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Reforming the
Industrial World
Chapter 25 Section 4
Philosophies of Industrialization
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Laissez Faire (lehs-ay-FAIR)
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Economic policy of letting owners of industry to
set working conditions without interference of
government.
Term is French for “let do”
Leave business alone!
From the Enlightenment: Government put’s
burden on business and interferes with
businesses’ profits
Adam Smith
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Wrote “The Wealth of Nations” (1776)
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Defended a Free Economy
Liberty guaranteed economic ($) progress
Created 3 Natural Laws of Economics
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Law of Self-Interest
Law of Competition
Law of Supply and Demand
Adam Smith
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Adam Smith – Father of Capitalism
Capitalism
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Economic system in which the factors of
production are privately owned and money is
invested in business ventures to make a profit ($)
Think of it as an “INVISIBLE HAND GUIDING
THE MARKET (ECONOMY)”
Cow Metaphor - Capitalism
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You have two cows. You sell one and buy a
bull.
Socialism
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Founder
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Definition
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Charles Fourier Saint-Simon
Factors of production are owned by the
government
Goal
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End poverty and promote equality
Plan your community vs. Freedom of choice
Cow Metaphor - Socialism
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You have two cows. You keep one and give
one to your neighbor.
Marxism
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Founders:
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Karl Marx & Frederick Engles
Wrote theory in the book “Communist Manifesto”
Theory:
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Have’s – Bourgeoisies (Oppressor)
Have Not’s - Proletariats (Oppressed)
Proletariats will always overthrow the
Bourgeoisies and then they become the new
bourgeoisies.
Communism
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Final Phase of Marxism – Communism
Definition
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All factors of production are owned by ALL.
Never seen a “pure” form of communism
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Ruled by dictators that run their economy for their
own profit.
Countries that are communist today: China, Cuba,
North Korea, Vietnam
Cow Metaphor - Communism
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You have two cows. The government takes
them both and provides you with milk.
Utilitarianism
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Founder:
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Definition:
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Jeremy Bentham
Judge ideas, institutions, & actions based on
utility or usefulness
Goal:
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Work for policies that lead to more equal division
of profits ($)