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 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
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