9.4 The Age of Reform

Economists, Socialists, Utopians, and Unions

CA State Standards 10.3.4 Trace the evolution of labor, including

the end of slave trade and the effects of immigration, mining, manufacturing, division of labor and the union movement.

10.3.5 Understand the connections amount natural resources, entrepreneurship, labor, and capital in an industrial economy.

10.3.6 Analyze the emergence of capitalism as a dominant economic pattern and the responses to it, inc. Utopianism, Social Democracy, Socialism, and Communism

EconomicsThe study of the problem of “Scarcity”What is “scarcity”?Essential Question: “How does a

society satisfy the “needs” and “wants” of its people with limited resources?

The Economic Philosophers

Adam Smith

Thomas Malthus

David Ricardo

Adam Smith Father of Capitalism

Famous Book: The Wealth of Nations (1776)

IF… business can operate in a laissez-faire, free market environment regulated by the law of supply and demand and the practice of competition, individual investors will realize private gain in the form of profits.

THEN…Economic liberty will bring economic progress for all.

What do those words mean? Laissez-faire: self-regulation by business men NOT

government! Free market: Trade free from restrictions like tariffs. Law of supply and demand: The demands of the

consumer determines what is produced, how much is produced, the price, and who gets it.

Competition: Gives the consumer choices and keeps encouraging new and better products.

Capitalism: an economic system in which money is invested in business with the goal of making a profit.

Thomas MalthusFamous Book: The Principle of

PopulationSupported Smith’s ideas and added:

Population will increase faster than food supply.

We need wars and epidemics to eliminate the extra people, or all will be poor and miserable.

The poor will always be with us.

David RicardoFamous Book: Principles of Political

Economics and TaxationSupported Smith and Malthus but

added the “ Iron Law of Wages”

What does it mean? There will always be a permanent underclass

of poor because… In a market system, if there are many workers

and abundant resources, then labor and resources are cheap.

If there are fewer resources and scare resources, then labor and resources are expensive.

Wages for workers will always be forced down as population increases.

All 3 believed in “Laissez-Faire”

Government should not intervene and help workers by creating minimum wage laws and better working conditions. It will only: Upset the free market system Lower profits Undermine production of wealth for the

whole society

The Utilitarians: Modifiers of Capitalism

Jeremy Bentham

John Stuart Mill

Social DemocracyA branch of socialism which emerged in

the late 19c, and which supports gradual social change through reform within a framework of democratic politics rather than by revolutionary means.

J. Bentham: UtilitarianismPeople should judge ideas, institutions

and actions on how useful they are.Sometimes government must interfere

in order to promote “the greatest good for the greatest number of people” in a society.

John Stuart Mill Gov’t. should do away with great difference in

wealth. Profits should be equally divided among the

workers. Have a co-operative system of agriculture Pro women’s rights, especially the right to

vote. Pushed for reforms in prisons and education.

The Utopians: “The Perfect World”

Robert Owen

Robert OwenTried to improve the lives of the workers

in his factory by: Building low rent housing No children under 10 had to work in the

factory Free schooling Started a new community called New

Harmony in U.S, only lasted 3 yrs.

The Socialists

Charles Fourier & Henri de Saint-Simon

Karl Marx & Friedrich Engels

Charles Fourier & Henri de Saint-Simon

French economists who tried with others to correct the negative effects of industrialization.

They advocated “Socialism.”

What is “Socialism”?The factors of production are owned by

the public and operated for the welfare of all.

Government should: centrally plan the economy. control factories, mines, railroads, and

utilities. Abolish poverty and promote equality.

Karl Marx & Friedrich Engels

Famous Book: The Communist Manifesto All history has been the story of the conflict

between the “haves” (bourgeosie/ rich) and the “have nots” (proletariat/workers).

The Industrial Revolution made the rich richer and the worker poorer.

The labor of the worker creates the profit for the employer.

Marx & Engels (cont.) “The proletariat have nothing to lose but

their chains. They have the world to win. Workingmen of the world, UNITE!”

THEN capitalism will be destroyed and a new classless society will develop.

Pure “communism” will be the future.

What is “Communism”? A complete form of socialism in which the

factors of production are owned by the “people.” No private property. All goods and services are shared equally.

OPPOSITE OF LAISSEZ-FAIRE CAPITALISM

They influenced communist revolutions in Russia and China in the 20th century

History proved them wrong. Economic forces alone do not dominate a society.

Capitalism v. Socialism (p.303) Individuals and Business own

property & the factors of production Progress results when people follow

their own self-interest Business follow their own self-

interest when they compete for profit.

Consumers compete for the best goods at the lowest prices Law of Supply & Demand

Gov’ts SHOULD NOT interfere in the economy because competition creates efficiency in business (laisseze-faire)

The community or state should own property & factors of production

Progress results when a community of producers cooperate for the good of all

Socialists believe that capitalist employers take advantage of workers. The community or state must act to protect the worker

Capitalism creates unequal distribution of wealth & material goods. The better system is to distribute goods acdg. to each person’s need.

Unequal wealth is unfair. “Each according to his need…” K. Marx

Unions

Factory Workers Press for Reform

UnionsA union is a voluntary association of

workers who join together as a political group to protect the rights of its members.

Unions started to work for better wages and working conditions through collective bargaining (negotiating between workers and employers).

Unions (cont.) If the employers refused their demands

they would strike (refuse to work).Unions were outlawed in the beginning,

but by 1875 they were legal in Britain and by 1886 in the U.S.

Reformers in Other Areas of Life

William Wilberforce

Jane Addams

Horace Mann

William WilberforceLed the fight in the British Parliament to

end slavery and slave trade in Great Britain and their colonies.

Slavery ended for Britain in l833.

Jane AddamsFought to provide social services for

women, Immigrants, and residents in poor neighborhoods in the United States.

Founded Hull House in Chicago, which is still used today. (By the way, Chicagoans believe that it is haunted…)

Horace Mann Fought for public education for all children in

the United States. “If we do not prepare children to become

good citizens…if we do not enrich their minds with knowledge, then our republic must go down to destruction.”

By 1850 many states had started a public education system.