Living and Working Conditions
Industrial Revolution
Economic Theories
 Mercantilism vs Physiocrats
 Mercantilism: economic theory that the world has a fixed amount of
wealth; in order to increase wealth, must take from another
 Physiocrats disagree; believed natural laws should be left to govern
economic life
 Comes to being during the Enlightenment Period
 Adam Smith
 Takes some ideas from Physiocrats
 Wrote Inquiry into the Nature and Causes of the Wealth of Nations (1776)
 Focused on the creation of wealth, need both manufacturing & farming
 Founder of classical economics
Adam Smith
 Smith said two natural laws governed all business & economic activity:
 Law of supply & demand
 Prices & profits depend on both the amount of available goods & the
demand for those goods
 Law of competition
 Manufactures compete to sell products; must reduce prices
 Cute prices too much, may lose money & even go out of business
 Supply goes down, prices go up
 Only the most effective will survive
 Smith believed that people should be free to engage in whatever business they
chose
 free enterprise
 Economic forces work automatically & naturally, without laws & regulations
Malthus & Ricardo
Thomas Malthus
 Clergyman became a economic
professor
 An Essay on the Principle of Population
(1798)
 Population increase presents
greatest obstacle to human progress
 Faster than the food supply can
keep up
David Ricardo
 Principles of Political Economy and
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Taxation (1817)
Working-class poverty is
inevitable
When labor is plentiful, wages
are down
When labor is scarce, wages rise
As population continues to
grow, wages will continue to go
down
Laissez-faire
 French phrase, “let it be” or “leaving things alone”
 Government should not to meddle in business
 Adam Smith favored this
Reformers
 Others argue that business could not be left entirely alone
 Humanitarians: people who work to improve the conditions of others;
urged for reforms
 Laws needed to regulate work hours, wages, working conditions
 Insist such laws would not interfere with the economy
 Utilitarianism:
 Put forth by philosopher Jeremy Bentham
 Argued that a law was useful, & therefore good, if it led to the
greatest happiness of the greatest number of people
 People should be educated to make decisions that were the best for
the most
Reformers
 John Stuart Mill
 Government should work for the
good of all its citizens
 Called for protection for children,
improve housing & factory
conditions
 Argued for full democracy &
equality for all men & women
 On the Subjection ofWomen (1869)
 call for support of women’s rights
 Promote education
 Guarantee individual liberties
Reform Laws
 Working conditions in Britain troubled the public
 Parliament began to reform with Factory Act of 1802
 Shortened hours & improved conditions for children working in cotton mills
 Ineffective, no means to enforce it
 Factory Act of 1833 corrected this mistake
 Also extended it to textile mills
 Mills cannot employ children under 9
 9-13 could not work longer than 8 hours a day, 6 days a week
 Later coal mines could not employ women or children under 10
 Ten Hours Act (1847) – women & children under 18 cannot work over 10 hours
a day
 Poorly enforced, conditions remained harsh, did not improve wages
Collective Action
 Workers band together to demand reform to improve own lives
 Workers protested low wages & working conditions by refusing to work
 Strike: large group of workers stop working
 Usually have demands, refusing to work until met
 Employers sometimes give in; fire & hire new workers; or wait till
economic needs force workers back to work
 Unions: organization or association of workers
 More successful if organized
 Collect dues to support workers on strike
 Worker organizations were illegal in Britain, France, & Germany
 British passed Combination Acts (1799 & 1800) workers who unite to demand
higher wages, shorter hours, better working conditions could be imprisoned
Collective Action
 Workers slowly make progress
 1825 – Combination Acts were repealed
 1870s – laws passed legalizing strikes
 Management & union representatives negotiated wages, hours,
conditions
 Agreements were written into contracts lasting for a fixed period
of time
 This process of negotiating as a group is called collective
bargaining