Industrial Revolution Unit 6 – Lesson #3 New Economic Systems – Capitalism, Socialism, and Communism

Warm Up!!! Describe the picture presented on the right of the slide. What did these workers form? What is the purpose of forming this group? In your answer, explain the term ‘Collective Bargaining’.

Warm UP!!! Viewing the picture on the right, summarize the meaning and/or main message of the political cartoon. Your answer should focus on how supply and demand are involved with the economy.

Today’s Theme!!! As we study new economic systems that developed during the Industrial Revolution, let’s focus on the following theme: Industrialization creates new economic theories (capitalism, socialism, communism).

Did YOU Know?!? 30% of United States citizens refuse to sit on a public toilet seat. In just about every species of mammal, the female lives longer than the male. Horses can’t vomit and pigs can’t look up at the sky. Abe Lincoln’s mother died when the family dairy cow at poisonous mushrooms and Ms. Lincoln drank the milk.

Introduction As the industrial revolution progressed, numerous ideas of how the economy should function circulated throughout Europe and the United States. Questions about the role of government in business arose, such as: Should the government be involved in regulating and controlling businesses? Should the government let businesses do as they want to make substantial profits?

Capitalism Capitalism = an economic system where private ownership (industry and business) controls the means on production without government involvement and regulation. Means of production = land, resources, factories, railroads, mines, etc. Countries that practice capitalism allow the middle class owners run their business without government interference. Laissez – faire policy = business operate without government interference Laissez – faire translates to “to do nothing”, the invisible hand.

Capitalist economist Adam Smith develops and supports this practice of laissez – faire. Adam Smith writes the Wealth of Nations explaining that an economy works best when the natural forces of supply and demand should regulate economies without government involvement. Allow business to compete against each other to make profits (market competition is good!)

Results of countries that practice capitalism: 1. The middle class (business owners) become wealthier and grow in numbers. 2. Standard of living for the middle class rises 3. Dissatisfaction with poor working conditions 4. Unequal distribution of wealth between the classes

Socialism Socialism = economic system where the means of production are owned by the community (people) but the government directly controls the production of goods, prices of goods, and promotes equality of wealth. Socialism believed that governments should intervene in the economy to improve people’s lives. German philosopher Karl Marx further developed the ideas of socialism in his book The Communist Manifesto (co – authored by Friedrich Engels). In The Communist Manifesto, Karl Marx stated that classes always competed against each other, creating a class struggle. The middle class (bourgeoisie) oppressed the working class (proletariat), especially in the factories.

Did YOU Know?!? Cleopatra married two of her brothers. There are 45 miles of nerves in the skin of a human being. Japanese and Chinese people die on the fourth of the month more often than any other dates. Nachos is the food most craved by pregnant women.

Communism Communism = economic system where the means of production (all land, mines, factories, and railroads) would be owned by the people and shared equally. In communism, no government exists, people want to share everything equally In communism, there are no classes and wealth is redistributed equally.

Communism, Continued Karl Marx said communism was the next step after socialism, stating that the proletariat should revolt against the bourgeoisie and run the economy equally. Karl Marx and Friedrich Engels co – author the books Das Kapital explaining the basic rules and views of communism.