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The Rise of Capitalism. Carnegie, Rockefeller, Marx, Spencer, & Labor Unions. TN Curriculum Standards:. Capitalism?. The Economy. Supporters of laissez-fare approach. The Economy. Supply & Demand. Big Government?.
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The Rise of Capitalism Carnegie, Rockefeller, Marx, Spencer, & Labor Unions
Big Government? • Opponents of this argument believe that the government has to involve itself in the affairs of private businesses to prevent everyday workers from being taken advantage of. • They believe(d) that the only way to keep corporations/business owners from taking advantage of their workers was to impose regulations (rules) on those businesses.
Let’s Check for Understanding • Supporters of______ believe that the government should not interfere in the economy other than to protect private property rights. • High tariffs • Laissez-fare • Industrial regulations • High taxes for private individuals
Rags to Riches • Andrew Carnegie was a Scottish immigrant who came to the U.S. at the age of 12. • He began work in a textile factory where he earned $1.20 a WEEK. He worked his way up to Superintendent of the Pennsylvania Railroad Company. • He used the money that he earned from his supervisor’s salary to invest in companies that served the RR industry ( iron mills, sleeping car factories, and locomotive factories). • By the time he reached his 30s, he was earning $50,000 a year.
Carnegie & Bessemer join forces • Carnegie met Henry Bessemer in Europe. • Bessemer told him about his new product for producing steel cheaper & faster. • Carnegie was so impressed with Bessemer that he bought a steel company and began using the Bessemer process.
Check 4 Understanding • Laissez-fare relies on • The government to regulate wages and prices. • High taxes and government debt to fund businesses. • High tariffs on foreign goods. • Supply and demand to regulate wages and prices.
Rockefeller & Standard Oil • John D. Rockefeller was an extremely shrewd businessman. • He used horizontal integration and bought out all of his competitors. People that refused to sell and become a part of his corporation were run out of business. • Rockefeller made deals with the middle man (to sell their products higher to his competitors) to make sure that other companies couldn’t compete with him.
Rockefeller & Oil • Rockefeller owned about 90% of the nation’s oil refineries. • He had a monopoly on the oil industry (monopoly- a single company achieves control of an entire market). • For example, When Verizon was the only service that could be picked up in the McKenzie area, residents there had to become Verizon customers. At the time, Verizon definitely had a monopoly on cell phone coverage.
“Spreading the Wealth” • Karl Marx (German philosopher) believed in the opposite of Herbert Spencer’s theory. • He believed in having an equal distribution of wealth in a society. He felt that this would put everyone on an equal playing field. His line of thinking became known as “MARXISM”. It is most commonly aligned with Socialism & Communism. • During the 2008 and 2012 Presidential election, President Barack Obama was repeatedly accused of being a Marxist.
Image circulated during 2008 of German Philosopher Karl Marx with a Obama “change we can believe in” pin
Theory vs. Real Life • A popular message during the 19th century was that everyone had the ability to succeed in an economy driven by free enterprise and opportunity. • By the early 1900s, workers were beginning to have their doubts.
2 Types of Unions • The main 2 types of labor unions were Mainstream & Radical. • Mainstream unions wanted: pay raises, shorter hours, and better working conditions. • They believed in using a process called collective bargaining. This simply meant that instead of everyone who worked for the company going in to complain to the boss about what they were upset about, they sent in representatives.
Samuel Gompers- AFL • The representatives would negotiate for all of the workers. • Samuel Gompers was the founder of this technique. He was a part of the mainstream union American Federation of Labor (AFL). • It was labor adopted by other unions (still used today).
The American Federation of Labor (AFL) The AFL had 3 main goals: • It tried to convince companies to recognize unions and to agree to collective bargaining. • It pushed for closed shops (tried to force companies to hire only union members. • It promoted an 8 hour workday.
Radical Unions • Radical Unions: argued that capitalism created exploitation of the masses (believed the rich kept getting richer while the poor kept getting poorer). Many advocated for either a Socialist/Communist economy that would be fair to everyone and help to create a more socially equal structure. • Mainstream unions hated the way radical unions operated.
The Wobblies • An example of a radical union would be the IWW (Industrial Workers for the World) or Wobblies. • They advocated the Communist system and often used arson and mail bombs to scare capitalist judges who ruled against them in labor cases (involving workers who had been arrested for violence during demonstrations).
