Ch.7: The Industrial Revolution, 1700-1900

Sec. 3New Ideas in a New Society

Captains of Industry or Robber Barons?

OVERVIEW:As industrialization grew, a small percentage of the

population became extremely wealthy as a result. While the standard of living was growing for almost everyone, still there was a tremendous inequality of wealth. This led to growing concerns about the nature of capitalism and its glaring weakness ---equal distribution of wealth for its citizens. Thinkers divided over the question of was unchecked industrial growth the best type of economy, or could there be better ways to distribute wealth more evenly throughout society.

Captains of Industry or

Robber Barons?

Captains of Industry (Pro Laissez-Faire)• Adam Smith – The Wealth of Nations

* economy works best with no govt. interference* laissez-faire

* “Invisible Hand of the Market”

• Herbert Spencer – social Darwinism

• Thomas Malthus – population grows much faster than food supply▫ will always have poor; no reason to help working class

• David Ricardo – Iron Law of Wages▫ natural business cycle is boom/bust pattern▫ over time “good times” leads to “bad times” & vice –versa

Robber Barons (Anti-Laissez-Faire)•Jeremy Bentham – utilitarianism

▫govt. should intervene IF it would produce “the greatest good for the greatest number”

▫encouraged govt. laws to reform business

•Robert Owen- social Utopianism▫cooperation vs. competition▫ est. utopian community -New Harmony, IN

where workers shared equally

•Karl Marx – The Communist Manifesto

Karl Marx: The Communist Manifesto

Marxist Theory:1. History a class struggle; poor vs.

rich2. History progresses through stages

*medieval- peasant vs. lord*agrarian- slave vs. landowner*industrial- worker vs. owner

3. Industrial stage is last one▫ workers rise up over owners &

takeover industries▫ then create equal society where

those who produce the wealth, get their share

4. Govt. unnecessary; eventually would disappear

The Three Economic Systems1. Capitalism – the means of production

(businesses) in hands of private citizens; demand/market economy

▫ Laissez-faire: no govt. intervention▫ Reform capitalism: govt. intervenes to

insure fair business practices2. Socialism - the means of production

(businesses) shared by private & govt. ownership; mixed economy

3. Communism - the means of production (businesses) in public (govt.) hands; command/planned economy