Reforming the
Industrial World
Capitalism vs. Socialism
• With big businesses and corporations in
the world, the gap between the rich and
the poor got bigger.
• The Rich believed that government should
stay out of business affairs.
• The Poor believed that the government
should keep a closer eye on big businesses.
Background
• The French used a economic policy
called Laissez-Faire Economics.
• Laissez-Faire: the idea that government
should not interfere with or regulate
industries or businesses.
• Free Trade: the flow of commerce in the
world market without government
regulation.
Background
• A big supporter of
Free Trade &
Lassiez-Faire
Economics.
• In 1776, he wrote a
book about it! The
Wealth of Nations
Adam Smith
• He had some supporters!
• Thomas Malthus
• David Ricardo
• Thought that the
population usually
increased faster than
the food supply.
• He said that without
wars and diseases to
kill off people, most
people would have to
be poor.
Thomas Malthus
• Thought that if there are
lots of workers & lots of
resources, then labor &
resources would be cheap.
• If there are few workers &
few resources, then labor &
resources would be
expensive.
• SO if population increases
we should lower wages.
David Ricardo
• Smith, Malthus, & Ricardo helped come
up with the ideas that laid the foundation
for Capitalism.
• Capitalism: an economic system in which
the factors of production are privately
owned and money is invested in business
ventures to make a profit.
Capitalism
•What is Capitalism &
Lassiez-Faire
Economics all about?
Sum it up!
• He changed the ideas of
Adam Smith & came up
with the idea of
Utilitarianism.
• Utilitarianism: the theory
that government actions
are useful ONLY if they
promote the greatest good,
for the majority of people.
Jeremy Bentham
• Bentham’s views led to an
new type of economic policy
called, socialism.
• Socialism: an economic
system in which the factors of
production are owned by the
public and operate for the
welfare of all.
Socialism
• Socialists believed that government
should have more say in big
business.
• They thought that if the government
controlled & ran factories, mines, and
other big businesses, poverty and poor
working conditions would change.
Socialism
• Karl Marx was an extreme
socialist who wrote, The
Communist Manifesto
• He said that society has 2 groups
of people…
Middle Class
Employers or Bosses
The “Haves”
Bourgeoisie
Karl Marx
Lower Class
Workers
The “Have-Nots”
Proletariat
• Factory workers faced…
• Dirty & dangerous working
conditions
• Long work hours
• Fear of being laid off or fired
• In order to get change, they would
band together & join unions.
Reforming Industrial
Society
• Union: an association of workers, formed
to bargain for better working conditions
and higher wages.
• One of the most famous was, American
Federation of Labor or AFL (1886)
Reforming Industrial
Society
• Factory Act of 1833 – illegal to hire
children under the age of 9 years old. Put
restrictions on how long children could
work.
• Mines Act of 1842 – women & children
can no longer work underground
• Ten Hours Act of 1847 – women &
children could only work in factories for
10 hrs.
Reform Laws