Chapter 13 Section 4 and 5

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The Economics of the Industrial Revolution

• Chapter 13 Section 4 and 5

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I.) Capitalism

• Capitalism an economic system in which
  individuals or corporations, rather than
  governments, control the means of production
• 1. Means of productions are privately owned
• 2. Business is privately owned
• 3. Economic idea of the 1800s

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II.) Mercantilism

• Mercantilism an economic theory based on the
  belief that the world contains a fixed amount of
  wealth. In order to increase wealth, countries
  must take wealth from another country
• 1. In 1700s Economists attack this theory
• 2. Believed natural law should govern economic
  life

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III.) Law of Economics

• Adam Smith economist who in 1776 wrote The
  Wealth of Nations an is considered founder of
  classical economics
• 1. Believed two natural laws govern
  economics
• - Law of Supply and Demand
• - Law of Competition
• 2. Free Enterprise economic theory in which
• there are no laws or regulations
  limited
• economic growth
• 3. Laissez-Faire belief that government should
• not meddle in operations of business

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1. Thomas Malthus Anglican clergyman who in 1798
   wrote An Essay on Principle of Population, which
   stated population causes problems and poverty in
   unavoidable
2. David Ricardo British economist who in 1817
   wrote Principles of Political Economy and
   Taxation, which stated supply demand determine
   wages

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IV.) Socialism

• Socialism political economic system in which
  governments own the means of production and
  operate them for the benefit of all the people
• 1. Utopian Socialists idea that people can
  live at
• peace with each other in cooperative
  settlements
• owning all means of production and
  sharing all
• Example Robert Owen

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• Communism economic political system in which
  governments own the means of production and
  control all economic planning
• 1. Karl Marx German journalist who in 1848
  wrote the
• Communist Manifesto with Friedrich
  Engels
• Beliefs
• - struggle existed between owners
  (bourgeoisie)
• and working class
  (proletariat)
• - Proletariat would unite seize power by
  force
• - Create a classless society

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1. Democratic Socialism political system in which
   government takes control over means of production
   peacefully people retain basic rights partial
   control over economy