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19th Century Economics
edit from same title by WBPhillips
• An economic system in
which ownership and
control of the means of
production and
distribution of products is
in the hands of private
individuals or
corporations who operate
these businesses for
• Evolved out of statesponsored mercantilism
Adam Smith
• Scottish economist and
author of The Wealth of
Nations (1776)
• Argued that a “free market”
economy works to benefit
everyone, because it
encourages the
manufacture of more
goods, thereby creating
jobs, innovation, and lower
prices on goods
• Also argued that the
“invisible hand” of supply
• Because of the laws of supply and
demand, most capitalist
economists promote “laissez
faire” (French term meaning “let
them do as they will”) policies
• In this approach, government
does nothing to regulate the
economy – they do not try to
control prices or wages, they also
provide no protection from
monopolies or foreign goods
• Capitalist economists argue that
• Others believed that the
government needed to exercise
some control over the economy
and protect workers and
consumers from industrial
• To deter economic injustice,
some supported socialism: a
system where the economy is
heavily regulated by the
government to ensure that all
citizens enjoy an equal share in
Marx & Engels
Friedrich Engels
Karl Marx
Expatriated Germans
Co-wrote The Communist
Manifesto (1848)
• Argued that society is made
up of “haves” (factory
owners or “bourgeoisie”) &
“have nots” (workers or
“the proletariat”) and this
inequality will inevitably
lead to a violent overthrow
• Marx and Engel’s believed that
the struggle between the
bourgeoisie and proletariat
would result in communism,
or a system of government
where a temporary
authoritarian power directs
the economy in order to
ultimately achieve a higher
social order where all property
is collectively owned by “the