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?

The Showdown: Marx vs. Smith

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?)

Laissez-faire

• Laissez-faire (French for “let do”)– economic policy of set working conditions without interference

• Instead of tariffs, free trade = growth of economy

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

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.

The Invisible Hand

http://geoffmartin.files.wordpress.com/2008/10/invisible-hand2.jpg

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

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

Marxism: Radical Socialism

• Karl Marx (1818-1883)– German journalist– Communist Manifesto

http://economistsview.typepad.com/photos/uncategorized/2007/10/29/karl_marx.gif

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

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

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.”

• 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/crane1.htm