19th Century Economics edit from same title by WBPhillips

Capitalism An economic system in which ownership and control of the means of production and distribution of products is in the hands of private individuals or corporations who operate these businesses for profit Evolved out of state- sponsored mercantilism of the colonial era

Adam Smith Scottish economist and author of The Wealth of Nations (1776) Argued that a “free market” economy works to benefit everyone, because it encourages the manufacture of more goods, thereby creating jobs, innovation, and lower prices on goods Also argued that the “invisible hand” of supply and demand works to regulate markets

Laissez-faire Because of the laws of supply and demand, most capitalist economists promote “laissez faire” (French term meaning “let them do as they will”) policies In this approach, government does nothing to regulate the economy – they do not try to control prices or wages, they also provide no protection from monopolies or foreign goods Capitalist economists argue that the market will balance itself without government interference

Socialists Others believed that the government needed to exercise some control over the economy and protect workers and consumers from industrial interests To deter economic injustice, some supported socialism: a system where the economy is heavily regulated by the government to ensure that all citizens enjoy an equal share in society’s prosperity

Marx & Engels Friedrich Engels Karl Marx Expatriated Germans Co-wrote The Communist Manifesto (1848) Argued that society is made up of “haves” (factory owners or “bourgeoisie”) & “have nots” (workers or “the proletariat”) and this inequality will inevitably lead to a violent overthrow of the bourgeoisie by the proletariat

Communism Marx and Engel’s believed that the struggle between the bourgeoisie and proletariat would result in communism, or a system of government where a temporary authoritarian power directs the economy in order to ultimately achieve a higher social order where all property is collectively owned by “the people” and government is no longer necessary