1. New Economic Ideas for the Industrial World

2. Mercantalism Old system Three beliefs:
Money = wealth
National power more important than the individual
More money = more power

3. Adam Smith (1723 – 1790) Rejected mercantilism New idea: capitalism
Labor was source of wealth
Goal = individual welfare
Competition would act as an invisible hand and guide resources to their best use

4. Adam Smith –cont-
Promoted idea of laissez faire - no government interference
Govt. would threaten economic growth

5. Karl Marx (1818 – 1883)
Economics was the basis for change in society

6. Marx’s social divisions
Karl Marx –cont-
Marx’s social divisions
Society has always been divided into “haves” (the bourgeoisie or middle class) and “have nots” (proletariat or working class)
This would happen:

7. State/govt. will wither away
Factories drive workers out of business
Proletariat rise up and take over factories
Will produce only what society needs
Workers will share profits w/society
State/govt. will wither away
Communism = people own all land, factories and roads

8. History did not happen as Marx thought
Workers used the vote and unions to correct problems