Chapter 22 Section 4 by yurtgc548


									   Chapter 22
    Section 4
Living and Working
               Economic Theories
 At this time a group of economists called Physiocrats
  strongly disagreed with the previous economic theory
  of Mercantilism *remember from Chapter 16 Sect. 1
 Physiocrats believed that the natural laws should
  apply to economics as well and any attempt to
  interfere with the natural order would result in disaster
 Economist, Adam Smith, who agreed with some
  ideas of the Physiocrats, wrote Inquiry into the Nature
  and Causes of the Wealth of Nations which focused
  on the theory that wealth was dependent on
  manufacturing as well as agriculture
 {Adam Smith is considered the founder of modern
 Adam Smith replaced
  composer Edward
  Elgar on the £20 note
  on March 13, 2007
              Laws of Economics
 Smith proposed that two natural laws governed
  business and economics:
 1- supply and demand states that prices and profits
  depend on the amount of available goods and the
  demand for those goods
 2- the law of competition states that in order for
  manufacturers to compete with each other, they must
  reduce their prices. Those who cut their prices too
  much might lose money or even go out of business.
 Smith also believed in {free enterprise- people should
  be free to engage in any business they chose and be
  able to run that business for their greatest advantage}
               Malthus and Ricardo
 Many agreed with and built upon Smiths ideas
 {Thomas Malthus wrote An Essay on the Principle of
  Population in which he stated that population increases were
  the biggest problem in human progress. He stated that
  people reproduce faster than food and supply can be
  made, thus poverty is inevitable
 David Ricardo also wrote that working-class poverty was
  inevitable, in the “iron law of wages”. He wrote that as
  population grows more workers become available and
  therefore wages drop}
 These economists believed in an {idea called laissez-faire,
  French for “let it be” in which the government was not able to
  meddle in the operations of businesses}
 Beginning in the late 1800’s regulations on wages, working
  hours and tariffs were dropped. Trade became totally
  unregulated. Laissez-faire ideas spread all over Europe and to
  the United States
                   Reformers Arise
 {Humanitarians- people who work to improve the conditions of
  others}- argued that businesses should not be left entirely alone
  and demanded reform
 Charles Dickens used his books to expose the corruption of
  greedy employers in David Copperfield which told the story of
  his own rough childhood
 Philosopher Jeremy Bentham created the reform theory of
  {utilitarianism that stated that a law was useful and therefore
  good IF it led to “the greatest happiness of the greatest
  number”} and that people should be educated so they could
  decide for themselves what made them happy
 Another philosopher John Stuart Mill, believed that a
  government should work for the good of ALL its citizens
 He called for improved conditions in factories and the protection
  of working children
 He was also a supporter of women’s rights and wrote a ground-
  breaking essay called On the Subjection of Women
              Early Reform Laws
 They did have in place the Factory Act of 1802 which
  shortened hours and improved conditions for children
  but there was no way to enforce it.
 This was corrected with the Factory Act of 1833 which:
 Prohibited the hiring of children under the age of 9
 Children between the ages of 9 and 13 could work no
  longer than 8hrs a day 6 days a week
 Older children could work no longer than 12hrs a day
  6 days a week
 A later act, the Ten Hours Act of 1847, set a maximum
  10 hour working day for women and children under
  the age of 18
 There were still problems enforcing the laws because
  officials could not be at all factories all the time
 None of the reform laws did anything to regulate
 {Workers protested working conditions and low
  wages by large numbers of workers refusing to
  work in what is called a strike}
 Employers would sometimes meet the demands but
  more often they would fire the strikers and hire new
  ones or just wait until the economy forced the strikers
  to return to work
 Many times the strike protests were broken up
  because the government would send troops in to
  diffuse the demonstration and arrest the protesters
 Workers decided that their protests might be more effective if
  they were more organized.
 So they began to form {organized workers associations
  called unions}
 Unions collected dues and used those funds to pay workers
  while they were on strike
 Workers associations were illegal in Britain, France and
  Germany. When workers did it anyway, Parliament passed the
  Combination Acts of 1799 and 1800.
 These laws stated that any worker that went on strike or simply
  made demands could be imprisoned
 In 1825 the Combination Acts were repealed and in the 1870’s
  Parliament passed a law that stated that strikes were legal
 {Management and union reps. began to negotiate wages, hours
  and working conditions then they were written into contracts
  than lasted for a fixed period of time. This process was called
  collective bargaining}
 Review Questions
Who is considered the founder of modern
 What is the Idea behind free enterprise?
 Thomas Malthus wrote An Essay that stated that
  this was the biggest problem in human progress.
 David Ricardo also wrote that what was inevitable?
 This idea is French for “let it be” in which the
  government was not able to meddle in the
  operations of businesses
 These are people who work to improve the
  conditions of others

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