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New Economic Ideas

New Economic Ideas. Chris Anderson Randolph-Henry H. S. After the French Revolution, Europe seemed upside down Undergoing a transformation: From a _________________________ to ____________________________ Middle class (MC) gained lots of wealth Working class (WC) lived in squalor

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New Economic Ideas

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  1. New Economic Ideas Chris Anderson Randolph-Henry H. S.

  2. After the French Revolution, Europe seemed upside down • Undergoing a transformation: • From a _________________________ to ____________________________ • Middle class (MC) gained lots of wealth • Working class (WC) lived in squalor • Lots of reformers were trying to help the WC

  3. “Hands Off” • Reformers and owners did not agree • Industrial owners thought they should control industry without government interference • Believed government involvement would ___________________________ • Laissez-Faire economics • Government keeps its “hands off” of industry

  4. Adam Smith • Scottish professor • 1st to explain capitalism (what is it????) and laissez-faire economics • Wrote Wealth of Nations(1776) • Justified a change from mercantilism (government restriction) to a more capitalistic (government free) industry • **Labor is the main source of wealth, NOT $$

  5. Supply and Demand: people only buy what they want or need; therefore businesses should produce what people buy • With no government interference, businesses will competeto produce goods at the most inexpensive price • “Invisible Hand”:the competitionbetween businesses

  6. Adam Smith

  7. Thomas Malthus • Had a pessimistic (gloomy) view of the economy • English economist/preacher • Wrote An Essay on the Principles of Population • Growing population caused poverty (WHY??) • Population was growing faster than food supply—ending in disaster • Believed poverty to be unavoidable

  8. Thomas Malthus

  9. Draw the Malthusian Ceiling

  10. David Ricardo • English banker and economists • “Iron law of wages”: believed that the rising population led to more workers competing for jobs • Competition for jobs kept wages low • Poverty unavoidable

  11. Reformers • Many people criticized laissez-faire economics • Many want to make changes in industry • 1.) William Wilberforce: • British Parliamentary member • Wanted to abolish slavery • Make lives of the WC better

  12. 2.) Lord Shaftsbury: • Parliamentary member • Wanted to reduce working hours for women and kids • Both Wilberforce and Shaftsbury will get Parliament to pass laws regulating working conditions in GB • 1833: laws regulating employment of children in factories • 1842: law outlawing the use of women/kids in mines • 1847: Ten Hours Act—a 10 hour or less workday for women/kids in factories

  13. William Wilberforce Lord Shaftsbury

  14. 3.) Jeremy Bentham: • Utilitarianism—true test of any action or institution is its usefulness to society • What are some institutions that are useful to society????

  15. 4.) John Stuart Mill: • Believed the government should tax people’s income to redistribute wealth

  16. 5.) Charles Dickens: • Writer • Used his works to attach industrialization • Do you know any of his works????

  17. Socialism • Many believed that capitalism caused suffering • Believe the struggle to make a profit caused misery • Argue for socialism—workers own, manage, and control production

  18. Utopian Socialism: • Early socialist idea • Wanted to create a society where everyone shares everything

  19. Robert Owen: • First to create a working utopia • Believed competition caused suffering • Cooperation would make life better

  20. Karl Marx • German philosopher • Saw Utopian socialism as impractical • Degrees in history and philosophy • Forced to flee Prussia to France

  21. Marx’s Theories: • Based ideas in history, economics, and historical change • History advanced through conflict, but economics was the major force • At the base of every social order was production • Everything in a nation developed around its economic base • Most important part of the economic base was the creating of social classes

  22. _____________________ controlled production (Would they every give it up???) • Only give up control of production through ________________________ • Conflict between the different classes was inevitable and unavoidable • Class struggle pushed history forward

  23. Marx said that Europe had experienced 4 stages of economic life: 1.) Primitive -people only produce what they need -no exploitation -tools develop, surpluses made, exploitation starts 2.) Slave -struggle between ___________ & ___________ 3.) Feudal -struggle between ___________ & ___________ 4.) Capitalist -struggle between ___________ & ___________

  24. Marx believed capitalism to be temporary • Was he correct?????? • Believed a major crisis would occur in an industrialized nation where the government would take control of the Middle Class • Government would create a society where the people owned everything—no private property, no class distinction, and eventually the government would __________________

  25. Capitalism did not go away—still exists today • Marx was wrong—lives got better for the Working Class (no need to rebel) • Communismdeveloped from Marx’s ideas

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