The worldwide industrialization gave rise to two different economic policies, capitalism and socialism, in some part due to the wide gap that it created between the rich and the poor, among other things. First, we had the laissez-faire form of economy, which was defended by Adam Smith, founder of Capitalism. Smith believed that economic freedom ensured economic pregress, and stated the three 'natural laws of economics', which were 1) the law of self-interest, 2) the law of competition, and 3) the law of supply and demand. Smith, along with two other British economists, T. Malthus and D. Ricardo had the basic ideas which made the foundation of capitalism. One of the main points of capitalism was encouraging competition between businesses and telling them to follow their own best interest. They also opposed to having government interfere with the economy of individual businesses, stating the fact that progress is possible only when individuals, not the all, follow their own interest.
The second economic theory was socialism, which contrary to capitalism, believed that the goverments should intervene in businesses in order to be able to improve people's lives. One of the most popular forms of socialism is Marxism, introduced by the German journalist Karl Marx and F. Engels. Marx and Engles believed that the Industrial revolution made the poor poorer and that the capitalism would destry itself. Among the principles of socialism, we include that socialists believed that only the state should own property, which means that they completly opposed private ownership, and that pregress will only be achieved when workers decide to cooperate for the good of all. They also discussed the inequality among the distribution of wealth, by stating that the best way to distribute goods is considering each person's need and that the unequal distribution of wealth [created by capitalism] is unfair.
The laissez faire, economic policy of letting owners of industry and business set working conditions without interference, policy favors a free market unregulated by the government. This policy inspired Adam Smith to write the book The Wealth of Nations in which he defended free economy based on the law of self-interest, the law of competition, and the law of supply and demand. Two supporters of Smith’s ideas were Thomas Malthus and David Ricardo whose ideas were the foundations for one of the most important economic systems called capitalism. These thinkers also opposed government efforts to help poor workers. Another system was utilitarianism where people should judge ideas, institutions, and actions based on their utility. Other reformers improved working conditions of their workers trying t create a utopia for them. In contrast with the laissez faire philosophy the socialist thinkers believed the government should intervene and wealthy people should help the poor. Some reformers responded to capitalism through socialism saying the factors of production are owned by the public. Karl Marx created communism that is a radical form of socialism in which the means of production would be owned by the people.
The gap between the rich and the poor that had always existed dint widen after the years. Workers on industries created unions to fight for reforms to better their working conditions. If the owners refused to respond to their demands the unions would strike. The union’s strikes new laws reformed the different working conditions decreasing the child labor. Other reforms were the abolition of slavery, allowing women to vote and creating public education.
By: Michelle Pelletier
The Industrial Revolution led to many changes in the social, political, and economical forms. Laissez-faire criticized the idea that nations grow wealthy by placing heavy tariffs on foreign goods. Adam smith defended the idea of free economy, or free markets. His arguments rested on what we called the three laws of economics:
• The law of self interest
• The law of competition
• The law of supply and demand
The ideas of smith were a form of laissez-faire Capitalism, an economic system in which the factors of production are privately owned and money is invested in business ventures to make a profit. These helped bring the Industrial Revolution. In capitalism, government should not interfere in the economy because competition creates efficiency in business. Consumers compete to buy the best goods at lowest prices. Business follows its self interest. In contrast with capitalism, we have Socialism. In socialism, the community or the state should own property and the means of production, progress results when community of producers cooperate for all goods, they believes that capitalist employers take advantage of workers. Also, during this time, many reforms were created towards men and women in labor unions.
The industralization came up with two diffrent Economic points of view, Capitalism and Comunism. Capitalism is When you think in yourself before thinking in the others. Comunism is the other wa around you think in everyones well being before you. In Capitalism there are 3 laws you have to follow which are The law Of Self Interest , Of competion and Supply and Demand. This was Defended by adam Smith an We use this Economic Point of view in many Countries if you Follow this point of view you have United States. Comunism is suppose to be Uthopia with everything free and everyone living in harmony with the others also it is suppose to be that lets say if you have 700 bottons I should have 700 bottons too. Lamentbly there is no real comunist country now a days. This was backed up by Karl Marx. If you try to follow this "Economic System" You have cuba which declared itself in Bankcrupcy.
By Haresh Khemlani
Below by Liango Liu
The industrialization caused great impact along with drastic changes during that time. In response to the effects of the industrialization, many people such as reformers wanted the government to implement reforms in order to help the poor, while others preferred the government to rarely interfere with private businesses. Eventually, the dispute about the government's role in society led many bright thinkers to create different ideals on how government should be run, among those are capitalism, socialism, and communism. Adam Smith in his book "The Wealth of Nations" lays and explains the basic ideas for capitalism. Capitalism is based on the ideals about free economy, in which capitalism is an economic system in which the factors of production are privately owned and money is invested in business ventures to make a profit. Smith explains that there are what he called three natural laws of economics: the law of self-interest, the law of competition, and the law of supply-and-demand. Socialism was created as a response to the negative impacts of industrialization, in which it states that the factors of production are owned by the public and operates for the welfare of all or the majority. Socialists supported the idea of public ownership in order to help the poor workers, and also argued that the government shouldn't depend on a free market but rather that the government should have control of most of the industries if not all. There is also a more radical side of socialism that is Marxism by Karl Marx. Communism as described by Karl Marx, is a form of complete socialism in which all the means of production are owned by everyone or the people, private property as well as the state would cease to exist, and everything will be shared equally.
In my opinion these three, capitalism, socialism, and communism, were the most influential during that time. During about the same time, other reform movements were surging as well, such as the formation of labor unions to demand better conditions, the fight for abolition of slavery, and the fight for women rights, which would have future effects and success.
The Industrial World brought a gap between the rich and the poor people around the world. Leaders of companies believed that the governments should stay on business and economic affairs because with this there is more demand on products so the more they need the more the country makes in which it play an active role to improve they living condition.
As economy arose and more work are demanded, workers began to think about the right and made several protest in order to gain more right and get insurance or protection. In order to gets it moving they formed labor unions to increase its influence and led the government to intervene into it.
The industrial revolution widened the gap between rich and poor countries. Business leaders believed that the government should have no part in economic and business affairs. However, reformers believed that the government should intervene because they needed to play an active role in improving the condition of the poor. Unions were formed as workers demanded more rights and protection. Many different economic policies were created during this revolution; one of these was laissez faire. It is a French term stemmed from economic philosophers of the Enlightenment. Many philosophers believed that if the government allowed free trade the economy would prosper. A defendant of this philosophy was Glasgow professor Adam Smith. His arguments rested on what he called the three natural laws of economics:
The law of self interest – people work for their own good
The law of competition – Competition forces people to make a better product
The law of supply and demand – Enough goods would be produced at the lowest possible price to meet demand in a market economy
Modern economy relies on these points.