17 hist 103 nov. 7(1)

17 hist 103 nov. 7(1) - History 103 Northern...

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Northern Transformations/ The Old South, 1790-1850 Nov. 7, 2011 History 103 Web
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Reminders: class etiquette
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a divided economy becomes an more integrated a divided economy becomes an more integrated before 1820s economy (after 1820) before 1820s economy (after 1820) Rural west Rural west semi subsistence agriculture, semi subsistence agriculture, only loosely tied into market only loosely tied into market Small farmers producing for Small farmers producing for selves and families selves and families Urban northeast Urban northeast In Northern cities, merchants In Northern cities, merchants and artisans tied into Atlantic and artisans tied into Atlantic trade trade Rural “Old South” Rural “Old South” Plantation economy based on Plantation economy based on slavery tied into Atlantic trade slavery tied into Atlantic trade Economic growth powered by regional specialization North North : manufactured goods : manufactured goods sold to South and Midwest sold to South and Midwest Midwest Midwest : grain and livestock : grain and livestock sold to North and South sold to North and South South: South: cotton sold to North cotton sold to North and to England; slaves bred and to England; slaves bred for sale in “new” slave states for sale in “new” slave states Changes start Changes start within within regions, regions, slowly slowly become more national become more national
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the “market revolution” the “market revolution” Represented very different model compared to heavy hand of mercantilism Birth of modern economic theory in work of Adam Smith: The Wealth of Nations 1776 Although it appears to be chaotic and unrestrained, the “market” is actually guided to produce the right amount and variety of goods by a so-called "invisible hand."
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Adam Smith Smith: a market economy best produces a satisfactory outcome for both buyers and sellers and results in optimal allocation of society's resources. “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”
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An uneven playing field Classical economic theory refers to “free market” but Classical economic theory refers to “free market” but in fact economy depended on legal and political in fact economy depended on legal and political protection of economic activity to function protection of economic activity to function Recall here: importance of government support for Recall here: importance of government support for business activities. business activities.
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17 hist 103 nov. 7(1) - History 103 Northern...

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