Download ppt - World History - New ways of thinking

New Ways of ThinkingNew Ways of ThinkingNew Ways of ThinkingNew Ways of Thinking

A Look at A Look at Different Economic TheoriesDifferent Economic Theories

A Look at A Look at Different Economic TheoriesDifferent Economic Theories

Adam SmithAdam SmithAdam SmithAdam Smith

Believed in Laissez Faire EconomicsBelieved in Laissez Faire EconomicsGovernment should not interfere in businessGovernment should not interfere in business““hands - off approach”hands - off approach”

Wrote, “The Wealth of Nations.”Wrote, “The Wealth of Nations.”The free market would produce goods at lower The free market would produce goods at lower prices, making the affordable to everyone because prices, making the affordable to everyone because of competitionof competitionGrowing economy would encourage capitalists ti Growing economy would encourage capitalists ti invest in new projectsinvest in new projects

Believed in Laissez Faire EconomicsBelieved in Laissez Faire EconomicsGovernment should not interfere in businessGovernment should not interfere in business““hands - off approach”hands - off approach”

Wrote, “The Wealth of Nations.”Wrote, “The Wealth of Nations.”The free market would produce goods at lower The free market would produce goods at lower prices, making the affordable to everyone because prices, making the affordable to everyone because of competitionof competitionGrowing economy would encourage capitalists ti Growing economy would encourage capitalists ti invest in new projectsinvest in new projects

Thomas MalthusThomas MalthusThomas MalthusThomas Malthus

Saw the effects of population explosionSaw the effects of population explosionCrowded slums, hungry families, unemploymentCrowded slums, hungry families, unemployment

WroteWroteAn Essay on the Principle of Population.”An Essay on the Principle of Population.”Concluded that poverty was unavoidable because Concluded that poverty was unavoidable because the population was increasing faster than food the population was increasing faster than food supply supply

Saw the effects of population explosionSaw the effects of population explosionCrowded slums, hungry families, unemploymentCrowded slums, hungry families, unemployment

WroteWroteAn Essay on the Principle of Population.”An Essay on the Principle of Population.”Concluded that poverty was unavoidable because Concluded that poverty was unavoidable because the population was increasing faster than food the population was increasing faster than food supply supply


Also a laissez faire believer who said that the Also a laissez faire believer who said that the only check on population growth would be only check on population growth would be natural methods of war, disease and faminenatural methods of war, disease and famineSaid as long as population kept increasing the Said as long as population kept increasing the poor would sufferpoor would sufferUrged families to have fewer children and Urged families to have fewer children and discouraged charity and vaccinationsdiscouraged charity and vaccinations

Also a laissez faire believer who said that the Also a laissez faire believer who said that the only check on population growth would be only check on population growth would be natural methods of war, disease and faminenatural methods of war, disease and famineSaid as long as population kept increasing the Said as long as population kept increasing the poor would sufferpoor would sufferUrged families to have fewer children and Urged families to have fewer children and discouraged charity and vaccinationsdiscouraged charity and vaccinations


Malthus was wrong because the food supply Malthus was wrong because the food supply began to grow as fast as the population and began to grow as fast as the population and living conditions slowly improved in the Westliving conditions slowly improved in the WestHowever this would now become a problem However this would now become a problem in other parts of the worldin other parts of the world

Malthus was wrong because the food supply Malthus was wrong because the food supply began to grow as fast as the population and began to grow as fast as the population and living conditions slowly improved in the Westliving conditions slowly improved in the WestHowever this would now become a problem However this would now become a problem in other parts of the worldin other parts of the world

David RicardoDavid RicardoDavid RicardoDavid Ricardo

Also a laissez faire economistAlso a laissez faire economistThought there was no hope for the working Thought there was no hope for the working class to escape povertyclass to escape povertyWrote, “Iron Law of Wages.’Wrote, “Iron Law of Wages.’

Wage increases were no use because they would Wage increases were no use because they would only cover the cost of necessities because when only cover the cost of necessities because when wages were high families had more childrenwages were high families had more children

Also a laissez faire economistAlso a laissez faire economistThought there was no hope for the working Thought there was no hope for the working class to escape povertyclass to escape povertyWrote, “Iron Law of Wages.’Wrote, “Iron Law of Wages.’

