Download 19th Century Economics

19th Century Economics
edit from same title by WBPhillips
Capitalism
• 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
profit
• 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
Laissez-faire
• 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
Socialists
• Others believed that the
government needed to exercise
some control over the economy
and protect workers and
consumers from industrial
interests
• 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
Communism
• 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