Who was Malthus, and what was his view on population growth?
What is Ricardo’s “iron law of wages?”
What is socialism, and how does it differ from Marx’s communism?
The problems caused by the Industrial Revolution caused many to look for solutions. While some believed the market would eventually fix the problems, others believed there should be a change in government.
In his book The Wealth of Nations, British economist Adam Smith promoted “laissez faire” capitalism, which became the leading economic system during the Industrial Revolution.
Laissez Faire (hands off) – policy allowing businesses to operate with little or no government interference.
Capitalism – economic system in which the means of production are privately owned and operated for profit.
Smith argued that the free market forces of supply and demand would produce more goods at lower prices, and encourage capitalists to invest their money in new ideas.
Smith claimed that the “invisible hand” of capitalism led individuals who worked for their own good to actually promote the good of the entire community.