Means of production=capital and equipment used to produce/exchange goods

Examples: land, mines, railroads, factories, stores, banks, machines.

Laissez-Faire:Free Market

• Translates to “let do” or “let the people do as they please”

• Means- “hands off government”- the gov’t does not get involved in business or industry.

http://www.youtube.com/watch?v=OaiSHcHM0PA

ADAM SMITH“Father oF modern economics”

• “The Wealth of Nations”- claims the gov’t need not interfere with the economy (supports Laissez-faire)

• Economy worked automatically- if there was interference w/supply & demand it wouldn’t work (aka- the gov’t)

Capitalism

• Capitalism= economic system where money is invested in business ventures with a goal of making a profit.

• Malthus & Ricardo support Smith’s ideas

• “An Essay on the Principles of Population” Malthus~ there would always be a poor lower class w/out war or epidemic to reduce population.

Capitalism

• David Ricardo- “Principles of Political Economy and Taxation” Ricardo states supply & demand determines wages “iron law of wages”

• Smith, Ricardo & Malthus opposed gov’t efforts to help the poor workers

• Believed creating a minimal wage would disrupt the free market

Utilitarianism

• Jeremy Bentham- believed every act of society should be judged by its usefulness.

• “greatest good for the greatest number”

• Good=whatever brought happiness to the most people

ideas

• John Stuart Mills- he thought gov’t should interfere to protect working children, improve housing and factory conditions.

• Supported women’s rights and their right to vote.

• Robert Owens- Utopian Socialist- he believed people could live at peace with each other in small communities, owning all means of production.

http://www.youtube.com/watch?v=VtDz15M-d_w

During the Industrial Revolution- some people got VERY rich, but the majority were poor.

The unequal distribution of wealth disturbed people. Reformers were convinced that laissez-faire capitalism was not the best system.

They said laws could not do enough to remedy inequalities. The only way to distribute the wealth equally was to change ownership of the means of production.

Socialism

• Government controls the means of production and operates them for the welfare of all the people.

• Opposite of laissez-faire. The government is very hands on!

Karl Marx

• Communist Manifesto (wrote w/ Fredrich Engels) 1848

• Believed that the proletariat (workers) would revolt against the factory owners and take over everything.

• When they revolted there would be– No government

– No social classes (everyone is equal)

– No private ownership of property.

– Everyone together owns the means of production

Everyone would own everything TOGETHER!

Communism after Karl Marx

• Marx influenced 20th century communist leaders like:

– Mao Zedong (China)

– Lenin & Stalin (USSR-Russia)

– Ho Chi Minh (Vietnam)

– Fidel Castro (Cuba).

• The communism we see today is NOT the same communism Marx wrote about!!!!

Communism today

• Today communism is closer to socialism

– Dictator as a leader

– Government controls all means of production

– Government takes care of the people’s needs

• Education

• Medical

• Retirement