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 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.
 Principles were applied by David Ricardo
 Ricardo’s book: The Principles of Political Economy and
Taxation (1817)
 “The supply and demand determine wages.”
 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
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
 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
 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.
 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
 Books and other works laid the philosophical
foundations for:
 Wrote in association with Friedrich Engels
communism
“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
 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
 Class struggle
 Haves (Bourgeois)
 Control the production of goods
 Possess most of the wealth
 Have-nots (Proletariats)
 Do the labor
 Reap no rewards
 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
 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
 Failure of predictions
 Economic causes alone cannot explain important
historical developments
 Other influences that should be considered:
 Political
 Religious
 Psychological
 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
 Wars were waged between nations not classes.
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
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
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)

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Economic theories

  • 1.
  • 2.
  • 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

  1. Where did the idea of laissez faire start?
  2. Adam Smith is a Scottish philosopher and economist
  3. Ricardo is an English stockbroker and writer; When labor is scarce, wages are high; wages go down when the number of workers increases
  4. English minister and economist
  5. Utopian socialists
  6. Ask class where the US place was. Answer: New Harmony, Indiana.
  7. Karl Marx Engels controversy
  8. Called for working class revolution
  9. How can… history? People’s first concern has ALWAYS been to obtain F&P
  10. (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.
  11. Marx underestimated the role of non-economic forces