The Economic Systems of the Industrial Revolution

Economic Systems that form as a Result of the I.R. *Capitalism (USA) *Communism (Cuba) *Socialism (Canada) Main issues/topics of the Industrial Revolution Class struggle (rich vs. poor) Competition vs. equality Treatment of workers Marxist theory

Capitalism Individuals/businesses own property & control the factors of production (entrepreneurs-start businesses) Factors of Production: land, labor, capital Businesses compete for the consumer’s money=better products Government should not interfere with the economy- only to protect worker’s health & safety Laissez Faire- let the people do as they please in business Unions are often formed to protect workers Adam Smith defended these ideas in his book “The Wealth of Nations.”

Adam Smith Defended free markets/ free economy. Considered the father of capitalism. Believed that economic freedom guaranteed economic progress. Government does not need to be involved in the economy. Invisible Hand Theory: if consumers are allowed to buy freely and producers are allowed to sell freely, then prices and distribution will be decided on their own.

Utopian Ideas One Answer to Capitalism Name for an ideal community or society- impossible to achieve Society without greed, evil, poverty, crime etc… Ideas influenced by Thomas More- Utopia was the name of a fictional Island. Industrial Revolution was criticized in many writings & novels because it did not promote utopian cities. (ex. Charles Dickens)

Charles Dickens Excerpt from Hard Times (1854) It was a town of red brick, or of brick that would have been red if the smoke and ashes had allowed it; but as matters stood, it was a town of unnatural red and black like the painted face of a savage. It was a town of machinery and tall chimneys, out of which interminable serpents of smoke trailed themselves for ever and ever, and never got uncoiled. It had a black canal in it, and a river that ran purple with ill-smelling dye, and vast piles of building full of windows where there was a rattling and a trembling all day long, and where the piston of the steam-engine worked monotonously up and down, like the head of an elephant in a state of melancholy madness. It contained several large streets all very like one another, and many small streets still more like one another, inhabited by people equally like one another, who all went in and out at the same hours, with the same sound upon the same pavements, to do the same work, and to whom every day was the same as yesterday and to-morrow, and every year the counterpart of the last and the next.

Socialism Another Answer to Capitalism Government should plan out the economy to improve people’s lives Government controls, factories, mines, railroads & key industries= end of poverty & more equality Some private ownership is allowed People should cooperate for the good of all (Utilitarianism) Goal: end the inequalities of a capitalist system. Countries like Canada blend socialism with democracy and we call this Social Democracy.

Karl Marx German journalist who believed in a type of radical socialism which has been called Marxism or communism. Considered the father of communism. Marx & Friedrich Engels outlined their ideas in the pamphlet-“The Communist Manifesto.” Industrial Rev., rich got richer and poor got poorer= lead to conflict Believed Capitalist system would destroy itself- workers would overthrow their owners Influenced: Lenin, Mao Zedong, Castro

Communism Another Answer to Capitalism All means of production- land, mines, factories, railroads, and businesses are owned by the “people” which really means the government. No private property Goal is a classless society Goods are shared equally 5 main countries today are still influenced by these ideals: North Korea, Cuba, China, Laos & Vietnam

Capitalist Countries vs. Communist Countries Free elections & more than one political party Private ownership People employ workers & keep profits Little government interference Freedom of speech & movement Communist Countries Usually a one-party government Industry/Ag owned by the state Classless society with no profit making Government controls most aspects of your lives Censorship on what can be said or written.

Take Away Ideas Connection to Now: The Industrial Revolution has changed everything in our lives. Everything that we use today is somehow a result of Industrialization. The United States and the rest of the modern world would not be capitalist were it not for the I.R., you would not have the benefit of public education, and we would not be able to fight modern wars.

Capitalism or Socialism? 1. Your public high school 2. A child’s lemonade stand 3. A soup kitchen 4. Government provides health care for all citizens 5. Fire department 6. You sell a candy bar for 25 cents more than what you bought it for 7. Baskin Robbins Ice cream 8. Factories during the Industrial Revolution