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February 25, 2016 Get out reading-T Chart from yesterday Industrial Revolutions sparks new ways of thinking • Business leaders wanted less government intervention • Workers wanted more rights • Reformers wanted more government regulation Capitalism • Capitalism: – factors of production are privately owned – Goal is to make a profit – Don’t believe in helping poor workers because it would hurt the free market Capitalism • Based on laissez-faire economics – “let people do as they please” – Natural laws would promote economic growth • Adam Smith – Believed in free markets and free economy – Wrote “The Wealth of Nations” – Based beliefs on three natural laws Three Natural Laws • Law of self-interest – People work for their own good • Law of competition – Competition forces people to make a better product • Law of the “invisible hand” – Everyone working in own self interest will promote efficiency – Enough goods will be produced at the lowest price possible to meet demand in a market economy Socialism • Socialism: – Born out of resentment of workers of growing class and wealth divide – Workers revolt and take over factors of production – Creates government whose goal is to benefit all • Govt. intervention in economy – Opposed to laissez-faire Marxism • Radical form of socialism • Coined by Karl Marx and Friedrich Engels in 1848 • Argued the Industrial Revolution had enriched the wealthy and impoverished the poor • Society was divided into “warring classes” of “haves” and “have nots” Communist Manifesto • Pamphlet written by Marx and Engels • Wealthy controlled the means of production while workers performed the labor • They argued the workers(proletariat) will unite and overthrow the wealth factory owners (bourgeoisie) Communist Manifesto • Prediction: – Large corporations would buy up small factories and control all the wealth – Workers would revolt, seize factories, and produce necessary goods – Workers would spread wealth equally (beginnings of socialism) – Workers would control the government – Government would slowly diminish – The country would be ruled by a classless society – Finally, communism Problems? 1) Misunderstand human motives and unrealistic 2) Revolution never happens 2) Totalitarian one party rule emerge instead 3) Command Economies fail • lacks incentive and competition