1. Socialist Thought Emerges
Review: Chapter 5 Section 4

2. Industrialism and the Economy
Capitalism: economic system in which the means of production (factories, farms, railways, large businesses) are PRIVATELY owned and operated for PROFIT.

4. Laissez-Faire Capitalism
Adam Smith: The Wealth of Nations
Unregulated exchange pf goods and services is good for everyone.
Equal opportunity for all to get richer.
Economy is run by the “Invisible Hand”: competition and self-interest.
Law of Supply and Demand.

5. Laissez-Faire Capitalism
Thomas Malthus and David Ricardo:
Poor people will always be poor because they have too many kids.
Nature has a way of “taking care” of poverty through famine, war, disease. Therefore the government should not help the poor. (“Bleak view”)
Should not pay them more, because they will just have more kids.
Poor people should learn to help themselves through thrift, hard work, and having less kids.

7. Socialist Thought Emerges
Utilitarianism: “the greatest good for the greatest number”. (Jeremy Bentham)
Laws should be judged by their usefulness
Government should help and protect the poor.
Socialism: the people as a whole own the means of production instead of individuals.
Sharing of work and property.
Relies on basic goodness and cooperation of people.

8. Karl Marx
German philosopher. Wrote The Communist Manifesto (1848) with Freidrich Engels.
Economics (money) is the driving force through history.
Always a class struggle between
the “haves” and “have-nots”.
“Workers of the world, unite!”
- Karl Marx

9. Karl Marx “Haves” = the bourgeoisie (upper class).
“Have-nots” = the proletariat (the working class).
Hated capitalism because it created prosperity for a few, and poverty for many.
This class struggle will eventually lead to communism.

10. Communism
A form of socialism where there is an inevitable class struggle;
The upper class is overthrown;
The proletariat (workers) take over and the means of production are owned by the whole community;
Government should be very small and limited.
No more rich, middle, or poor classes. In communism, wealth belongs to the community and everyone is equal.