Adam Smith (English)Adam Smith (English) Karl Marx (German)Karl Marx (German)
The Wealth of Nations
Laissez-faire, or “hands-off,” approach to the economy
No government intervention or regulation
The Communist Manifesto
Working-class would take power and create a class-less society
Workers control the means of production
Origins of Economic Philosophies
Free Market EconomyFree Market Economy Command EconomyCommand Economy
Business will create ideal conditions if free from interference
“Invisible hand”
Government makes all decisions about production and wealth distribution
The Economic Spectrum
DemocracyDemocracy CommunismCommunism
Power is held by the citizens in a system with open elections
Greatly expanded in the 1800’s to include all classes of people
“Dictatorship of the proletariat” – suppress any pro-capitalist movement
Redistribution of wealth
The Political Spectrum
SocialismSocialism CommunismCommunism
Achieved through peaceful, democratic means
Retain people’s support with political liberty and economic justice
Only nationalize major industries
Power only through revolution
Suppress anything counter-revolutionary
Government owns all production
Socialism ≠ Communism
Socialism CAN occur in a democracy
A Third Way – Utilitarianism
The goal of society should be “the greatest happiness for the greatest number” – Jeremy Bentham Can a free market achieve this goal? Why or why not?
Government regulation and involvement under certain circumstances
Mixed economy – combining private ownership and tax-funded infrastructure and services
Where would you place the United States on this spectrum today?
Democratic socialism – the two ideas can be combined
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.” •Adam Smith, “Wealth of Nations”
“I hope we shall...crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.” •Thomas Jefferson
“The development of Modern Industry, therefore, cuts from under its feet the very foundation on which the bourgeoisie produces and appropriates products. What the bourgeoisie, therefore, produces, above all, are its own grave-diggers. Its fall and the victory of the proletariat are equally inevitable.”•Karl Marx, “Communist Manifesto”
"Democracy cannot consist solely of elections that are nearly always fictitious and managed by rich landowners and professional politicians.”•Ché Guevara, in support of democratic socialism
Democracy Flourishes
Britain – change through reform Reform Act (1832) & Bill (1867) – suffrage to more men Slavery banned in all British colonies (1833) Benjamin Disraeli – created modern Conservative party
France Third Republic – new National Assembly
Separated Church and State, stopped paying clergy Ownership rights for married women
Failures Dreyfus Affair – accused German spy denied rights Antisemitism – persecution of Jews (led to calls for Jewish
state)
Democracy Flourishes
Germany Reichstag – lower house of Parliament, universal male
suffrage Welfare state – social security programs (1880s)
Italy Statuto Albertino – constitution of 1848 Corruption leads to facism
Democracy Flourishes
United States Territory added in 1840’s –
Texas, Mexican Cession, Oregon Country
Abolition of slavery – Emancipation Proclamation & 13th amendment
Suffrage – African-Americans get right to vote in 1870
Modern Capitalism
Corporations Businesses owned by many investors who buy shares of
stock
Monopolies Corporations merge to combine power and control
market Corporations in U.S. in 1898 – 1,800; 1904 - 157
John D. Rockefeller – Standard Oil
Regulations Reaction to abuses of laissez-faire “captains of industry” or “robber-barons?” How does this compare to our current economic troubles?