THE INDUSTRIAL REVOLUTION
EMERGENCE OF CAPITALISM
Focus Questions
Why was Great Britain the first state
to have an Industrial Revolution?
What were the basic features of the
new industrial system created by the
Industrial Revolution?
What role did government and trade
unions play in the industrial
development of the Western world?
Who helped the workers the most?
Before the Industrial
Revolution
Cottage
industry
Production at
home, but
under the
social
conditions of
capitalism
German hand-loom
weaver
ECONOMIC
TRANSFORMATION
Agricultural Revolution of 18th Century
Introduction of New Crops
Legumes, turnips, clover, potatoes
Scientific Livestock Breeding
Enclosure System
ECONOMIC
TRANSFORMATION
Rapid Population
Growth in 18th Century
1700-1800:110 million
to 190 million
Better health practices
– Smallpox Inoculation
– Sanitation
INDUSTRIAL REVOLUTION
Increased Demand for goods
Investment Capital
Cheap Labor
Inventions
– Flying Shuttle
– Cotton Gin
– Spinning Jenny
– Power Loom
– Steam Engine
Role of Technology
Cotton and the
spinning jenny
Cotton gin (Eli
Whitney, 1793)
The Industrial Revolution
Steam power
Thomas Newcomen
James Watt
Cotton Production
Factory System
INDUSTRIAL REVOLUTION
Some Statistics
– 1760: Britain Imports 2.5 million pounds
of raw cotton; mostly processed by hand
in cottage system
– 1787: Britain Imports 22 million pounds
of raw cotton; mostly processed by
machines and water power
– 1840: Britain Imports 366 million tons;
mostly processed in factories by steam
power
INDUSTRIAL REVOLUTION
Improved Transportation
– Canals
– Railroads
IronProduction
Factory System
Role of technology: Iron
and steam
Iron smelting –
coke
1780s – high
quality iron
(ships, weapons,
rails and nails)
1782 – rotary
engine
Role of Technology:
railroad
Rocket
Liverpool to
Manchester
line (1830)
20 years: 50
mph, 2,000
miles of tracks
effects
Role of technology:
transportation Revolution
INDUSTRIAL REVOLUTION
More Statistics
– 1800: Steam engines generating 10,000
horsepower
– 1850: 500,000 horsepower stationary
engines; 790,000 horsepower in mobile
engines
SPREAD OF INDUSTRIAL REVOLUTION
SPREAD OF INDUSTRIAL REVOLUTION
Great Britain
Northern Germany
Netherlands
Northeastern
France
SPREAD OF INDUSTRIAL REVOLUTION
Social impacts: factories
and their effects
Urbanization
Significant Population Growth
Move to the cities--shift of orientation
from countryside to city.
Housing, public health, crime,
sanitation
Poor working conditions
Child labor; female labor
Social Impacts: new social
classes
Working class
Child and female
labor
Working
conditions
Class Consciousness
MiddleClass—bourgeoisie
Working Class—proletariat
Peasant
Landed Gentry—old aristocracy
Social and political impacts:
middle, entrepreneurial and
business classes
Concept of
“middle class”
New business
aristocracy
The Industrial Revolution—
from order to classes
Reciprocal obligation?
Thinning of social bonds
Conflicting interests
Where does the bourgeoisie identify
their interests?
Social and political impacts: reforms,
regulations and labor organizations
Cotton factories
Regulation Act
(1819)
MP Sadler and the
Factory Act (1833)
Ashley and the
Mines Act (1842)
Unions, 1824
Grand National
Consolidated Trade
Unions, 1834
The Emergence of Capitalism in Western
Europe
The source of wealth in feudal societies
is the land, agriculture.
In Europe,
as trade became more endemic,
as itinerant traders morphed into respected merchants, and
permanent towns replaced occasional fairs,
trade enabled the acquisition of a more ‘liquid’ form of wealth—
money.
Early capitalism, also called merchant capitalism or
mercantilism, challenged the hegemony of the landed
aristocracy.
Classical Capitalism
As capitalism ‘matured,’
the source of wealth shifted to industry;
In classical capitalism,
instead of ‘adding value’ by merely moving a commodity in time
and space,
value is added in a production process
in which resources are transformed into products—
goods and services—ostensibly more valuable to consumers than
the cost of the factors of production employed to produce
them.
