1. Economic Systems of the Industrial Revolution
Capitalism

2. Capitalism: Definition
An economic system in which the means of production are owned mostly privately.
Capital is invested in the production of goods for profit in a competitive free market.

3. Adam Smith Wrote The Wealth of Nations in 1776
Founded modern economics and laid the foundation for capitalist theory
Believed laws of nature should be left to govern the economy
Was an Enlightenment philosopher

4. Two Laws of Economics Supply & Demand Competition
Prices & profits depend on both the amount of available goods and the demand for those goods
Low supply with high demand  can charge more!
High supply with low demand  price cuts…
Competition
As manufacturers compete with each other to sell their products, they must reduce prices
But can’t cut them too much or you’ll lose profit!

5. Other Concepts Free Market Laissez-Faire Invisible Hand
People should be free to engage in whatever business they choose and trade with whoever they want without restriction
Laissez-Faire
“Let alone” or “hands off”
The government should not interfere with the economy
Invisible Hand
Driving force of the economy
Dips / fluctuations are natural – this will correct it!

6. Other Important Capitalists
Thomas Malthus
The population grows faster than the food supply
Therefore, there will always be a class in poverty
Wars, epidemics etc are natural ways to regulate the excess population
David Ricardo
“Iron Law of Wages”
Workers’ wages are connected to supply & demand
Lots of workers  lower wages
Fewer workers  higher wages

7. Rise of Corporations
During the IR, small businesses grew into corporations
Groups of business owners who allow people to buy stock in the company
Run by board of directors
Corporation = a single “person” under the law
Stockholders only financially responsible for the % they hold of the company
Profits are split between stockholders, generally invested back into the company

8. Monopolies Not all corporations were successful
When a business failed, could be bought out by another corporation
Sometimes a single corporation gained almost complete control of the production / sale of a single good
This is called a monopoly
Are monopolies good or bad for a capitalist system?

9. Socialism & Communism

10. Critiques of Capitalism
Some people did not like laissez-faire capitalism
Laws cannot do enough to fix the social inequalities of the IR!
Socialists wanted the means of production to be owned by the government
Get rid of profit motive and competition
Everyone has a right to share the profits of industry

11. Utopian Socialism
People can live peacefully with each other in small cooperative settlements
Everyone works for the common good and shares everything
Model “utopian” towns (“perfect societies”)
Robert Owen – factory owner and utopian
Wanted workers to be happy
Built good homes, schools, fed workers
Encouraged workers to form unions

12. Karl Marx The capitalist system should be destroyed!
History = class struggles
Owners of property/business (bourgeoisie)
AGAINST
Those without property / the working class (proletariat)
The proletariat must unite and seize power!

13. Marx’s Ideas Dictatorship of the Proletariat Pure Communism
Revolutionaries would have to control the government by force because people will be reluctant to support socialism
Pure Communism
The state would “wither away” (disappear) when people learned to cooperate and work together
**Society can run on its own without government in the end

14. Two Directions of Socialism
Communism
Violent revolution was required to get rid of capitalism
The only way to establish governments that owned the means of production and controlled the economy
Democratic Socialism
Socialism can develop gradually through education and democracy
Government owns at least some of the means of production
People can still have some private ownership and control of the economy

15. Debate Teams Capitalism Communism Anna Patrick Emily Jonnah Reagan
Catie
Sam
Dyovanna
Alex
Kierce
Cole
Mary Kate
Kaitlyn
Aras
Ally
Karina
Sonny
Jennie
Adrienne

16. Charles Darwin & Social Darwinism
Other Theories
Charles Darwin & Social Darwinism

17. Charles Darwin Published Origin of the Species in 1859
Two observations:
No two living things are exactly the same
There are more creatures born than actually survive
The survivors have characteristics best suited to the environment
“Survival of the Fittest” or “Natural Selection”
Strong offspring pass these good traits to the next generation

18. Controversy 1) Humans developed from animals  offensive!
2) Many thought Darwin’s theory contradicted the Bible (story of creation)
Herbert Spencer developed new theory: social Darwinism
Applied Darwin’s ideas to social situations
The wealthy are on top because they have the right characteristics
People were in poverty because they were “unfit”