The Industrial Revolution Begins

New Ways of Thinking

Economic Thoughts

• Adam Smith and The Wealth of Nations – Laissez-Faire Economics• The Free Market would

help everyone• More goods at lower

prices• A growing economy• The successes of the

industrial age

Economic Thoughts

• Thomas Malthus• Predicted population would outpace food supply.• War, disease and famine the only checks on

population growth• As population increased, poor would continue to

suffer• Encouraged families to have fewer kids

Thomas Malthus (1766-1834)

Economic Thoughts

• David Ricardo – “Iron law of wages”• Higher wages = families have more kids• More kids = more labor supply• Increased labor supply = lower wages and higher

unemployment• No hope for working class

David Ricardo (1772-1823)

Economic Thoughts

• Malthus’ and Rocardo’s gloomy predictions about life lead economics to being called the “dismal” science.

• Both felt that individuals should be left to improve their own lives through thrift, hard work, and smaller families.

The Utilitarians

• Jeremy Bentham (1800) The goal of society should be:

“The greatest happiness for the greatest number.”

• All laws or actions should be judged on their “utility.”

The Utilitarians

• John Stuart Mill – Bentham follower• Actions are right if they promote happiness, wrong if

they promote pain• Wanted government to improve the lives of workers• Worker’s and women’s suffrage• Social reforms

John Stuart Mill(1806-1873)

Socialism

• The people rather than individuals own the means of production

• Enlightenment ideas – Goodness of man• Individuals would work for the benefit of all

Communism• “Scientific Socialism”• Karl Marx and Friedrich Engels

• Communist Manifesto 1848• Class struggle between owners and workers is

inevitable• History is a history of struggles between “haves” and

“have nots”• Bourgeoisie v. Proletariat• Despised capitalism• “Workers of the world unite”

Karl Marx(1818-1883)

Freidrich Engels(1820-1895)

Failures and Successes

• Failures• Marx wrong about workers• Marxist ideology flawed

• Successes• Russians socialists embrace Marxism• Russian revolution - 1917