Adam Smith (English)Adam Smith (English) Karl Marx (German)Karl Marx (German)

The Wealth of Nations

Laissez-faire, or “hands-off,” approach to the economy

No government intervention or regulation

The Communist Manifesto

Working-class would take power and create a class-less society

Workers control the means of production

Origins of Economic Philosophies

Free Market EconomyFree Market Economy Command EconomyCommand Economy

Business will create ideal conditions if free from interference

“Invisible hand”

Government makes all decisions about production and wealth distribution

The Economic Spectrum

DemocracyDemocracy CommunismCommunism

Power is held by the citizens in a system with open elections

Greatly expanded in the 1800’s to include all classes of people

“Dictatorship of the proletariat” – suppress any pro-capitalist movement

Redistribution of wealth

The Political Spectrum

SocialismSocialism CommunismCommunism

Achieved through peaceful, democratic means

Retain people’s support with political liberty and economic justice

Only nationalize major industries

Power only through revolution

Suppress anything counter-revolutionary

Government owns all production

Socialism ≠ Communism

Socialism CAN occur in a democracy

A Third Way – Utilitarianism

The goal of society should be “the greatest happiness for the greatest number” – Jeremy Bentham Can a free market achieve this goal? Why or why not?

Government regulation and involvement under certain circumstances

Mixed economy – combining private ownership and tax-funded infrastructure and services

Where would you place the United States on this spectrum today?

Democratic socialism – the two ideas can be combined

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.” •Adam Smith, “Wealth of Nations”

“I hope we shall...crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.” •Thomas Jefferson

“The development of Modern Industry, therefore, cuts from under its feet the very foundation on which the bourgeoisie produces and appropriates products. What the bourgeoisie, therefore, produces, above all, are its own grave-diggers. Its fall and the victory of the proletariat are equally inevitable.”•Karl Marx, “Communist Manifesto”

"Democracy cannot consist solely of elections that are nearly always fictitious and managed by rich landowners and professional politicians.”•Ché Guevara, in support of democratic socialism

Democracy Flourishes

Britain – change through reform Reform Act (1832) & Bill (1867) – suffrage to more men Slavery banned in all British colonies (1833) Benjamin Disraeli – created modern Conservative party

France Third Republic – new National Assembly

Separated Church and State, stopped paying clergy Ownership rights for married women

Failures Dreyfus Affair – accused German spy denied rights Antisemitism – persecution of Jews (led to calls for Jewish

state)

Democracy Flourishes

Germany Reichstag – lower house of Parliament, universal male

suffrage Welfare state – social security programs (1880s)

Italy Statuto Albertino – constitution of 1848 Corruption leads to facism

Democracy Flourishes

United States Territory added in 1840’s –

Texas, Mexican Cession, Oregon Country

Abolition of slavery – Emancipation Proclamation & 13th amendment

Suffrage – African-Americans get right to vote in 1870

Modern Capitalism

Corporations Businesses owned by many investors who buy shares of

stock

Monopolies Corporations merge to combine power and control

market Corporations in U.S. in 1898 – 1,800; 1904 - 157

John D. Rockefeller – Standard Oil

Regulations Reaction to abuses of laissez-faire “captains of industry” or “robber-barons?” How does this compare to our current economic troubles?