3. Adam Smith
Book: The Wealth of Nations
Entrepreneurs should be free to operate their
businesses in a way that brings them the most profits
What is good for the entrepreneur is good for
everyone
The duty of the government is to keep peace and
maintain order within the community.
Government should not meddle in affairs of business.
4. Principles were applied by David Ricardo
Ricardo’s book: The Principles of Political Economy and
Taxation (1817)
“The supply and demand determine wages.”
5. Blamed poverty on the poor
An Essay on the Principle of Population
Population always increases faster than the food supply
Result: Humanity is never far away from starvation.
Supply of workers becomes greater than the demand
Result: Unemployment, low wages, unending poverty
Solution: Lowering the birth rate, population control
6. UTOPIAN SOCIALISTS!
Charles Fourier
French philosopher
Proposed communities that would be organized to give
people enjoyment in their work and pleasant living
conditions (phalanxes)
1 Phalanx = 1000 people, 400 acres of land.
People would learn a variety of trades
Did not call for an equal distribution of money and
goods.
More specialized people have better reward
7. Robert Owen
Welsh-born manufacturer
Managed a cotton mill in Manchester, England by the
age of 19
Became a manager and part owner of the New Lanark
mills in Scotland (1799)
Sought to turn New Lanark into a model town
8. Raised wages, improved working conditions, reduced
hours of work.
Children under age of ten: attended free schools.
Provided classes for older children
Made sure workers had neat homes and were supplied
food and clothing at reasonable prices
Cause of evil: A bad social environment
Set up a community in the US.
9. Son of a German lawyer
Analyzed the new industrial society
Developed a philosophy of history and society
Advocated a new kind of socialism
Did not believe that problems of industrialization
could be solved by reforming capitalist society
10. Books and other works laid the philosophical
foundations for:
Wrote in association with Friedrich Engels
communism
11. “The Communists… openly declare that their ends can be
attained only by the forcible overthrow of all existing
social conditions. Let the ruling classes tremble at a
communistic revolutions. The proletarians have nothing
to lose but their chains. They have a world to win.
Working men of all countries, unite!”
- - Karl Marx and Friedrich Engels,
- The Communist Manifesto
12. Held that history follows scientific law just as does
the world of nature.
How can one understand the inner meaning of
history?
Food
Possessions
“Economic forces” shape
history
13. Class struggle
Haves (Bourgeois)
Control the production of goods
Possess most of the wealth
Have-nots (Proletariats)
Do the labor
Reap no rewards
14. Marx’s predictions:
Destruction of capitalism
New economic system (socialism) will be built
Ranks of the working class would steadily grow larger
Only a few rich people and the great proletarian masses
Great upheaval in society
Violent revolution is necessary
15. Disagreement of followers
Orthodox Marxists
Looked on Marx’s basic principles as unquestionably true
All energies of the working class should be directed toward a
revolution against capitalism
Revisionists
Accepted parts of Marx’s theories
Disagreed with him on major points
Believed that a revolution was not necessary
Socialist society can be achieved through
Gradual Reform
Legislation
16. Failure of predictions
Economic causes alone cannot explain important
historical developments
Other influences that should be considered:
Political
Religious
Psychological
17. Differences
Workers gained
Higher Wages
Shorter hours
Better working conditions
Middle class greatly increased in all industrialized countries
The state represents both workers and capitalists
Governments are not run solely to keep the “capitalist
oppressors” in power.
Social security
Unemployment insurance
Minimum-wage Laws
18. Wars were waged between nations not classes.
19.
20.
21. 1. The book written by Adam Smith.
2. True or False. Laissez Faire doctrine gives permission
for government to meddle in business.
3. Writer of the essay: Principle of Population?
4. According to #3, how can we combat poverty?
5. Writer of the Principles of Political Economy &
Taxation
22. 6. When there is more labor what happens to the
wages?
7. Charles Fourier and Robert Owen were known as
________ Socialists.
8. What is a phalanx?
9. What do you call the Radical type of socialism
10. Difference between Bourgeois and Proletariat?
11. 5 good effects of Industrial Revolution
12. 5 bad effects of Industrial Revolution
23. 1. The Wealth of Nations
2. False
3. Thomas Malthus
4. Population control
5. David Ricardo
6. Lower wages
7. Utopian Socialists
8. Basic community in Charles Fourier’s society. It consisted
of 1000 people in 400 acres of land.
9. Marxism
10. Bourgeois (Haves) and Proletariat (Have-nots)
Editor's Notes
Where did the idea of laissez faire start?
Adam Smith is a Scottish philosopher and economist
Ricardo is an English stockbroker and writer; When labor is scarce, wages are high; wages go down when the number of workers increases
English minister and economist
Utopian socialists
Ask class where the US place was. Answer: New Harmony, Indiana.
Karl Marx Engels controversy
Called for working class revolution
How can… history? People’s first concern has ALWAYS been to obtain F&P
(1)Destruction of capitalism: owners and managers are not concerned with workers as human beings; disadvantages of IR; Capitalism fails to use advances in tech to benefit masses.
Marx underestimated the role of non-economic forces