Villalobos Eamon Barkhordarian

Period C 1/27/09

Review Questions pg. 208

1. Reading Focus
a. What was Laissez-faire economics?
i. The main prophet of laissez-faire economics was Adam Smith.
Smith asserted that a free market would come to help everyone, not
just the rich. The free market would produce more goods at lower
prices making them affordable for everyone. A growing economy
would also encourage capitalists to reinvest profits into new
ventures. Individuals should be left to improve their lot through hard
work and limiting the size of families.
b. How did the views of Utilitarian differ from those of the Socialists?
i. In Utilitarianism, all laws and actions should be judged by their
utility. Did they provide more pleasure than pain? The Utalitarians
wanted the government to step in to improve the hard lives of the
working class. The socialists had utopians, in where there was no
difference between the rich and poor. These were self sufficient
communities in which all work was shared and all property was
owned in common.
c. What were the ideas of scientific socialism, introduced by Karl Marx?
i. Marxism was the economic and political theories of Karl Marx that
hold that human actions and institutions are economically
determined and that class struggle is needed to create historical
change and that capitalism will ultimately be superseded by
communism .Under Marxism, the economics was the driving force
in history. Marx despised capitalism. He believed it created
prosperity for only a few and poverty for many. He called for an
international struggle to bring about its downfall.
2. Identify
a. Thomas Malthus
i. His writings were like Adam Smith’s book, and his writings on
population shaped economic thinking for generations. Malthus
grimly predicted that population would outpace the food supply. The
only check son population growth, he said, were war, disease, and
famine.
b. Iron Law of Wages
i. Introduced by David Ricardo. Ricardo agreed with Malthus that the
poor had too many children. In his “iron of wages,” Ricardo showed
that when wages were too high, families had more children. But
more children meant a greater supply of labor, which led to lower
wages and higher unemployment.
c. John Stuart Mill
i. Jeremy Bentham’s chief follower. He also argued that actions are
right if they promote happiness and wrong if they cause pain. He
Villalobos Eamon Barkhordarian
Period C 1/27/09

reexamined the idea that unrestricted competition in the free market

was always good. Often, he said, it favored the strong over the weak.
d. Utopians
i. The socialists had utopians, in where there was no difference
between the rich and poor. These were self sufficient communities in
which all work was shared and all property was owned in common.
This was base on Thomas Moore’s ideal community. The utopian
Robert Owen set up a model community to put his ideas into
practice.
e. Karl Marx
i. A German Philosopher. He condemned the ideas of Utopians as
unrealistic idealism. He agitated for reform. He was forced to leave
his homeland because of his radical ideas. Marxism was the
economic and political theories of Karl Marx that hold that
human actions and institutions are economically determined and that
class struggle is needed to create historical change and that
capitalism will ultimately be superseded by communism.
3. Define
a. Utilitarianism
i. The idea that the goal of society should be “the greatest happiness
for the greatest number.”
b. Socialism
i. The people as a whole would own and operate the means of
production.
c. Means of production
i. The farms, factories, railways, and other large businesses that
produced and distributed goods.
d. Communism
i. A form of socialism that sees class struggle between employer and
employees and unavoidable.
e. Proletariat
i. Working class.