The value added, when realized, is profit.
ECONOMIC LIBERALISM
Adam Smith, The Wealth of Nations, 1776
– Laissez-faire economics
– “Hidden hand”
Thomas Malthus (1766-1834), Essay on
the Principles of Population
– Geometric Growth of Population
– Arithmetic Growth of Food Supply
David Ricardo (1772-1823), Principles of
Political Economy
– “Iron Law of Wages”
Adam Smith
1723-1790
The Wealth of Nations, 1776
• Economic Liberalism
• laissez faire
• The Hidden Hand
• Theory of Progress
Role of government limited to national defense, domestic
justice
The Hidden Hand of the laissez-faire economy
“Every individual is continually exerting
himself to find out the most
advantageous employment for whatever
capital he can command. It is his own
advantage, indeed, and not that of the
society, which he has in view. But the
study of his own advantage, naturally,
or rather necessarily, leads him to prefer
that employment which is most
advantageous to the society….” Adam
Smith
“…he intends only his own gain, and
he is in this, as in many other cases,
led by an invisible hand to promote
an end which was no part his
intention.” Adam Smith
Thomas Malthus
1766-1834
“Population, when unchecked,
increases in a geometrical ratio.
Subsistence only increases in an
arithmetical ratio. A slight
acquaintance with numbers will
show the immensity of the first
power in comparison of the
second.” Thomas Malthus
Who is mainly responsible for poverty?
David Ricardo
172-1823
David Ricardo (1772-
1823), Principles of
Political Economy
“Iron Law of Wages”
Socialism
Utopian Socialism
– Henri de Saint-Simon (1760-1825)
– Charles Fourier (1772-1837)
– Robert Owen (1771-1858)
Scientific Socialism
– Karl Marx (1818-1883)
Communist Manifesto (1848)
Das Kapital
– Friedrich Engels (1820-1895)
Karl Marx
(1818-1883)
not only anticipated
the ability
of capitalism to achieve
unprecedented rates of economic
growth
but also predicted
the exacerbation of income
inequality:
a larger pie but more disparate slices
Marx and Alienated Labor
(Labour)
“The devaluation of
the human world
increases in direct
relation with the
increase in value of
the world of things.
Labour does not only
create goods; it also
produces itself and the
worker as a
commodity, and in the
same proportion as it
produces goods. 1818-1883
Karl Marx (1818-1883)
Communism
Economics as the Foundation
Mode of Production
“The history of all hitherto existing society
is the history of class struggle.”
Theory of “surplus value.”
Dialectical Materialism
Mode of Production and material
conditions drive ideas
Violent Revolution as inevitable
Classless Society -- bourgeois state will
“wither away.”
Political and Economic Liberalism
The Inherent Tension or Heilbroner’s Two
Realms
“…capitalism is unique in history in having
not one
but two centers of authority, one built
around the
‘economic’ prerogatives of the business
system,
Political and Economic Liberalism
The Inherent Tension or Heilbroner’s Two
Realms
“…there is an inherent pulling apart in a
social order composed of two realms---one
built on the verticality of wealth, the other
on the horizontality of democracy.”
Wealth Equality
&
Class
Capitalism Democracy
Declaration of Rights of Man & Citizen, 179
21. Public relief is a sacred debt. Society owes maintenance
to unfortunate citizens, either procuring work for them
or in providing the means of existence for those who
are unable to labor.
22. Education is needed by all. Society ought to favor with
all its power the advancement of the public reason and
to put education at the door of every citizen.
34. There is oppression against the social body when a single
one of its members is oppressed: there is oppression agai
each member when the social body is oppressed.
35. When the government violates the rights of the people,
insurrection is for the people and for each portion of the
people the most sacred of rights and the most indispensab
of duties.
Political and Economic Liberalism
The Inherent Tension or Heilbroner’s Two
Realms
“…there is an inherent pulling apart in a
social order composed of two realms---one
built on the verticality of wealth, the other
on the horizontality of democracy.”
Wealth Equality
&
Class
Capitalism Democracy
Conclusions and Consequences:
New kind of economy
Continuous, rapid, self-
sustaining economic growth
came to be seen as fundamental
characteristic of new economy
