Industrial Revolution Fri 3/7: Economic Systems of the Industrial Age Objective: Examine the rules of an early European factory and compare the factory system to the cottage industries. Bell Work: If you were to have your own business – name 1 golden rule that you would all of your employees to…

Industrial Revolution Socialism, Communism and Capitalism

Industrial Revolution Capitalism: Free Market System Definition: Economic system in which individuals rather than governments control the factors of production – Factories and Owners v. Workers – Leader: Adam Smith wrote “The Wealth of Nations” supporting Capitalism

Industrial Revolution Capitalism 1. Define Means of Production: Everything used to produce and exchange goods – Land, Railroads, Mines, Factories, Stores, Banks and Machines

Industrial Revolution In Capitalism (Business), who controls the Means of Production? – Owners: own business and get profit

Industrial Revolution Capitalism Role of Government: – Laissez-Faire: Government stays out of business (let owners control business) Class System is necessary and based on multiple factors but people can move between groups

Industrial Revolution Who would like Capitalism? – Owners, Rich

Industrial Revolution Socialism Because of capitalism, there was a large difference between rich and poor – Some believed that there was a better way to distribute the wealth evenly so all could benefit

Industrial Revolution Socialism – Definition: governments own the means of production and operate them for the benefit of all people, rich or poor – All people have the right to share in the profit ($$ from factories) – Get rid of profit and competition

Industrial Revolution Socialism Leaders: Robert Owen, Jerry Bentham Means of Production: Government owns major industries (railroads, heavy industry) but small private ownership of business is allowed

Industrial Revolution Socialism Role of Government: Owns and operates major industries; Regulates Economy Class System: Classes are more equal

Industrial Revolution Socialism Who would like Socialism? – Workers and Middle Class who gain

Industrial Revolution Communism – Definition: Government owns the means of production and controls economic planning; believed that violent revolution against owners was necessary

Industrial Revolution Leader: Karl Marx Karl Marx Published Communist Manifesto – “The history of all hitherto existing society is the history of class struggle” – #2: All issues are the struggle between bourgeoisie and proletariat – #3:Proletariat: Working Class (have-nots) – #4:Bourgeoisie: Owners (Middle Class) (haves)

Industrial Revolution Communism: Marx is first believer in ‘Communism’ – Each person contributes what he/she can – Each person receives what he/she needs

Industrial Revolution Communism Means of Production: Government or the “Collective People” (workers and everyone else) (Share Profits) Role of Government: Owns and operates all business Class System: No Classes

Industrial Revolution Communism Who would like Communism? – Lower Working Class and Poor

Industrial Revolution HW (if not finished in class): Reading on Capitalism and Communism – The Wealth of Nations by Adam Smith – The Communist Manifesto by Karl Marx