The age of reforms

The Age of Reforms and the Industrial Revolution

  • The Age of Reforms followed the Industrial Revolution

  • Capitalism and Marxist Communism were defined and explained

Laissez Faire Economics

  • Laissez faire economics originated in France

  • It means "let do" or "hands off"

  • It allows business owners to freely produce goods and services without government interference

French Economists and Laissez Faire Economics

  • French economists of the 18th century Enlightenment supported laissez faire economics

  • They believed that government regulation interfered with the production of wealth

  • Their greatest concern was government-enforced tariffs on imported goods in Mercantilism

  • They believed that lifting tariffs would allow for more free trade and prosperity for national economies

Adam Smith and the Wealth of Nations

  • Adam Smith, a professor at the University of Glasgow, supported free economies and free markets

  • His book, The Wealth of Nations, written in 1776, supported laissez faire economics

  • He believed that economic liberty guaranteed economic progress and wealth for nations

Adam Smith's "Invisible Hand"

  • Smith introduced the concept of the "invisible hand"

  • The invisible hand is a natural phenomenon that guides free markets and capitalism through competition for scarce resources

  • Individuals pursuing their own self-interest and desire for personal gain improve society as a whole

  • Government intervention in the economy is not needed because the invisible hand is the best guide

Industrial Capitalism and the Industrial Revolution

  • During the Industrial Revolution, a new form of capitalism called Industrial Capitalism emerged

  • Entrepreneurs and investors invested money into businesses with the goal of turning a profit within the factory system

  • Industrial Capitalism drove mass production and established modern corporations

Thomas Malthus and David Ricardo

  • Thomas Malthus and David Ricardo supported Smith's ideas of laissez-faire capitalism

  • They believed that natural laws governed economic life and any government intervention would disrupt successful economies

  • They opposed government efforts to improve the conditions of the working class, as it would lower profits and undermine wealth production

Malthus and Overpopulation

  • Malthus argued that population was increasing more rapidly than the food supply

  • Without wars and epidemics, most people were destined to be poor and miserable

  • This prediction appeared to be coming true in the 1840s

Ricardo and Overpopulation

  • Ricardo believed that a permanent underclass would always be poor

  • He proposed that wages were spiraling downward and poverty was increasing due to the rapid growth of the European population

The Ideas of Malthus and Ricardo

  • Increased poverty and low wages were seen as a result of rapid overpopulation

  • Any attempt to fix these issues through minimum wage laws or improving work conditions would disrupt successful economies

  • They encouraged the continuation of laissez-faire economics

Utilitarianism and Jeremy Bentham

  • Jeremy Bentham introduced the philosophy of utilitarianism

  • He believed that ideas, institutions, and actions should be judged by their usefulness or utility

  • Governments should promote the greatest good for the greatest number of people, but individuals should be free to pursue their own advantage without interference

John Stuart Mill and Utilitarianism

  • John Stuart Mill, leader of the Utilitarian movement, questioned unregulated capitalism

  • He believed that the working class should not live in poverty and that business profits should be equally divided

  • Mill favored a cooperative system of agriculture and called for governments to end wealth disparity

Proposals of Utilitarianism

  • Utilitarians questioned unregulated capitalism and advocated for improving the lives of the working class

  • They favored policies that created an equal distribution of business profits and supported women's rights

  • They pushed for reforms in the legal system, prison system, and education

The Rise of Socialism

  • Some economic philosophers believed that governments had to intervene in business policy to improve the lives of poor workers

  • Capitalists tended to oppose minimum wage laws and improved working conditions, as they would cut into profits

The First Socialists

  • Charles Fourier and Saint Simon were the earliest proponents of modern socialism

  • They believed that the factors of production should be owned by the public and operate for the welfare of all

  • They called for government control of key industries to abolish poverty and promote equality

Socialism and Government Intervention

  • Socialists believed that governments should actively plan economies and control key industries

