The Industrial Revolution created an enormous amount ofopportunity to “get rich” Mass production of goods Middle Class now has a new consumer (women) Transportation makes goods readily available all over theworld No government restrictions or laws to drive down profits.Here is what happenedHOW DOES THE INDUSTRIAL REVOLUTIONCHANGE OUR ECONOMY?
Capitalism: economic system in whichthe means of production are privatelyowned and operated for a privateprofit. Laissez-faire economy: decisionsregarding supply, demand, price,distribution, and investments are madeby private actors Profit goes to owners who invest in thebusiness Wages are paid to workers employed bycompanies and businessesCAPITALISM
MONOPOLY: when a single company or group owns all ornearly all of the market for a given type of product or service.There is NO competition amongst businessesResult: high prices and inferior productsEx:Sirius XM Radio Sirius Radio controls most of the market in regards tosatellite radio. Can you think of more than 2 satellitecompanies other than Sirius Radio? Sirius had very little if any competition and therefore canprice their service at a higher rate and make more profit. Thiswas a HUGE PROBLEM during the Industrial RevolutionEFFECTS OF CAPITALISM
THINK ABOUT IT! What might some results be if one company was the onlyplace where you could buy a specific product?
PEOPLE THAT HAD A PROBLEM WITHCAPITALISMUTOPIANS MARXISTSTHE SOCIALISTS:Socialist beliefs:• People as a society would operate and own the means of production, notindividuals (capitalist)• Their goal is a society that benefits everyone, not just the rich• Tried to build perfect communities (utopias)• They want everyone to be equal in every wayKARL MARXUtopian Society
Wrote: The Communist Manifesto, 1848 A response to the injustices of capitalism;argued that capitalism would produce internaltensions which would lead to its destruction Communism = a political philosophy that aimsfor classless and stateless society structuredupon common ownership of the means ofproduction and an end to private property Marx believes that capitalism will eventuallydestroy itselfAs a result of The Communist Manifesto, theproletariat (working class) started to participatein politics. They wanted to ensure social,economic, and political equality for everyone!So the fight began!KARL MARX: COMMUNISM
Author of “The Wealth of a Nation” He is a believer of Laissez-faireeconomics; defender of freemarkets Believes economic libertyguarantees economic progress Economic natural laws – self-interest, competition, supply anddemandADAM SMITH
Capitalist Believe in Laissez-faireconomics (free trade/nogovernment regulations Resources are owned by aprivate owner Individual freedom beforesociety Earn their worth Profits are owned by aprivate owner Stands for private property Supply and DemandEconomicsSocialist No difference betweenrich and poor. Community ownsresources and means ofproduction Government runseconomy Abolishes privateproperty Society before individualfreedomCAPITALISM VS. SOCIALISM