White Plains Middle School



Capitalism WHAP/Napp

“Adam Smith (1723–1790), a Scottish social philosopher, is famous for one book, An Inquiry into the Nature and Causes of the Wealth of Nations, which was first published in 1776 and has been reprinted many times and translated into many languages. It was the first work to explain the economy of a nation as a system. In it, Smith criticized the notion, common in the eighteenth century, that a nation’s wealth was synonymous with the amount of gold and silver in the government’s coffers. Instead, he defined wealth as the amount of goods and services produced by a nation’s people. By this definition, labor and its products are an essential element in a nation’s prosperity. Smith also wrote that government should not intervene in the market [laissez-faire capitalism]. In a free market where individuals are free to buy and sell as they please, the greatest productivity occurs.

It is important to recognize that European historians have used the word revolution to describe the many different changes taking place in Europe between 1500 and 1750. The expansion of trade has been called a commercial revolution, the reform of state spending a financial revolution, and the changes in weapons and warfare a military revolution. Europe also encountered a scientific revolution and the religious revolution of the Reformation.

These important changes in government, economy, society, and thought were parts of a dynamic process that began in the later Middle Ages and led to even bigger industrial and political revolutions before the eighteenth century was over. Yet the years from 1500 to 1750 were not simply – perhaps not even primarily –an age of progress for Europe. For many, the ferocious competition of European armies, merchants, and ideas was a wrenching experience. The growth of powerful states extracted a terrible price in death, destruction, and misery. The Reformation brought greater individual choice in religion but widespread religious persecution as well. Individual women rose or fell with their social class, but few gained equality with men. The expanding economy benefited members of the emerging merchant elite and their political allies, but most Europeans became worse off as prices rose faster than wages.

The historical significance of this period of European history is clearer when viewed in a global context. What stands out are the powerful and efficient European armies, economies, and governments, which larger states elsewhere in the world feared, envied, and sometimes imitated. From a global perspective, the balance of political and economic power was shifting slowly, but inexorably, in the Europeans’ favor. In 1500 the Ottomans threatened Europe. By 1750, Europeans had brought the world’s seas and a growing part of its land and people under their control.” ~ The Earth and Its Peoples

|1. New institutions that supported early capitalism included all of |2. What, according to Adam Smith, is the best way to promote |

|the following EXCEPT |collective interest? |

|A) Banks and lending institutions. |(A) Through government making decisions about what is in the public |

|B) Craft guilds. |interest. |

|C) Stock exchanges. |(B) Through everyone working together to support each other. |

|D) Joint-stock companies. |(C) Through everyone working on their own self-interest. |

|E) Insurance companies |(D) Through mercantilism |

|Key Words/ Questions |I. Capitalism |

| |A. Industrial Revolution coincided with fall of mercantilism and rise of |

| |capitalism |

| |Central feature of mercantilism: strict governmental control of economy |

| |By 1700s, a number of economic thinkers began to argue that economies were more likely to flourish when they were left |

| |alone to function freely |

| |Classical, or laissez-faire, economists theorized that competition, free |

| |trade, supply and demand created greater wealth for nations and people |

| |First major capitalist thinker was Scottish philosopher Adam Smith who wrote The Wealth of Nations (1776) |

| |Thomas Malthus, Essay on Population (1799), focused on how population growth caused poverty; population increased at |

| |geometric rate, food at arithmetic rate |

| |II. Reactions to Capitalism |

| |A. Socialism: economic competition is unfair and leads to inequality |

| |Earliest socialists, 1810s and 1840s, known as utopian socialists |

| |Included the Scottish industrialist Robert Owen |

| |Utopian socialists felt that with good planning and judicious regulation, |

| |economies could be made to prosper without exploiting working class |

| |Marxism |

| |1. More radical form of socialism appeared later, during the 1840s |

| |Originated by German philosophers Karl Marx and Friedrich Engels |

| |The Communist Manifesto (1848) and Das Kapital (1867-1894) |

| |Based heavily on philosophy of G.W.F. Hegel, condemned capitalism |

| |History has been driven by class struggle between upper classes (who control capital or means of economic production) |

