1700

1. American Revolution: 1775 - 1781 French Revolution: 1789-1815 European Revolutions and Latin American Independence: 1815-1848 Age of Reason 1700 1750 1800 1850 1900 Industrial Revolution

2. Introduction Questions • How does a company determine the price of a product? • What could be some problems created if the world population doubled from 7 billion people to 14 billion people? • What guarantees happiness? • What is socialism? What is communism?

3. The Free Market System - allowing the forces of supply and demand to control the economy

4. A product is released in limited supply; it becomes very popular... Supply Demand Price

5. ...so the factories increase production to meet with popular demand. This stabilizes the price of the product. - Supply Demand Price

6. If production continues and supply begins to exceed demand, prices will fall. Supply Demand Price

7. New Ways of Thinking • Adam Smith believed that a free market system would help not only the rich but the poor • more goods would lower prices making them accessible to all • a growing economy would encourage capitalists to reinvest profits in new ventures

8. Problems of Overpopulation Population Food Production Time

9. Thomas Malthus • Thomas Malthus believed that people should have less children or none at all • the only things that kept population in check were war, disease, and famine – without these the poor would always suffer

12. “Iron Law of Wages” High Wages Smaller Work Population Large Families Eventually the Job Market becomes flooded Smaller Families Low Wages

13. David Ricardo • David Ricardo believed in the “iron law of wages” • when wages were high families got larger; more children would eventually flood the job market lowering wages and increasing unemployment

14. “Theory of Dismal Science” • both Malthus and Ricardo believed that the working class had no hope of escaping poverty

15. The Utilitarians • Jeremy Bentham preached utilitarianism – the idea that the goal of society should be the greatest happiness for the greatest number of their citizens • He believed laws should be judged by their “utility”– do they provide more pleasure than pain? • He believed personal freedom ensured happiness • John Stuart Mills wanted the government to help the working class • Middle Class Businessmen opposed Mills’ ideas

16. The Socialists • socialism – the belief that people as a whole rather than private individuals should own and operate the means of production – farms, factories, railways, and other large businesses that produce and distribute goods • it’s belief was based on the idea of basic goodness in human nature and it’s concern for human justice • Utopians were early socialists who took small communities and ran them according to socialist ideals

17. The “Scientific Socialism” of Karl Marx • Karl Marx (a German philosopher) and Friedrich Engles (a German socialist) teamed up to write The Communist Manifesto – theories on socialism based on the scientific study of history

18. Communist Manifesto • this book laid the foundation for communism – a form of socialism that sees class struggle between employers and employees as inevitable • the entire course of history is a struggle between the “haves” (the upper and middle class) and the “have-nots” (the proletariat – working class)

19. Readings and Questions • Read the excerpts on page 256 about the different type of economic systems and answer the critically thinking question #1 at the bottom of the page. • Read the primary documents on page 269 and answer questions #1-3 at the bottom of the page.