New Ideas in a New Society Economics, Business and People

Capitalism and Competition Laissez-Faire- French meaning “free to do” referred to a business system free from government interference Late 1800’s new ideas created growing spirit of individual enterprise called Capitalism. Capitalism- Individuals, rather than governments, control factors of production

Capitalism and Competition Adam Smith was a leading advocate of laissez-faire economics. Believed an economy free from regulation benefitted all This is called a Free Market Economy Smith influenced Thomas Malthus who was concerned about Population growth. Believed Population would grow faster than Food Production Poverty and Misery would never go away Believed that war, disease, famine and poverty were good and necessary in order to rid the planet of those people it could not sustain.

Problems with Capitalism and the Free Market Economy Business Owners will always do what is best for them Who they hired- Mostly men, however some factory owners preferred women and children, could pay them less. Very little Pay- paying workers allowed the owners to sell products cheaper and make more profit Long workdays- 12 to 16 hours workday Dangerous- taking precautions to make factories safer cost money. Without regulation, there was no need to diminish profits by wasting money on safety

Competing Economic Views Socialism- economic system where society owns all property and controls industry Robert Owen was the founder of socialism New Lanark, Scottland- First test of socialism in a modern industrial town Good Working Conditions, nonprofit stores, lived in decent houses, sick pay, free education. New Harmony, Indiana

Competing Economic Views Karl Marx- German author believed as Capitalism grew workers would sink more and more into poverty. Believed it was inevitable that workers would rebel and seize control of factories and farms. Capitalism would Collapse Communism- Government owns the means of production, controls economic planning and redistributes wealth. Command Economy- the government controls workers and output of factories. In actual practice, Communism has used the power of the government to violate basic human rights and freedom of choice