Ch 9 Industrial Revolution (9.4)

The free-market system of capitalism was defended in the book "The Wealth of Nations" by: a) Adam Smith b) John Stuart Mill c) Jeremy Bentham d) William Wilberforce

A) Adam Smith

The two leading capitalist economists were:

1) David Ricardo 2) Thomas Malthus.

Define capitalism.

Capitalism is an economic system in which the factors of production are privately owned and money is invested in business vestors to make a profit.

Would the IR have started without capitalism?

No.

The leading laissez faire or free market economist was Adam Smith. He wrote a book called The Wealth of Nations in the year 1776. He argued that the three natural laws of economics would create economic progress.

The leading laissez faire or free market economist was ADAM SMITH. He wrote a book called THE WEALTH OF NATIONS in the year 1776. He argued that DIVISION OF LABOR (**verify)** would create economic progress.

The three natural laws of economics are:

The three natural laws of economics are: a) self interest b) competition c) supply and demand

True or False: The "laissez-faire" system creates a "free market" system

True

Nineteenth-century socialists argued that government should: a) leave the economy alone b) actively plan the economy c) destroy the economy d) allow the economy to be controlled by the bourgeoise

b) actively plan the economy

Karl Marx is most closely associated with: a) socialism b) communism c) utilitarianism d) trade unions

b) communism

When the trade union movement began in Britain, the strike was an illegal action taken against: a) child laborers by factory owners b) union workers by factory owners c) factory owners by union workers d) non-union workers by union workers

c) factory owners by union workers.

Define "Laissez-Faire"

Refers to the economic policy of letting owners of industry and business set working conditions without interference.

Adam Smith believed that three natural laws dictated how the economy would work. He said that if these were allowed to work without government interference, everyone would eventually get what they needed at a fair price.

Adam Smith believed that MARKETS ** verify ** dictated how the economy would work. He said that if these were allowed to work without government interference, everyone would eventually get what they needed at a fair price.

Utilitarianism held that government policies should promote: a) wars and epidemics to kill of excess people b) public ownership of the means of production c) the complete independence of each individual d) the greatest good for the greatest number of people

D. The greatest good for the greatest # of people.

In the 19th century, what were some of the main differences between the beliefs of laissez-faire capitalists and communists?

L-F capitalists believed in a free market that where the government controls. Factors of production privately owned and money invested in business to make profit. Opposed government efforts to help workers and favored permanent poor underclass to provide abundant workers. Communists: All land, miners, factories, railroads, businesses should be owned by the people. NO private property. Economic equality for all and eventual withering away of government to development of a classless society.

Laissez Faire philosophers originated in the Enlightenment in France. They argued against wealthiness. They said government should not regulate the economy with high tariffs, but instead to allow free trade.

Laissez Faire philosophers originated in the ECONOMY in France. They argued against government regulations. They said government should not regulate the economy with high tariffs, but instead to allow FREE trade.

According to Malthus, what problems would the world always have?

More people than food, without war and epidemics to kill off extra people, most people would remain poor and miserable.

What solution did Ricardo and Malthus have for the problems of the working class.

None: opposed minimum wage laws & better working conditions as thought they would upset the free market system, lower profits, and undermine production of wealth.

Describe David Ricardo's "Iron Law of Wages" (from KT and ID's)

Permanent middle class would be poor, market system- many workers and many resources=cheap lanor and resources.

What is Thomas Malthus' theory?

Population tends to increase more rapidly than food supply, so without war and epidemics to kill off, extra people, most were destined to be poor and miserable.

In the 19th century, collective bargaining was carried out between: a) governments and unions b) employers and employees c) communists and capitalists d) political and financial leaders

b) employers and employees