| |and lower classes |

| |Bourgeoisie (capitalists) against proletariat (workers) |

| |In order to bring about socialism, revolution was necessary |

| |III. Reform |

| |A. Rapid expansion of middle class and birth of industrial working class |

| |Gradual widening of political representation due to agitation |

| |Desperate turned to radicalism: socialism, communism, even anarchism |

| |But most workers turned to trade unions rather than radicalism |

| |At first, unions were illegal in Europe, as well as the United States |

| |Unionism led to higher wages, shorter workday, safety regulations, etc. |

| |Workers’ parties also emerged: the Labour Party in Britain |

| |IV. Industrialization and Imperialism |

| |A. Western industrialization and imperialism were connected |

| |Industry placed new weaponry in hands of Westerners |

| |Industrialization required ever-greater amounts of raw materials |

| |Growing importance of steamships made it necessary for Western |

| |nations to maintain naval bases and refueling stations around the globe |

| |Europe and America wanted markets overseas to sell factory goods |

| |Industrial Revolution, gradually created a sharply defined domestic sphere for women, separate from the workplace |

|The set of cultural values called “the cult of domesticity” applied |Which answer choice includes the major political groupings in |

|primarily to |nineteenth-century Europe? |

|Working-class men in industrial societies |Conservative, liberal, radical |

|Lower-class women in industrial societies |Liberal, radical, fascist |

|Peasant families in Southeast Asia and Sub-Saharan Africa |Fascist, conservative, radical |

|Landed nobility in East Asia |Radical, fascist, anarchist |

|Middle-class women in industrialized societies |Liberal, fascist, conservative |

| | |

|Which of the following was a new Western motive for overseas |Who does NOT belong in a list of nineteenth- and early |

|territorial expansion in the industrial era? |twentieth-century nationalist thinkers? |

|Missionary drive to convert non-Western peoples to Christianity |Karl Marx |

|Seizure of land to be put to use raising crops |Albert Einstein |

|Drive to dominate sources of precious minerals and metals |Sigmund Freud |

|Need for raw materials for factory production |Charles Darwin |

|Access to new markets for the sale of Western manufactured goods |John Locke |

| | |

|Which nineteenth-century political ideology stressed principles of |Which of the following was NOT an influential political force in |

|laissez-faire and constitutional rule? |Europe by the late nineteenth century? |

|Conservative |Feminism |

|Liberal |Social democracy |

|Fascist |Socialism |

|Anarchist |Anarchism |

|Socialist |Absolute Monarchy |

Thesis Practice: Comparative

Analyze ideological similarities and differences in capitalist economic thought and Marxist economic thought.

____________________________________________________________________________________________________________________________________________________________

Critical Thinking Questions:

What was Karl Marx’s criticism of industrial capitalism?

____________________________________________________________________________________________________________________________________________________________

What solutions did he envision?

____________________________________________________________________________________________________________________________________________________________

How well did he foresee the evolution of industrial society? Did his predictions come to pass?

____________________________________________________________________________________________________________________________________________________________

In their critique of industrial capitalism, Karl Marx and Friedrich Engels claimed that

(A) The trade union movement would force industry to accept social reforms.

(B) The most equitable and just society could be found in an industrial commune.

(C) The bourgeois class needed to exercise responsibility toward their workers.

(D) Democracy had failed because most workers did not understand their true interests; a dictatorship would serve them better.

(E) Only a communist revolution would change the abuses of capitalism and create a just and equal society.

In response to socialist demands for social and economic reform, most governments

(A) Treated trade unions as illegal organizations.

(B) Supported business and prosecuted strikers.

(C) Passed laws restricting child labor.

(D) Extended the vote to the working class.

(E) All of the answers are correct.

Critical Thinking Reflection:

Do you agree or disagree with the following statement. Explain your answer.

Marx: According to the labor theory of value, the value of a commodity can be objectively measured by the amount of labor hours that are required to produce that commodity. In fact, labor is the only factor of production capable of creating wealth (adding “value” to raw materials). Capital, land and entrepreneurial abilities create no value. Capitalists extract “surplus value” (profit) from the workers by exploiting workers. Capitalists do not participate in production and do not create value. If labor is the source of all value created in the productive process, then workers have a valid moral claim to all wealth created through production.

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

-----------------------

Reflections:

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download