  • They believed that public ownership of businesses would help workers and undo the injustices observed during the Industrial Revolution

The Communist Manifesto

  • The Communist Manifesto explained how capitalist societies would eventually be replaced by socialism

  • It described the division of society into the bourgeoisie (middle class and employers) and the proletariat (working poor)

  • The wealthy always controlled the means of production while the poor did the labor

Marxist Philosophy

  • Karl Marx and Friedrich Engels believed that the Industrial Revolution exacerbated the divide between the rich and the poor

  • They believed that the proletarians would overthrow business owners through forceful revolutions

Pure Communism

  • Pure communism is a completed form of socialism where all land, mines, factories, railroads, and businesses are owned by the people

  • There is no private property, and all goods are shared equally

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  • Capitalism vs. Marxism

    • Capitalist Ideas

      • Progress results when individuals follow their own self-interest.

      • Businesses compete with one another for the consumer's money.

      • Each producer tries to provide better and less expensive goods and services than competitors.

      • Consumers compete to purchase the best goods at the lowest prices.

      • Market economy aims to produce the best products and lowest prices.

      • The capitalist system will eventually destroy itself.

    • Marxist Ideas

      • All great movements in history are the result of an economic class struggle.

      • The "haves" take advantage of the "have-nots."

      • Workers are exploited by employers.

      • The labor of workers creates profit for employers.

      • The government should not interfere in the economy.

      • The state will wither away as a classless society develops.

      • Make nations wealthy, make people more equal.

Page 22

  • Economic philosophies explained

    • Capitalism

      • Entrepreneurs, investors, or the market control the means of production and other business decisions.

      • Laissez faire economics.

    • Mixed economies

      • Business owners operate under a free market system with government regulation or political influence.

      • Most commonly practiced today.

    • Socialism

      • Government controls business decisions and the means of production.

    • Communism

      • The people "exclusively" own and control business decisions and control all factors of production.

      • No hierarchy, only equality.

      • All property and profit is jointly owned and shared.

      • Pure Communism has yet to have been achieved on a national scale.

      • Pure Communism is finally reached at the end of Socialism.

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  • The reality check for Communism

    • Marx and Engels believed that economic forces alone would bring revolutionary change to society.

    • Religion, nationalism, ethnic loyalties, and the desire for democratic reforms also had a grip on society and would prevent the spread of Communism worldwide.

    • The gap between rich and poor in western industrialized countries failed to widen as predicted by Marx and Engels.

    • Labor conditions improved due to at least 3 labor reforms.

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  • 1st Unionization

    • Factory workers began to organize and unite into Labor Unions.

    • Unions engaged in collective bargaining, negotiating for better working conditions and higher pay.

    • Workers went on strike when employers refused their demands.

    • Skilled workers led the way in forming these unions.

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  • 2nd Labor laws were passed in Great Britain

    • The Factory Act of 1833

      • Made it illegal to hire children under the age of 9.

      • Children 9-12 couldn't work more than 8 hours.

      • Teens 13-17 could not work more than 12 hours.

    • The Mines Act of 1842

      • Prevented women and children from working in underground mines.

    • The Ten Hours Act of 1847

      • Limited the workday to 10 hours for women and children.

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  • 3rd Slavery was abolished in the West

    • Great Britain was the first to abolish slavery.

    • William Wilberforce, a devout Christian and Abolitionist, fought for the abolition of slavery within the British Empire.

    • In 1833, Britain completely abolished slavery within its empire.

    • William Wilberforce died three days later.

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  • The abolition of slaver y in the West

    • The years slavery ended in the western world

      • 1833 - The British Empire

      • 1865 - United States - The 13th Amendment

      • 1873 - Puerto Rico

      • 1886 - The Spanish ended slavery in Cuba

      • 1888 - Brazil's massive slave population won their freedom

    • A popular medallion inscription created as part of the anti-slavery campaign by Josiah Wedgwood