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The Economics of the Industrial Revolution

The Economics of the Industrial Revolution. Chapter 13 Section 4 and 5. I.) Capitalism. Capitalism : an economic system in which individuals or corporations, rather than governments, control the means of production 1. Means of productions are privately owned

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The Economics of the Industrial Revolution

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  1. The Economics of the Industrial Revolution Chapter 13 Section 4 and 5

  2. I.) Capitalism • Capitalism: an economic system in which individuals or corporations, rather than governments, control the means of production 1. Means of productions are privately owned 2. Business is privately owned 3. Economic idea of the 1800’s

  3. II.) Mercantilism • Mercantilism: an economic theory based on the belief that the world contains a fixed amount of wealth. In order to increase wealth, countries must take wealth from another country 1. In 1700’s Economists attack this theory 2. Believed: natural law should govern economic life

  4. III.) Law of Economics • Adam Smith: economist who in 1776 wrote The Wealth of Nations an is considered founder of classical economics 1. Believed two “natural laws” govern economics: - Law of Supply and Demand - Law of Competition 2. Free Enterprise: economic theory in which there are no laws or regulations limited economic growth 3. Laissez-Faire: belief that government should not meddle in operations of business

  5. Thomas Malthus: Anglican clergyman who in 1798 wrote An Essay on Principle of Population, which stated population causes problems and poverty in unavoidable • David Ricardo: British economist who in 1817 wrote Principles of Political Economy and Taxation, which stated supply & demand determine wages

  6. IV.) Socialism • Socialism: political & economic system in which governments own the means of production and operate them for the benefit of all the people 1. Utopian Socialists: idea that people can live at peace with each other in cooperative settlements owning all means of production and sharing all Example: Robert Owen

  7. Communism: economic & political system in which governments own the means of production and control all economic planning 1. Karl Marx: German journalist who in 1848 wrote the Communist Manifesto with Friedrich Engels Beliefs: - struggle existed between owners (bourgeoisie) and working class (proletariat) - Proletariat would unite & seize power by force - Create a “classless society”

  8. Democratic Socialism: political system in which government takes control over means of production peacefully; people retain basic rights & partial control over economy

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