New Ways of Thinking!

 A. Laissez – Faire Economics 1. Embraced by middle class business leaders 2. Stressed that individuals should be left to improve their lot through thrift, hard work, and limiting the size of their families. 3. Adam Smith, advocate  a. Authored “The Wealth of Nations”  b. Asserted that a free market – the unregulated exchange of goods and services – would help everyone, not just the rich.

 i. Free markets would produce more goods at lower prices, making them more affordable to everyone.  ii. Economic growth would also encourage capitalists to reinvest profits in new ventures.

 a. Published “An Essay on the Principle of Population” i. Predicted that the population would outpace the food supply ii. Claimed that the only checks on population growth were war, disease, and famine.  b. Concluded that poverty was unavoidable because the population was increasing faster than the food supply.  c. Urged families to have fewer children and discouraged charitable hand-outs and vaccinations.  d. View regarding the food supply was proven wrong as the food supply actually grew faster than the population.

 a. Pointed out that in his “Iron Law of Wages” that wage increases were futile.  b. Said when wages were high, families often had more children instead which cost more money instead of using additional income to raise the family’s standard of living.

 1. Utilitarianism: the idea that the goal of society should be “the greatest happiness for the greatest number of people.”  2. Utilitarians a. Jeremy Bentham  i. Believed that all laws or actions should be judged by their “utility” (usefulness)  ii. Supported individual freedom but saw a need for limited governmental support.

 i. Wanted government to improve the hard lives of the working class.  ii. Said “The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, “is to prevent harm to others.”  iii. Advocated universal suffrage

 1. Condemned the evils of industrial capitalism  2. Offered a radical solution: the people as a whole rather than private individuals would own and operate the means of production - farms, factories, railways, and other large businesses  3. Grew out of the Enlightenment faith in progress, its belief in the goodness of human nature, and its concern for social justice

 a. Early socialists who established communities where all work was shared and all property owned in common.  b. Believed that, with no difference between rich and poor, fighting would disappear

 1. German philosopher  2. Condemned the ideas of the Utopians as unrealistic idealism  3. Wrote The Communist Manifesto with Friedrich Engels a. Published in 1848 b. Advocated communism, a form of socialism, in which an inevitable struggle between social classes would lead to the creation of a classless society where all means of production would be owned by the community.

 c. Differentiated between the haves (bourgeoisie) vs. the have nots (proletariat)  d. Despised capitalism, believing it created prosperity for only a few and poverty for many.  e. Called for an international struggle: “Workers of all countries unite” – triggering worldwide revolution.

 1. Gained popularity with many people around the world.  2. Never practiced exactly as he had imagined.  By the end of the 20 th century, few nations remained with a communist government while nearly every economy included elements of free-market capitalism.