Chapter 7
section 4
New ways of thinking
Laissez-Faire Economics
• Government should not interfere with
business of free operation of the economy
• Adam Smith- The wealth of Nations
– Unregulated trade and exchange of goods
and services
– Felt that free market would produce more
products at less prices
– Capitalists would reinvest profits into new
areas of growth
Malthus on Population
• Predicted that population would outpace
the food supply
– Only things to keep population in check would
be war, dieses and famine
– He also felt that the poor would suffer the
most and urged them to have fewer children
• He was accurate in the population growth
however food supply increased at even
greater rates
Ricardo on Wages
• Also felt that the poor had to many
children
• “iron law of wages”
– When wages were high people had more
children= larger labor force=lesser pay and
higher unemployment
The Utilitarian
• Fought for the protection of women children and
public health
• “the greatest happiness for the greatest number”
– Jeremy Bentham
– Supported individual freedom
– Felt government should be a little involved in the
economy
• John Stuart Mill
– Actions are right if they cause happiness and wrong if
they cause pain
• John Stuart Mill
– Actions are right if they cause happiness and
wrong if they cause pain
– He felt that the government should get
involved in labor issues when the workers
were being exploited
– More rights for worker and women
Emergence of Socialism
• Focused on the goods of society
• Condemned evils of industrial capitalism
• People as a whole would run and own the
means of productions
• Society would operate for the benefit of all
members , rather than just the wealthy
The Utopians
• The ideal society
– All work and property shared by the
community
– No difference between rich and poor
– Impractical dreamers
Robert Owen
• Utpian who created his own Utopia
• Campaigned for laws that limited child
labor and encouraged labor unions
• New Lanark Scotland
– Model village
– Built homes for workers
– Treated them with respect
– Proved that people would obey even when
treated well
Scientific Socialism
• Karl Marx
– Based on the scientific study of history
– Wrote The communist Manifesto with
Frederick Engels
• Communism- sees the struggle between workers
and employees as unavoidable
• Economy was the driving force in history
• Have vs have-nots
Connecting past to present
• Failures
– Marx felt that when the
working class rebelled
it would set off a world
revolution
• Actually caused a
number of changes in
society and the work
place
• Revolutions
– Russian socialists
embraced Marxism
– 1917 Russia fell to
communism along with
many other countries
– By 1990 many of
these nations have
embrace the freemarket capitalism