1. INT 200: Global Capitalism and its Discontents Adam Smith & the Industrial Revolution

2. Adam Smith The Wealth of Nations (1776) – free trade between nations, and between individuals left both sides better off – when governments interfered with that freedom with controls, tariffs or taxes, they made their people poorer rather than richer A nation’s wealth is its per capita national product – real wealth is what money buys; GNP/GDP Key to economic efficiency: specialization – Division of labor Mutual gains from exchange Money and value – Labor remains the real price

3. Adam Smith Self-regulating Markets – Supply and demand: the quantity of the product that sellers bring to market, and the size of the demand from potential buyers – In their natural pursuit of profit, sellers steer their resources to where the demand, and therefore price, is highest, thereby helping to satisfy that demand. – Resources are drawn to their most valued application, without the need for any central direction Money vs. Wealth – Money is a tool of exchange – Real wealth resides in what that money can buy – Mercantilism wrong

4. Adam Smith Role of Government – Defense – Justice – Public Works – Taxes Tenets of Capitalism – Private Property – Self Interest – Competition – Supply and Demand (invisible hand) – laissez-faire

5. Industrial Capitalism Industrial Revolution – transition from agrarian, handicraft economy to one dominated by industry and machine manufacturing – technological, socioeconomic, political, and cultural changes wider distribution of wealth, the decline of land as a source of wealth, and increased international trade new state policies corresponding to the needs of an industrialized society growth of cities, the development of working-class movements, and the emergence of new patterns of authority worker acquired new and distinctive skills, and his relation to his task shifted; instead of being a craftsman working with hand tools, he became a machine operator, subject to factory discipline – industrialist > the merchant