H US 2 - Unit 1 - Capitalism

What is Capitalism?

• an economic system in which a country’s trade and industry are controlled by private people to make money

• make life better

Who was Adam Smith and what was his capitalism approach

• Author of “The Wealth of Nations” (1776)

• Laissez Faire - hands off government

What is socialism?

means of production, distribution, and exchange owned or regulated by the community as a whole/government

• individual may own means of production, but state regulates

Who is Karl Marx

• creator of communism

• “The Communist Manifesto” 1848

What is communism

• an extreme state of socialism where the “state”, “class” and “money” are no longer need to exist

  • Bourgeoisie (rich)

  • Proletariat (poor)

• Advocating class war against unfair structure of capitalism

• Lead to society where all property is owned and resources are pooled

What is industrialization?

• increase in production (due to machines)

• Use of new energy sources (water, steam and coal)

• Began in England in approx. 1750

How many waves of industrialism where there in the US

2

• American Revolution —> Civil War

  • Agriculture and transportation

• Civil War —> early 1900s

  • Consumer goods (diversification)

What were the 3 positions of industrialists

• 1 - Laissez-Faire Capitalism

  • No government interference/pure capitalism

  • No regulations or laws restricting business activity

• 2 - Rugged Individualism

  • Idea —> responsibility = to help yourself

  • Experiencing struggle —> pick yourself up by your bootstraps

    • If you don’t succeed, that’s your fault

  • Focus - hard work

  • Discounts external factors

• 3 - Social Darwinism

  • “Survival of the fittest” applied to humanity 

  • Basic belief - those that deserve it/work for it are the strongest and become wealthy

  • Harsh 19th century reality —> either you are fit or not

Who are some of the big names in industrialism and what did they do

• Andrew Carnegie 

  • Steel

• John D Rockefeller

  • Oil

• J.P. Morgan 

  • Finance (banks and industry)

• Cornelius Vanderbilt 

  • Railroads and shipping

What are the ways the businesses got big? (Business processes)

• Vertical Integration

  • Different goods/services in a supply chain united by a common owner

• Horizontal Consilidation

  • Combining producers (competitors) in a similar industry

  • Buy out competition

    • Monopoly

What is a monopoly

a single individual or business has sufficient control over an industry

• gains control of how goods are accessed

What is a trust

Multiple companies operating as if they are 1

Farmers and Populists

• Late 1800s - overproduction of farm crops causing prices to fall

• Want “easy money”

• To solve the problem, the farmers wanted the US government to increase money supply

• Farmers supported free and unlimited colnage of silver

  • free silver

  • believed it would lead to higher prices for crops

What was the populist party

Political party that wanted reforms for farmers and labor, leading to their rise in popularity by the 1890s

• brings farmers and laborers together

Goals of the populist party

• regulate railroads

• more cash available (back the dollar with silver, not gold)

• direct election of senators, 1 year terms for presidents

• graduated income tax

• restrictions on immigration and 8 hour workday

What were the conditions of workers in cities

• unsafe, low wages, unskilled work, child labor, long hours, no unemployment/insurance

What lead to the rise of labor unions

harsh conditions and workers seeking mutual protection

What does Gilded mean

Thinly covered with gold lead or gold paint

• glittering on the surface but corrupt underneath

• Mark Twain’s book “The Gilded Age: A Tale of Today” (1873)

  • Criticizes greed, materialism, political corruption

• This is when the US was experiencing a time of serious problems masked by economic growth

What are labor unions

Advocated for 8 hour workdays

Many advocated for arbitration (not strikes)

Union would negotiate with employers

Were labor unions successful?

yes, average wages rose a few dollars, workweek fell by several hours

Why were people threatened by labor unions

limits control, could lead to violence

How did industrialists oppose unions?

• Used violence and black listing

  • Haymarket Affair —> union activity gets a bad rep

• Pinkertons - private security company hired to infiltrate Unions and to break strikes through violence