Wage increases were no use because they would Wage increases were no use because they would only cover the cost of necessities because when only cover the cost of necessities because when wages were high families had more childrenwages were high families had more children

What Should Government DoWhat Should Government DoWhat Should Government DoWhat Should Government Do

Smith, Malthus and Ricardo all believed that Smith, Malthus and Ricardo all believed that government should not help the poorgovernment should not help the poorThought the best cure for poverty was not Thought the best cure for poverty was not government help but the unrestricted free government help but the unrestricted free market where individual would improve their market where individual would improve their lives through hard work and by limiting the lives through hard work and by limiting the size of their families. size of their families.

Smith, Malthus and Ricardo all believed that Smith, Malthus and Ricardo all believed that government should not help the poorgovernment should not help the poorThought the best cure for poverty was not Thought the best cure for poverty was not government help but the unrestricted free government help but the unrestricted free market where individual would improve their market where individual would improve their lives through hard work and by limiting the lives through hard work and by limiting the size of their families. size of their families.

Summarize the views of

Laissez Faire Economists

Smith, Malthus & Ricardo

UtilitarianismUtilitarianismUtilitarianismUtilitarianism

Advocated by Jeremy Bentham Advocated by Jeremy Bentham Goal should be the greatest happiness for the Goal should be the greatest happiness for the greatest numbergreatest numberLaws should be judged on whether they provide Laws should be judged on whether they provide more happiness or painmore happiness or painSupported individual freedom and thought that Supported individual freedom and thought that some government aid was necessarysome government aid was necessary

Advocated by Jeremy Bentham Advocated by Jeremy Bentham Goal should be the greatest happiness for the Goal should be the greatest happiness for the greatest numbergreatest numberLaws should be judged on whether they provide Laws should be judged on whether they provide more happiness or painmore happiness or painSupported individual freedom and thought that Supported individual freedom and thought that some government aid was necessarysome government aid was necessary

UtilitarianismUtilitarianismUtilitarianismUtilitarianism

John Start MillJohn Start MillWanted the government to step in and improve Wanted the government to step in and improve the hard lives of the working classthe hard lives of the working classSaid middle class business owners were entitled to Said middle class business owners were entitled to increase their own happiness but should not do so increase their own happiness but should not do so at the expense of the workersat the expense of the workersCalled for giving women and workers the right to Called for giving women and workers the right to vote so they could use their political power to vote so they could use their political power to bring reformsbring reforms

John Start MillJohn Start MillWanted the government to step in and improve Wanted the government to step in and improve the hard lives of the working classthe hard lives of the working classSaid middle class business owners were entitled to Said middle class business owners were entitled to increase their own happiness but should not do so increase their own happiness but should not do so at the expense of the workersat the expense of the workersCalled for giving women and workers the right to Called for giving women and workers the right to vote so they could use their political power to vote so they could use their political power to bring reformsbring reforms

What did utilitarians

believe the role of

government should be?

Socialism and Karl MarxSocialism and Karl MarxSocialism and Karl MarxSocialism and Karl Marx

Condemned the evils of industrial capitalism Condemned the evils of industrial capitalism which they believed had created a gap which they believed had created a gap between the rich and the poorbetween the rich and the poorSocialismSocialism

Solution to problems of capitalismSolution to problems of capitalismPeople as a whole would own and operate the People as a whole would own and operate the means of production (factories, goods, money)means of production (factories, goods, money)

Condemned the evils of industrial capitalism Condemned the evils of industrial capitalism which they believed had created a gap which they believed had created a gap between the rich and the poorbetween the rich and the poorSocialismSocialism

Solution to problems of capitalismSolution to problems of capitalismPeople as a whole would own and operate the People as a whole would own and operate the means of production (factories, goods, money)means of production (factories, goods, money)


UtopiansUtopiansEarly socialists who established communities Early socialists who established communities where all work was shared and property was where all work was shared and property was owned by everyoneowned by everyone

Robert OwenRobert OwenSet up a model community in Scotland where he Set up a model community in Scotland where he refused to use child labor and he campaign against it refused to use child labor and he campaign against it and supported labor unions. and supported labor unions.

