1820-1870 Industrial Revolution - Essay Example

Economic History The Industrial Revolution The Industrial Revolution from 1820 to 1870 was one of the most important economic developments in the United States. But there were two industrial revolutions. The first began in the late 18th century in the Britain. The second occurred during the mid 19th century in the US and Germany. There are many factors that contributed to the industrial revolution which had the effect of changing and modernizing society to what it is today. The term Industrial Revolution refers to the move from handmade and homemade production of goods to machine made and factory made goods. Whereas the first revolution played a role in the invention, development and implementation of spinning and weaving machines for the textile industry, which use water power until the introduction of steam power, it was the second revolution that really changed American economy and society into a modern industrialized state. The process had begun in the 19th century. Growth in the 19th century was fuelled by many factors: plentiful resources, innovative technology, cheap and efficient energy, swift transportation and labor and capital which were readily available (Wikipedia 2007). In the west, forests, mines and cattle supplied the raw materials for key industries. The rapid expansion of railroads allowed businesses to transport raw materials to and from factories and move products to the cities where the bigger markets lay. Around this time too, a continual flow of European and Asian immigrants arrived in America to seek work. Many found work in the factories and mines. Advancements in technology shaped and improved production with the invention of the assembly line in a number of industries. This along with new machine tool industries which produced cutting, drilling and milling machineries, hastened manufacturing and production. A series of breakthrough inventions and discoveries such as the phonograph, electric light, telephone, typewriter, automobile and others opened up new industries. Businesses changed with the times and the corporate heads discovered how to conduct business and broaden their economic activities to encompass wider geographic territories and eventually global ones. This permitted businesses to expand and today's mega corporations are founded on business organization with their own theories and practices. From 1870 to 1900 the United States became the most industrialized nation in the world. In numerous sectors such as steel and timber production, mining of coal, iron, silver and gold, meatpacking and other industries, the US emerged as a leader. In general, the nation saw a huge upsurge in the pace and scale of industrialization which had altered businesses, commerce, the environment, job opportunities and daily life. With the development of industries around major cities, people moved from farms and the countryside to the cities for work. But agriculture was not neglected as advancements were made with agricultural machines. The established political and legal systems which the US had inherited from the British model, encouraged entrepreneurship and rewarded innovation and initiative. The nation was socially more mobile than any other, and receptive to change. Three important developments in the mid 1850s spurred the Second Industrial revolution in America. One, was the transportation system was developed and expanded. Two, electrification was successful exploited and put to use. Three, major progress was made to the industrial system such as improving the refining process and hastening production. The government passed a protective tariff to protect American manufacturers. There was a great demand in the railways, not only for transportation of goods but also to make it more durable. This led to development and production of cheap mass produced steel which during the time saw its use in many aspect of industrial activity. After steel, the industrialization took on to include chemical and electrical industries, petroleum refining and distribution and eventually to the automobile industry at the turn of the century. Technological supremacy shifted from Britain and Germany to the US which saw electrification as the principal initiator of the second industrial revolution. The area of communication of technical knowledge received a boost with the invention of the steam-powered printing press. Also the introduction into all areas of commerce and industry was mechanical typesetting which further allowed new knowledge and ideas to spread. The reduction of taxes on paper and ever cheapening production costs, led to the development of technical journalism, newspaper and periodicals. This period saw a spurt in inventions and their application into industry and other spheres of life. Machines tools were specially designed to construct precision parts for other machines. Although the use of the steam engine was widespread throughout the world, it had spread slowly. The invention of the internal-combustion engine, in contrast, and its exchange to other nations, was much swifter. It was fully exploited by the automotive industry after breakthroughs in using petroleum as fuel as an alternative to coal gas. When Henry Ford made further advancements, the automobile became a mass market marvel that would impact society tremendously. The industrial revolution saw huge work forces employed in industrial labor in factories and enterprises but the wages were low and unemployment high. The population of better paid white collar workers also began to swell when improvements and advancements in technical areas that relied less on the human element and more on automated systems. This period also marked the rise in activity of trade unions which were facilitated by the industrial revolution's division of labor into factories, mills and mines. Separate trade unions meant each interest group had a voice and their issues could be heard and addressed. Unions had the power to stipulate better working conditions and increased wages and even cease working if their demands were not met. Employers therefore bore the brunt of the actions of the unions. Since skilled workers were not easily replaceable, more often than not, their demands would be met through the bargaining process. But this model of capitalism had its detractors. One of the most important socialist thinkers was German political philosopher Karl Marx who created the system of political thought called Marxism. Along with Friedrich Engels, he founded socialism (later communism). Marx's communist manifesto proposed a number of