Economics of Industrial Rev. Capitalism vs. Socialism [Marxism] What are the main differences between capitalism & socialism [Marxism]? Frederick Engels Adam Smith Karl Marx

Capitalism – Laissez Faire laissez-faire economic philosophy that allowed owners to set working conditions w/o interference from the gov’t Adam Smith defended l-f in his book The Wealth of Nations - argued free-market, w/ no gov’t regulation would create competition, causing better products & wages Prices would be regulated by supply & demand - Others argue unregulated capitalism will not protect workers & encourages greed Poor workers Rich Owners

A Radical Form of Socialism socialism gains popularity as response to capitalism factors of production should be owned by the public and operate to benefit everyone end poverty, promote equality & create social justice 1849: Karl Marx (German journalist) & Frederick Engels (son of factory owner) wrote a pamphlet called The Communist Manifesto calls for more radical & complete form of socialism, called communism Marx & Engels say capitalism has created division in society owned by

Marx & Engels argue owners control “means of production” while the workers control nothing, which creates two warring classes: owners known as the bourgeoisie (“haves”) 2. workers known as the proletariat (“have-nots”) Marx states proletariat will violently rise up against the bourgeoisie Workers will have a worldwide revolution & when they control the means of production, the world will have equality w/ proletariat ruling

“The proletarians have nothing to lose but their chains “The proletarians have nothing to lose but their chains. They have the world to win. Workers of the world unite”. - Karl Marx Capitalism Communism Individuals own property & the means of production People (community) should own property & means of production Businesses follow their self-interest (free market) creating competition, causing good wages. Self interest (free market) leads to greed, so businesses takes advantage of workers Consumers determine what products are needed. Supply & demand effects prices Goods should be divided according to people’s needs, public sets the price. Government should not interfere in the economy Community or Govt should plan the economy

Communism Capitalism Communism Capitalism Communism What is communist or capitalist? (write questions) A public owned phone company has decided to raise your rates: You are a farmer and sell your food to either Albertson’s or Ralph’s, depending on who pays more: I cannot afford health insurance and public tax money will pay my medical bills: McDonald’s introduces a $.99 cheeseburger, so Burger King does the same thing: Government plans on needing 100 cell phones this year Communism Capitalism Communism Capitalism Communism