UtopiansUtopiansEarly socialists who established communities Early socialists who established communities where all work was shared and property was where all work was shared and property was owned by everyoneowned by everyone

Robert OwenRobert OwenSet up a model community in Scotland where he Set up a model community in Scotland where he refused to use child labor and he campaign against it refused to use child labor and he campaign against it and supported labor unions. and supported labor unions.


Karl MarxKarl MarxThought utopians were unrealistic and teamed up Thought utopians were unrealistic and teamed up with Friedrich Engels and wrote, “The Communist with Friedrich Engels and wrote, “The Communist Manifesto (1848).”Manifesto (1848).”

CommunismCommunismThere is an inevitable struggle between social There is an inevitable struggle between social classes that would lead to the creation of a classes that would lead to the creation of a classless society where all the means of classless society where all the means of productions are owned by the communityproductions are owned by the community

Karl MarxKarl MarxThought utopians were unrealistic and teamed up Thought utopians were unrealistic and teamed up with Friedrich Engels and wrote, “The Communist with Friedrich Engels and wrote, “The Communist Manifesto (1848).”Manifesto (1848).”

CommunismCommunismThere is an inevitable struggle between social There is an inevitable struggle between social classes that would lead to the creation of a classes that would lead to the creation of a classless society where all the means of classless society where all the means of productions are owned by the communityproductions are owned by the community


CommunismCommunismThere has always been a class struggle between There has always been a class struggle between the haves and have notsthe haves and have notsHaves have always controlled the means of Haves have always controlled the means of production and thus controlled society and the production and thus controlled society and the wealthwealthIn Europe the haves were the bourgeoisie and the In Europe the haves were the bourgeoisie and the working class were the proletariat (have nots)working class were the proletariat (have nots)

CommunismCommunismThere has always been a class struggle between There has always been a class struggle between the haves and have notsthe haves and have notsHaves have always controlled the means of Haves have always controlled the means of production and thus controlled society and the production and thus controlled society and the wealthwealthIn Europe the haves were the bourgeoisie and the In Europe the haves were the bourgeoisie and the working class were the proletariat (have nots)working class were the proletariat (have nots)


CommunismCommunismIn the end the proletariat would be successfulIn the end the proletariat would be successfulSaid wealth and power should be equally sharedSaid wealth and power should be equally sharedMarx despised capitalism and believed it would Marx despised capitalism and believed it would create prosperity for only a few and poverty for create prosperity for only a few and poverty for the restthe restWorkers of all countries, UNITE!Workers of all countries, UNITE!

CommunismCommunismIn the end the proletariat would be successfulIn the end the proletariat would be successfulSaid wealth and power should be equally sharedSaid wealth and power should be equally sharedMarx despised capitalism and believed it would Marx despised capitalism and believed it would create prosperity for only a few and poverty for create prosperity for only a few and poverty for the restthe restWorkers of all countries, UNITE!Workers of all countries, UNITE!

Marxism in the FutureMarxism in the FutureMarxism in the FutureMarxism in the Future

Social DemocracySocial DemocracyPolitical ideology where there is a gradual Political ideology where there is a gradual transition from capitalism to socialism instead of a transition from capitalism to socialism instead of a sudden violent overthrow. sudden violent overthrow. Marxist governments failed though however Marxist governments failed though however nationalism won out over working class loyaltynationalism won out over working class loyaltyPeople felt stronger ties to their own countries People felt stronger ties to their own countries than to the international communist movementthan to the international communist movement

Social DemocracySocial DemocracyPolitical ideology where there is a gradual Political ideology where there is a gradual transition from capitalism to socialism instead of a transition from capitalism to socialism instead of a sudden violent overthrow. sudden violent overthrow. Marxist governments failed though however Marxist governments failed though however nationalism won out over working class loyaltynationalism won out over working class loyaltyPeople felt stronger ties to their own countries People felt stronger ties to their own countries than to the international communist movementthan to the international communist movement

What did Marx suggest as

an alternative to

capitalism? Why did he

think capitalism was bad?