Reforming the Industrial World
Capitalism
• An economic system in which businesses
and industry are privately owned and money
is invested in business to make a profit.
– Privately owned = individuals rather than the
government
• Laissez-faire capitalism – government
should allow free trade (free market system)
– Belief that no government interference in
business as the best way for the economy to
prosper
Adam Smith
• Wrote The Wealth of Nations (1776)
– Economic freedom = economic progress
– Government should not interfere
– Natural laws of economics
• People work for their own good
• Competition forces people to make a better product
• Supply and demand - enough goods produced at the
lowest price to meet demand
– Government should not help the poor because it
upsets the free market system and lowers profits.
What is the economic system
of the United States?
Capitalism
The Rise of Socialism
• Economic system in which the factors of
production are owned by the public and
operated for the welfare of all.
– Factors of production – what is need to
produce goods
– Public = government/society (democratic
control)
Socialism
• Grew out of concern for social justice
• Government should plan the economy,
NOT depend on free market system
• Government control of factories, railroads,
mines, and other key industries would end
poverty and promote equality
• Public ownership would help workers who
were at mercy of employers
Marxism: Radical Socialism
• Karl Marx writes The Communist Manifesto
– Human society has always been divided into
warring classes:
• The haves and the have-nots
The bourgeoisie (owners and bosses)
vs
The proletariat (workers)
– Believed the Industrial Revolution had enriched
the wealthy and impoverished the poor
– Predicted that workers would overthrow the
owners
The Future According to Marx
•
•
•
•
Proletariat would revolt and seize factories
Workers would bring economic equality to all
Workers would control government
Eventually government would disappear (not
needed) and a classless society would develop
• This classless society he called communism –
a form of complete socialism in which the
people own the means of production.
– Private property does not exist
– All goods and services are shared equally
Labor Unions and Reform Laws
• By 1800s, workers wanted reform
• Joined together in unions (voluntary labor
associations)
– Represented workers in collective bargaining with
employers
– Would strike
• New laws reformed some of the abuses of
industrialization
– Ex. Factory Act of 1833 – illegal to hire children
under 9, limited working hours of older children,
no child labor in mines
Reform Movements Spread
• Abolition of slavery (Britain in 1833, US 1865)
• Women’s Rights
– Women paid 1/3 what men were paid
– Women led reform movements
• Formed unions
• Opened settlement homes to help poor people
• Reforms spread to
– Public education
– Prison reform
– Democracy grew
Settlement
Houses
offered help
to the poor
such as child
care. Why
was this
important?