• 11/9 Focus: – Business leaders believed that governments should

stay out of business and economic affairs. – Reformers felt that governments needed to play an

active role to improve conditions for the poor.

• Important Terms: – Laissez Faire, Capitalism, Social Darwinism,

• Do Now: – Identify the industry that first became

industrialized.

Competing Philosophies of the

Industrial Revolution

Impact of IndustrialRevolutio

n

Urbanization

Working Conditions

Living Conditions

• Created many new jobs • Factories were unsafe and

dangerous• Workers worked long hours

• Rich lived in nice neighborhoods

• Poor were crowed in slums near factories

• Factory worked attracted people looking for jobs

• Rapid growth of cities

Impact of IndustrialRevolutio

n

Rise of Big Business

Changing social roles

Social Classes

• Change in family life and role of women

• Growth of the Middle class • Upper middle • Lower middle

• Business sold stock or shares of the company

• Led to formation of corporations

New Class Structure

Middle Ages

Commercial

Revolution

Industrial

Revolution

Nobles

Peasants

Nobles

Peasants

Middle Class

Upper Class

Upper Middle

Lower Middle

Working Class Poor

Developed with expansion of trade and growth of cities during high middle ages

Impact of Industrialization on Class Structure

Class Description Standard of living

Upper

Upper Middle

Lower Middle

Working Class Poor

Aristocrats; wealthy industrial and business families

Very wealthy;

Business people; Factory managers; professionals (doctors, lawyers)

High standard of living

office workers; skilled workers; teachers; shop owners

Factory workers; poor farmers

Comfortable standard of living

Harsh living and working conditions in overcrowded cities

Mercantilism

Enlightenment idea of

Laissez Faire

Capitalism

Factors of production privately owned

Economic SystemsMoney

invested in business to

make a profit

Free markets

Europe Pre-Industrial Revolution

Heavy gov’t

regulations and tariffs

Nations try to

achieve favorable balance of trade

Business should operate without gov’t

interference

Lassiez Faire Capitalism

• Supported by Adam Smith –Wrote The Wealth of

Nations (1776)

• Ideas became the basis for the economic system during the Industrial Revolution– Economic system of the

U.S today

Lassiez Faire Capitalism • Smith said there were 3 natural laws of economics

Law of Self

Interest

Law of Competitio

n

Law of Supply

and Demand

People work for their own good

Competition forces people to make a

better product

Goods will be produced at the

lowest possible costs to meet demand

• 11/10 Focus: – Socialists were concerned less on the interests and

rights of the individual and more on the interests of society as a whole.

• Important Terms: – Socialism, Command Economy, Utopia,

Marxism

• Do Now: –Which economic system is Adam Smith

associated with?

Lassiez Faire Capitalism

• Thomas Malthus– Believed population

would grow faster than food supply

–Without war, famine, and epidemics population would keep growing

– Poor would suffer• Not governments job

to help

Social Darwinism • Based on Charles

Darwin’s idea of natural selection – Survival of the fittest

• Belief that successful business people and wealthy were more “fit” to succeed that others

• Stronger nations should weed out weak nations

• Led to increase in Racism and imperialism

Points for Discussion

• Which social class expanded as a result of the Industrial Revolution?

• Which economic system encouraged the growth of industrialization?

Socialism

• Economic system where the factors of production are owned by the public and operate for the good of all people rather than individuals

Socialism

• Believed Capitalism creates large gap between rich and poor

• Felt that business owners took advantage of workers

Socialism

• Supported the idea of a Command Economy– Government makes

decisions about the economy rather than free markets

• Government should control factories and key industries– This would end

poverty and promote equality

Utopian Socialism

• Utopians tried to create self-sufficient communities

• Property and work would be shared

• Robert Owen setup Utopian factory community in Scotland

Marxist Socialism

• Based on the ideas of German Philosopher Karl Marx

• Wrote the Communist Manifesto (1848)–Written with Friedrich

Engels

Marxist Socialism

• Communism– Radical form of

socialism – All means of

production are owned by the government • Land, mines, railroad,

businesses

– Private property does not exist

– all goods and services are shared equally

“From each according to his ability to

each according to his needs”

The Commun

ist Manifest

o

History was a struggle

between the wealthy and working class

Capitalists took advantage of

proletariat to make profits

Proletariat would rise up

and overthrow capitalist system

Take control of the means

of production

Create a classless

communist society

Wealth and power equally shared

Capitalism Socialism

• Individuals and businesses own property and the means of production

• Progress results when individuals follow their own self interest• Businesses compete for consumers money by producing goods that are better and less expensive than competitors• Consumers compete to buy the best goods at lowest prices.

• Shapes the market by affecting what businesses sell• Government should not interfere in the economy because competition creates strong businesses (Free Markets)

• The community or state should own property and the means of production

• Progress when a community cooperates for the good of all

• Believe that capitalist employers take advantage of workers and the government must protect workers

• unequal distribution of wealth and goods in the capitalist system

• System should distribute goods according to each person’s need

• Government regulation of economy to ensure equal distribution of wealth and material goods (Command Economy)