The Western World Turns Upside Down The Social Changes of the Industrial Revolution

Adam Smith… The Wealth of Nations Free Market is best economy Buyers and sellers work on their own interest No government interference Businesses want to produce goods as cheaply as possible Consumer wants best good at lowest price Efficient producers will make the most profit by meeting in the middle and benefiting everyone

Capitalism and Adam Smith Capitalist Ideas- Rejects mercantilism Supports “laissez-faire” economy. Literally means “Let them do”, interpreted as “Hands off” The “invisible hand” of the marketplace will make things work out correctly

Smith’s Opposition Thomas Malthus- David Ricardo- Increase in population would cause: Poverty Famine Misery War is necessary to kill off the extra people David Ricardo- Established “Iron Law of Wages”- Rapid population growth means: Fierce competition Lower wages Higher unemployment Increased poverty

Opposition… Utilitarianism-Jeremy Bentham. Government should promote the greatest happiness for greatest # of citizens. John Stuart Mill- equal distribution of wealth by government. Done through imposition of income tax.

Opposition through Socialism Socialism- means of production should be owned and controlled by society, either directly or through the government. Karl Marx-established a scientific base for socialism. Marx- economy is major force for change Economic status decides social status Ruling class controls production “Class Struggles” happen to decide who controls the production

Marx… Separated society into 2 classes- Proletariat-make goods, productive class Bourgeoisie- middle class and owners of production. Solution for equality- Democratic Socialism (John Maynard Keynes) Public control of some means Respect for individual rights Use democratic means to implement socialist policy in a capitalist system (The people rule!)

3 Economic Systems of the IR LOW Limited by laws To prevent abuses High Individual Liberty Government Some private, Some govt. Private Ownership of Business Wages, hours controlled by government Laws to limit hours, protect wages No protection of worker hours, wages Social Aspects In theory, workers; In practice, govt. Some market demand, Some govt. control Market Demands Determiner of Production Socialism/ Communism Democratic Socialism Capitalism (Laissez-Faire)