Positives:
 Adam Smith- laissez faire (let people do as they please)
Wealth of Nations: economy will prosper without government interference

Privately owned business.

Market System:
Many workers & abundant resources = cheap labor & resources
Few workers & scarce resources = expensive labor & resources

Entrepreneurs are rewarded for their risks.

Goods are improved, competition breeds better products at lower costs.

Anyone can become rich!

Negatives:
Social Darwinism- survival of the fittest used for society.
Wealth of one built on the backs of many.
Gap between the rich and poor grows wider.

Socialismthe means of production (land, capital, raw materials and factories) should be owned and controlled by society.
Wrote book,
Communist Manifesto
Communism - Karl Marx: Believed there is a constant struggle between the “haves” and the “have-nots.” “Workingmen of all countries, unite.”
Workers (proletariat) were the productive class. He wanted the people to own everything, no private property, no classes. The idea is that “from each according to his ability, to each according to his need.”

Capitalism
Individual/Businesses own property
Progress = when individuals follow their own self-interest
Businesses compete for consumer’s money by producing goods/services that are better and less expensive
Consumers compete to buy the best goods at lowest prices
Government should NOT interfere in the economy
Socialism
Community or state owns property
Progress = when a community cooperates for the good of all
Capitalist employers take advantage of workers.
Community must act to protect them
Unequal distribution of wealth and material goods is created; should be according to each person’s needs
Unequal distribution of wealth and materials is unfair; better to distribute based on need

Unions : Voluntary labor associations
Collective Bargaining : negotiations between workers and employers to better working conditions and increase pay
Strike : refusing to work until changes are made (originally illegal)
Reform Laws :
Political leaders looked into abuses of IR
Child Labor Laws
Working Conditions in Factories and Mines
Lead to:
Abolition of Slavery
Fight for Women’s Rights
Public Education
Prison Reform
D E M O C R A C Y continued to grow

1. Land- Natural resources.
2. Capital- Money to start the business.
3. Labor- Workers (Displaced farmers, increased population)
Entrepreneurs- Risk takers, people with the idea, capital and the guts to take the risk.
Business Organizations
1. Sole proprietorship- one person owns the business.
2. Partnership- 2 people own the business.
3. Corporation- Shareholders own the business (stocks). They share in profits but are not responsible personally for debt.

I. Negative Changes
A. Child labor
B. Unsafe Working conditions
C. Overpopulated cities (from thousands to millions.)
1. Unsanitary living conditions a. Disease b. Rats, filth c. Poor living conditions d. People living in slums
D. Environment
1. Depleting natural resources
2. Polluting water supply
E . Growing gap between the rich and the poor

II. Positive Changes
A. Labor laws
1. Limiting working hours, age and safety
B. Collective Bargaining
1. Labor unions a. Striking for improvements b. Better working conditions c. Better pay
C. Growing Middle class
1. New wealth, better standard of living
D. New Tax Revenue
1. Public education
2. Improved infrastructure (police, sanitation, etc.)

III. Capitalism vs. Socialism
A. Adam Smith- Laissez Faire, Capitalism
B. Karl Marx- Communism, Socialism
1. Constant struggle between rich and poor.
2 . “Haves” Bourgeosie and “Have Nots” Proletariat
3. “The proletarians have nothing to lose but their chains. They have a world to win. “Workingmen of all countries, unite.”