Economics David Ricardo • “iron law of wages” • When wages are

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

Both Malthus & Ricardo felt… • Individuals should improve their lives through: – Thrift

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

Utilitarians • Goals - of society should be the greatest happiness for greatest number

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

Utilitarians • Actions/laws are right if they bring happiness, wrong if they bring pain

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

Socialism • People, as a whole, would own means of production (factories, farms, natural

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)

Utopians • Early socialists – Built self-sufficient communities – Everything owned in common –

Utopians • Early socialists – Built self-sufficient communities – Everything owned in common – All work shared

Socialism Robert Owen • Selected New Lanark, Scotland as model village & factory, based

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

Communism • Introduced by Karl Marx & Frederick Engels • Communism – radical form

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

Karl Marx • Wrote Communist Manifesto (1848) • Saw class struggle between bourgeoisie (middle

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”