TEKS 8C: Calculate percent composition and empirical and molecular formulas.

Industrial Age Economic Ideas

TEKS 8C: Calculate percent composition and empirical and molecular formulas.

• Understand laissez-faire economics and the beliefs of those who supported it.

• Describe the doctrine of utilitarianism.

• Summarize the theories of socialism.

• Explain Marx’s views of the working class and responses to Marxism.

Objectives

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• Thomas Malthus – British economist; wrote An Essay on the Principles of Population warning that the population would outgrow the food supply

• Jeremy Bentham – British philosopher and economist who advocated utilitarianism

• utilitarianism – the idea that the goal of society should be “the greatest happiness for the greatest number of citizens,” and that this should be the basis for judging all laws

Terms and People

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• socialism – the belief that the means of production should be owned and operated by and for the people in general rather than by and for private individuals

• means of production – farms, factories, railways, mines, and other large businesses that produce and distribute goods

• Robert Owen – a Utopian who set up a model community at his cotton mill in Scotland

Terms and People (continued)

TEKS 8C: Calculate percent composition and empirical and molecular formulas.

• Karl Marx – German philosopher who, with Frederick Engels, published The Communist Manifesto predicting class struggle

• communism – in practice, a system in which a small elite controlled the political and economic life of a nation

• proletariat – society’s “have nots,” the working class

• social democracy – a political ideology favoring gradual transition from capitalism to socialism

Terms and People (continued)

TEKS 8C: Calculate percent composition and empirical and molecular formulas.

What new ideas about economics and society were fostered as a result of the Industrial Revolution?

Economic thinkers developed new ideas and ideologies to explain the staggering changes of the Industrial Age.

While some focused on the benefits of the free operation of capitalism, others looked at the harsh conditions faced by workers.

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This attitude of keeping “hands off” was called “laissez faire.”

They believed these laws should be allowed to operate without any government interference.

Enlightenment economic thinkers believed that natural laws govern the world of business and economics.

TEKS 8C: Calculate percent composition and empirical and molecular formulas.

• Most middle-class capitalists agreed with Smith’s laissez-faire approach to capitalism.

• Supporters of free-market capitalism saw the success of the industrial age, in which government played no part, as evidence for laissez faire.

Most famous of these thinkers was Adam Smith, who published The Wealth of Nations in 1776.

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He concluded that poverty was unavoidable because the population was growing faster than

the nation’s ability to grow food.

Thomas Malthus was an English economist who carefully studied the impact of the population

explosion in eighteenth-century Britain.

TEKS 8C: Calculate percent composition and empirical and molecular formulas.

Many agreed with Malthus, but he proved to be wrong. Food production rose quickly over the next century.

He felt that “natural events” such as famine or war were the only mechanisms to maintain a sustainable population.

Malthus said that unless the working class had fewer children, they were doomed to remain in poverty.

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Ricardo opposed help for the poor, contending that this would only lead them to have more children.

Malthus and Ricardo saw the “laws of the free market” as the best cure for poverty and advised the poor to be thrifty, work hard, and have fewer children.

Like Malthus, Ricardo saw no hope for the working class to escape poverty.

Another British laissez-faire economist was David Ricardo.

TEKS 8C: Calculate percent composition and empirical and molecular formulas.

Laws should be judged by their utility to benefit people.

Bentham believed that the goal of society should be “the greatest happiness for the greatest number of citizens.” This idea was called utilitarianism.

Other thinkers, such as Jeremy Bentham, believed there should be some government

intervention in the economy.

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One follower of Bentham was John Stuart Mill.

• Like Bentham and Smith, Mill believed in individual freedom.

• But he also believed, “The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.”

• Mill saw capitalists harming workers. He called for limiting their power to do so by giving workers the right to vote.

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The champions of laissez-faire economics praised individual rights, whereas socialists focused on the good of society in general.

Socialism: The people as a whole should own and operate the means of production for the general good.

Capitalism: Individuals should own and operate the means of production for profit.

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These early socialists were called Utopians. The name implied impractical dreamers.

Robert Owen set up a Utopian community at his cotton mill in New Lanark, Scotland.

Socialists set up communities where work was shared and property was commonly owned.

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Owen’s model community was intended to show that mill owners could make a profit and still offer decent wages and conditions.

At New Lanark, Owen:

• Raised wages

• Provided schools

• Refused to use child labor

• Built homes for workers

• Ran a profitable business

TEKS 8C: Calculate percent composition and empirical and molecular formulas.

He formulated a new theory that he called “scientific socialism.”

German philosopher Karl Marx condemned the ideas of the Utopians as unrealistic idealism.

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Along with Englishman Frederick Engels, Marx published The Communist Manifesto

in 1848.

• He predicted a struggle between the social classes that would lead to a classless society.

• The workers would take over all of the means of production, such as the farms, factories, and railways, and run them for the public good.

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Marx theorized that all of history was a struggle between the “haves” and the “have-nots.”

• In industrialized Western Europe, the “haves” were the business owners or bourgeoisie.

• The “have-nots” were the workers, or proletariat.

• In the end, Marx predicted that the proletariat would unite along class lines, take control of the means of production, and end the struggle.

• In practice, Marx’s ideas evolved into communism, a system in which governments led by a small elite controlled all economic and political life.

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Marx called for workers everywhere to unite and overthrow the capitalists.

• In Germany, socialists adapted Marx’s beliefs to form social democracy, a political ideology calling for a gradual transition from capitalism to socialism.

• Russian socialists embraced Marx’s ideas and set up a communist-inspired government in 1917.

TEKS 8C: Calculate percent composition and empirical and molecular formulas.

The later failures of communist nations illustrated

flaws in Marx’s theories.

But workersworldwide never united as a class.

Revolutionaries around the world adapted Marx to their local goals and needs.