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New Economic Ideas. Chris Anderson Randolph-Henry H. S. After the French Revolution, Europe seemed upside down Undergoing a transformation: From a _________________________ to ____________________________ Middle class (MC) gained lots of wealth Working class (WC) lived in squalor - PowerPoint PPT Presentation
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• After the French Revolution, Europe seemed upside down
• Undergoing a transformation:• From a _________________________ to
____________________________• Middle class (MC) gained lots of wealth• Working class (WC) lived in squalor• Lots of reformers were trying to help the WC
“Hands Off”
• Reformers and owners did not agree• Industrial owners thought they should control
industry without government interference• Believed government involvement would
___________________________• Laissez-Faire economics– Government keeps its “hands off” of industry
Adam Smith
• Scottish professor• 1st to explain capitalism (what is it????) and
laissez-faire economics• Wrote Wealth of Nations (1776)• Justified a change from mercantilism
(government restriction) to a more capitalistic (government free) industry
• **Labor is the main source of wealth, NOT $$
• Supply and Demand: people only buy what they want or need; therefore businesses should produce what people buy
• With no government interference, businesses will compete to produce goods at the most inexpensive price
• “Invisible Hand”: the competition between businesses
Thomas Malthus
• Had a pessimistic (gloomy) view of the economy
• English economist/preacher• Wrote An Essay on the Principles of Population• Growing population caused poverty (WHY??)• Population was growing faster than food supply
—ending in disaster• Believed poverty to be unavoidable
David Ricardo
• English banker and economists• “Iron law of wages”: believed that the rising
population led to more workers competing for jobs
• Competition for jobs kept wages low• Poverty unavoidable
Reformers
• Many people criticized laissez-faire economics• Many want to make changes in industry• 1.) William Wilberforce:• British Parliamentary member• Wanted to abolish slavery• Make lives of the WC better
• 2.) Lord Shaftsbury:• Parliamentary member• Wanted to reduce working hours for women and
kids
• Both Wilberforce and Shaftsbury will get Parliament to pass laws regulating working conditions in GB– 1833: laws regulating employment of children in
factories– 1842: law outlawing the use of women/kids in mines– 1847: Ten Hours Act—a 10 hour or less workday for
women/kids in factories
• 3.) Jeremy Bentham:• Utilitarianism—true test of any action or
institution is its usefulness to society• What are some institutions that are useful to
society????
• 5.) Charles Dickens:• Writer• Used his works to attach industrialization• Do you know any of his works????
Socialism
• Many believed that capitalism caused suffering
• Believe the struggle to make a profit caused misery
• Argue for socialism—workers own, manage, and control production
• Utopian Socialism:• Early socialist idea• Wanted to create a society where everyone
shares everything
• Robert Owen:• First to create a working utopia• Believed competition caused suffering• Cooperation would make life better
Karl Marx
• German philosopher• Saw Utopian socialism as impractical• Degrees in history and philosophy• Forced to flee Prussia to France
• Marx’s Theories:• Based ideas in history, economics, and historical
change• History advanced through conflict, but
economics was the major force• At the base of every social order was production• Everything in a nation developed around its
economic base• Most important part of the economic base was
the creating of social classes
• _____________________ controlled production (Would they every give it up???)
• Only give up control of production through ________________________
• Conflict between the different classes was inevitable and unavoidable
• Class struggle pushed history forward
• Marx said that Europe had experienced 4 stages of economic life:1.) Primitive-people only produce what they need-no exploitation-tools develop, surpluses made, exploitation starts2.) Slave-struggle between ___________ & ___________3.) Feudal-struggle between ___________ & ___________4.) Capitalist-struggle between ___________ & ___________
• Marx believed capitalism to be temporary• Was he correct??????• Believed a major crisis would occur in an
industrialized nation where the government would take control of the Middle Class
• Government would create a society where the people owned everything—no private property, no class distinction, and eventually the government would __________________