Reforming the Industrial World
Ch.9 Sec.4
Background
• Wide gap between the rich and the poor in
industrialized countries during 19th century
• Business leaders felt government should stay out
of economic affairs
• Economic reformers felt governments needed to
have an active role in economics
• Workers are beginning to demand more rights and
protection
Laissez Faire Economics
• Letting business/industry owners set working
conditions without interference
• Adam Smith
▫ Economic professor
▫ Wealth of Nations- defended idea of free
market/economy
• Smith’s Argument
1. Law of Self-Interest- people work for their own good
2. Law of Competition- competition forces people to
make better products
3. Law of supply & demand- enough goods produced @
lowest possible price to meet demand in a market
economy
Capitalism
• Economic system
• Factors of production are privately owned and $
is invested in business to make a profit
• This idea helped cause Industrial Revolution
• Oppose government efforts to help poor workers
• Believed that creating minimum wage jobs and
better working conditions would….
1. Upset free market system
2. Lower profits
3. Undermine production of wealth
Rise of Socialism
• Opposite of laissez-faire/capitalism
▫ Believed government should intervene
• Utilitarians
▫ Believed an idea/practice was only good if it
proved useful
▫ Believed it was unfair that workers worked so hard
for such little pay in such bad conditions
▫ Felt government should eliminate wealth
differences in people
Rise of Socialism
• Utopian Society- everyone works to produce goods
for community (nobody is paid)
• Robert Owen- British factory owner
▫ Wouldn’t allow children under 10 to work
▫ Provided free schooling
▫ Traveled to U.S. and set up utopian community called
New Harmony, Indiana
▫ Lasted 3 years, but led to other utopian communities
starting
Rise of Socialism
• Socialism
▫ Offset the effects of industrialization
▫ Factors of production owned by the public and
operate for welfare of all
▫ Argued that government should plan the economy
rather than rely on free market capitalism
▫ Government control of industries would end
poverty and promote equality
Communism
• Karl Marx- German socialist
▫ Developed radical form of socialism (Marxism)
▫ Communist Manifesto- described communism as a
form of socialism where all production is owned by
the people or state
▫ Workers shared profits to benefit all
▫ Did NOT believe in private property
▫ Inspired Vladimir Lenin (Russia), Mao Zedong
(China), & Fidel Castro (Cuba)
Labor Unions
• Factory workers faced long hours, dirty &
dangerous conditions, and the threat of being fired
• 1800s people joined together in volunteer labor
associations called UNIONS.
▫ Spoke for all workers
▫ Bargained for better wages/conditions
▫ Could strike (not work) if factory owners refused
demands
Labor Reforms
• Investigations of child labor occurred in
▫ Factory Act- no children un age 10
▫ Kids from 13-17 no more than 12 hrs.
• Mines Act
▫ Prevented women & children from working
underground
• Ten Hours Act
▫ Limited work day for 10 hrs. for women & children
• 1904- U.S. ended child labor
Reform Movement
• Slavery
▫ William Wilberforce- argued for abolition in Great Britain
▫ Ended in most of the western hemisphere by late 1800s
• Women’s Rights
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More opportunities
Higher wages
Safer conditions
International Council for Women- 1888
• Education
▫ Horace Mann
▫ Free public education for children
• Prison
▫ Alexis de Tocqueville
▫ Argued for prison reforms