New Ideas in a New Society

Human Legacy Ch 21.3

Pages 646-651

New Ideas About Economics

• “During the 1700’s and early 1800’s industrialization was changing not just products and work, but also how people thought about economics. One change was that mercantilism was giving way to capitalism and competition.”

– Human Legacy, p 646.

Capitalism and Competition

• Mercantilism – Governments controlled

trade

– Protected industries from foreign competition

• Laissez-faire – Governments should not

interfere in business

– Desire for profit will naturally lead business men to make the most advantageous decisions

– Self-regulating economy

Adam Smith

• Advocate of Laissez –faire economics

• Wealth of Nations 1776 – Markets free from

government interference benefit all

– Businesses compete freely for trade

– Good businesses succeed and bad businesses fail according to natural selection

Thomas Malthus

• Laws of Population Growth

– Population grows along with increased food production but faster

– Poverty & misery are inevitable

– Population growth slowed by war, disease & famine

– Justified low wages & limited charity to the poor

New Roles for Business Leaders

• Industrialist supplant landowners as economic & political elite

• Entrepreneurs

– Financiers

– Bankers

– Investors

• American Industrialists

– Andrew Carnegie

– Cornelius Vanderbilt

– John D Rockefeller

– Drove out all competition

– Admired for contributions to progress

– Criticized for treatment of workers

COMPETING ECONOMIC VIEWS

Robert Owen

• Socialism – Government owns property &

controls industry for good of society

– Good working conditions

– Decent housing for workers

– Low priced consumer goods

– Free education

– Sick pay

– Safety regulations

– Builds a model community in Scotland

– New harmony, Indiana 1825

Karl Marx

• Communism – Struggle between workers

(Proletariat) & Owners (Capitalists)

– Workers will rebel & distribute wealth equally

– Das Kapital (1867)

• Capitalism disrupts relationship between labor & profit

• Workers should control government & means of production

Effects on Society

• “The rise of new economic ideas was among the countless effects of the Industrial Revolution. Other effects were felt in small and large ways, from how families lived to how countries dealt with each other. For example, the shift away from cottage industries affected home life and the roles of women in society.”

– Human Legacy, P 649.

Effects on Home Life

• Separate Spheres theory

– Men work in factories

– Women stayed at home to care for children

– Home provides moral guidance

Effects of Industrialization on Women

• Women who went from Cottage Industries to Factory Work – Earned low wages in low-skill jobs

– Separated from their families

– No real improvement in Status

• Other Working-Class Women – Found jobs as cooks, maids and child-care workers

– Found some new educational & cultural opportunities in cities

– Overall improvement for many women

• Middle-Class Women – Freed from chores because many could hire domestic help

– Began to attend college (became teachers & nurses)

– Often criticized for working outside the home

– Most affected by the idea of Separate Spheres

Effects on Countries • Industrialized nations

become more powerful – Increased ability to

manufacture ships & weapons

– Stronger economies

– Great Britain, France & Germany

• Controlled economies of other nations – Seek colonies and control

their production & economies

• U.S. becomes a global political power

Long-Term Effects on Societies

• Overall increase in Wealth

• New Middle Class

– Clerks, merchants & managers

• Standard of Living improves

– Only slowly for working class

• Leisure Time Introduced

– Middle & Upper class had more time & money

– Introduction of sporting events & concerts, parks

– Vacations

– Increased participation in politics

Causes and Effects of the Industrial Revolution

• Availability of raw materials and markets in colonies

• Great Britain’s sea power and political stability

• Parliament’s support of free enterprise

• Agricultural improvements in great Britain

• Enclosure movement in great Britain

• Great Britain’s factors of production • Invention of new machines in the

textile industry • Development of the steam engine • Increased individual freedom in the

West • Western Attitudes towards

competition

• Development of labor-saving, time-saving machines

• The factory system • Poor working conditions in factories • Overcrowding, pollution & disease

in cities • Competing ideas about economics • Rise in standard of living; growth of

middle class • Rise of new industries and powerful

industrialists • New emphasis on middle-class

home life • Increased power of industrialized

countries