Economic Theory and Impact of Industrialization

Social Impact• Breakdown of traditional social structure

– Aristocracy• Wealth based primarily on land• Influence reduced by industrialization

– The Middle Class (bourgeoisie)• Benefitted the most• Factory owners, merchants, and bankers

– Upper middle» Government employees, doctors, lawyers, and managers of factories, mines, and shops

– Cotton Lords: Factory Owners– Lower middle

» Factory overseers» Skilled workers

– The Working Class (proletariat)• Badly treated; poor compensation

• Little improvement in living and working conditions• Work is replaced by machines

– The Luddites– Breakdown of traditional family

• Young people left constraints of villages and families• Increase in illegitimate births

Social Impact

• New factories – Required unskilled labor– Unemployment common

• People lost jobs and homes

– Low wages• Whole family had to

work– Long hours

• Late 1800s, early 1900s– Conditions improved

Social Impact• Population Growth

– Population tripled between 1750 and 1850• Result of declining death

rates• Growth of Cities

– Rapid urbanization (the building and movement of people to cities) caused problems• Poor housing• Lack of sewers and public

water supplies• Pollution • Disease such as cholera,

tuberculosis, and typhoid

Women and Industrialization

• Before the Industrial Revolution– Worked with men on the farm or family business

• Motherhood and homemaking not full-time pursuits

– Altered reality• Men were wage earners and women were homemakers

– Created a sharply defined domestic sphere for women

– Change took time• Working class families, all members had to work (early 1800s)• Before 1870 50% of textile industry is women

– Women made less money than men

• As salaries improved in industry and laws restricted the hours women could work more women stayed home

Women and Industrialization

• Around 1900– Rising standard of living– Mass consumer society emerges• Sewing machines, cast-iron stoves freed up time for

women of all classes

– Medical advances reduced infant mortality and the number of women who died in child birth

Economic Theory

• The Manchester School– Laissez-faire capitalism

• Adam Smith The Wealth of Nations– Natural law applied to the world of manufacturing and trade– Supply and demand– No government interference; invisible hand

• Thomas Malthus Essay on the Principle of Population– English clergyman

» Disturbed by population increase

• David Ricardo– Iron law of wages

Reforms• Early 1800s brought some changes and reforms

– Liberals• Tried to soften hard edge by agreeing to fairer labor laws and social

welfare measures• Initiated by Prime Minister Robert Peel (son of the cotton lord)

– Sensitive to needs of business and ideas of free trade» Restrictions and tariffs reduced; Non-Anglicans were allowed in civil and

military service; Catholics received equal rights; Parliament reduced the number of crimes punishable by death; Established professional police force (bobbies)

– Trade Unions (collective bargaining)• Illegal in the early 1800s• Earned legal status in late 1800s early 1900s

– Gained greater economic and political strength» The Labour Party in Britain

Reforms

• Working laws– 1833; Factory Act

• Limited the number of hours children under age nine could work

• Paid inspectors and procedures for enforcement

– 1842; Mines Act• Women, girls, and boys under 10 forbidden

to work in mines• Hurriers

– 1847; Ten Hours Act• Limited women and children to 10-hour

shifts– Poor laws

• Made unemployment unpleasant

Reforms

• Socialists– defined as a centrally planned economy in which the

government controls all means of production – Rejected capitalism and denied validity of private property• Economic competition is unfair and leads to injustice

and inequality

Reforms• Marxist socialism

– Karl Marx and Friedrich Engels• The Communist Manifesto (1848)• Das Kapital (1867-1894)

– Main argument• All history was driven by class struggle

– Upper class (controls capital, or the means of economic production)– Lower class (forced to labor for the upper class)

• Age of industrial capitalism– Struggle between bourgeoisie and proletariat– Final stage of human history before socialism– Move to communism

» Economic state of perfect justice, equality, and prosperity» Required revolution, advocated the overthrow of capitalism by

force is necessary

Industrialization Spreads

• Belgium 1831– Greatest industrialization on the continent

• Cottage industries; large population; ports for trade opened markets and provided profits

• Natural resources (coal)

• France– Industrialized slowly

• Coal deposits, but few iron ore deposits• Family agriculture• Investors were cautious; banks were not investment institutions• Railroads made improvements, but Chapelier law remained in

effect to 1864 forbidding strikes and unions

Industrialization Spreads

• Germany– Agricultural and disunited

• Slowly centers began to emerge– Ruhr Basin rich in both coal and iron ore

– The Zollverein (tariff union developed by Friedrich List)– Alfred Krupp steel works

• Eastern and Southern Europe– Little development– Lacked capital and a middle class– Governments were uninterested in encouraging manufacturing and

trade

Industrialization and Imperialism

• Intimately connected– Gave Western nations the ability to conquer and

colonize other parts of the world– Gave the West greater motivation• Raw materials• New markets

Industrial and Non-Industrial Nations

• Africa, Asia, and Latin America– Struck deals to exploit local resources– Monoculture

• Generally damages environment and slows the development of local diverse economies

• Exploits local workers

• Non-western nations eventually start to industrialize• Western colonizers see industrialization as a way to wealth

and power• Continues even today

Industrialization and Atlantic Slave Trade

• 1793 invention of cotton gin– Boosted England’s demand for raw cotton– Egypt was a large supplier, but also the American

south• Prolonged slavery