1. 19.4: New Ways of Thinking

2. Laissez-Faire Economics Laissez-Faire Economics  A. Physiocrats = enlightenment thinkers who argued that natural laws should be allowed to operate without interference Government should not interfere with the economy Government should not interfere with the economy Early 1800s = middle class business leaders embrace this idea Early 1800s = middle class business leaders embrace this idea  B. Adam Smith = proponent of Laissez- Faire Economics Authored The Wealth of Nations = argued that free market would… Authored The Wealth of Nations = argued that free market would… Produce more goods @ lower pricesProduce more goods @ lower prices Encourage capitalists to reinvest in economyEncourage capitalists to reinvest in economy

4. Thomas Malthus  A. Also a Laissez-Faire Economist  B. Predicted population would outpace the food supply Believed only “checks” on population were natural…war, disease and famine Believed only “checks” on population were natural…war, disease and famine Believed population increase would cause the poor to suffer Believed population increase would cause the poor to suffer Urged families to have fewer children, discouraged charity and vaccinations Urged families to have fewer children, discouraged charity and vaccinations

5. David Ricardo David Ricardo  A. Also supported Laissez-Faire Economics  B. Wrote “Iron Law of Wages” Said working class would never escape poverty Said working class would never escape poverty Wages would never keep up with cost of living Wages would never keep up with cost of living Said when wages were high people had more children instead of raising their standard of living Said when wages were high people had more children instead of raising their standard of living

6. Utilitarianism  Advocated by Jeremy Bentham  Idea that you wanted “the greatest happiness for the greatest number” Laws and actions should be judged on this idea and whether they cause more happiness or pain Laws and actions should be judged on this idea and whether they cause more happiness or pain  Individual freedom very important  Government should get involved to prevent harm to others

7. Socialists  A. Focus = the good of society as a whole  B. Condemned Industrial Capitalism = believed it created a gap between rich and poor  C. Socialism = people as a whole would own and operate the means of production, rather than individuals Primary concern = “social justice” Primary concern = “social justice”  D. Theory = no gap between rich and poor meant no fighting/conflict  E. Early socialists were called Utopians Robert Owen = set up a model community in New Lanark, Scotland Robert Owen = set up a model community in New Lanark, Scotland

8. Communism  A. Karl Marx = German philosopher who devised theory of “scientific socialism”  B. Helped author The Communist Manifesto = argued that….1)Economics was driving force in history 2)continuous conflict between the “haves” and “have nots” Haves = “Bourgeoisie”, owned means of production Haves = “Bourgeoisie”, owned means of production Have-nots = Proletariat, working class Have-nots = Proletariat, working class  C. Communism = form of socialism that would lead to a classless society where all means of production would be owned by the community

9. Marxism Continued  Marx’s Prediction = Coming conflict between the Proletariat and the Bourgeoisie Coming conflict between the Proletariat and the Bourgeoisie Proletariat would be triumphant Proletariat would be triumphant Workers would set up a classless, communist society Workers would set up a classless, communist society Wealth and power would be equally shared Wealth and power would be equally shared