ideas on the rise of monopoly or capitalism. He prophesized the end of class exploitation and the fall of the ruling bourgeoisie (capitalists). In their desire to accumulate greater wealth, the capitalists frequently adapts or changes the models of economic production. In the process, Marx argues, the bourgeoisie have set about conditions that would contribute to their own downfall by creating conflict between the forces of production and the relations of production. Further, as the capitalists increase their wealth and dominance in society as well as in the political arena, a class resentment would stimulate revolution that would overthrow the ruling elite. Marx also classifies the communists as partners and liberators of the lower downtrodden classes. He maintained that the division of labor leads to social conflict (Kolakowski, Falla p.130). He stressed the need to eliminate privately held property, an elementary transformation in material existence that would expose the elitist culture which was the capitalist ideological manifestation. The manifesto also maintains that the right to inheritance should be abolished, universal free education for children in public schools and abolition of child labor in factories; transport run by the state; centralization as a way of communication as well as expanding the state owned means of production; a merging of agriculture with manufacturing industries; a steady ending in the differences between town and country. At the end of the revolution, economic production and development will be in possession of the lower classes, who would represent the state, but would be reorganized as the governing class. With common ownership, class divisions would cease to exist and society would be rendered stateless and classless. Recent history has shown that a capitalist state can indeed survive with a ruling governing body at the head of affairs, without the fear of animosity from those lower in the order. The industrial revolution altered social structures, enabling ordinary workers to rise above their class, achieve success as industrialists and businessmen and surpass the elite ruling classes and other nobility. It is perhaps this the Marxism failed to anticipate, that ordinary folk if given opportunities, could succeed through the dint of their own efforts. With the industrial revolution came a development of new industries and consequently more opportunities for ordinary people to find work in mills and factories. Though the US had taken a lead in industrialization, the nation began the process from a state of moderate backwardness. One theory by Alexander Gerschenkron offers insights on how the US rapidly transited to a wealthy economy. Gerschenkron's chief idea stressed the constructive role of relative economic backwardness in stimulating methodical substitution for basics for industrial growth. The intervention of the state could recompense for the insufficient stream of funds, skilled labor, technological expertise and entrepreneurship that were prevalent in countries that were aiming to modernize. Gerschenkron hypothesis (advantage of backwardness) states that growth potential is the highest where the initial gap between the late developers and the developed is the highest. In other words, the function of financial institutions in industrialization is associated with the degree of economic backwardness before the industrialization in an economy begins (Gerschenkron p7). According to Gerschenkron, financial institutions were crucial participants in the industrialization of modestly backward economies. This was especially true in northwestern continental Europe but in exceedingly backward economies like Russia, financial institutions were incapable of offering aid to modernize industry and the economy and relied on centralized governmental intervention to supplement the economy. In the case of the US, financial institutions provided aid in abundance which allowed enterprise to develop and flourish. Gerschenkron's hypothesis works well with the American Industrial revolution as this once moderately backward economy was able to transform itself through financial aid and sweeping technological changes. Earlier, England had been the center of the industrial revolution and was capable of advancing with the free market model proposed by Adam Smith. France which started later would require a great deal of state involvement to compensate for its inadequacies. The German innovation was the establishing of large banks to offer access to the required capital for the process of industrialization. The backwardness in Russia necessitated much greater intervention from the state and compensation from them. Gerschenkron had a noticeably anti-Marxian analysis which discarded the English Industrial Revolution as the normal course of economic and industrial development and which starved the state of capital thus effecting further expansion. Features of modernity and backwardness could endure along side each other in an orderly manner. Restructured institutional arrangements could solve issues that were predominant in the initial inadequate conditions of access to capital. Success was measured by brisk growth by later developers, and a rapid surge in industrial expansion. The English model of industrialization influenced Gerschenkron's research in the nature of individual developmental in countries such as Germany, Italy, Russia, Bulgaria and France. These individual examples reinforced his support of a comparative, all inclusive European form of industrial development. He states that European industrial development in history is envisaged as a combined but ever developing pattern. Also there was a tendency for underdeveloped economies to imitate the evolution of wealthier economies (Gerschenkron p.26) The following four hypotheses summarize his approach to industrial development. 1. Relative backwardness produces pressure between the assurance of industrial development and the prospect of economic decline. When these pressure are felt politically, there is a motivation to seek institutional improvement to compensate for the failings. These institutional remedies tend to substitute the non-existent prerequisites for growth. 2. The larger the scale of backwardness, the greater the amount of intervention that is needed in the market economy to redirect capital and entrepreneurial guidance to emerging industries. This also entailed greater coercive and wide-ranging actions to decrease domestic consumption and set aside national savings. 3. The greater the backwardness of the economy, the more likely were the possibilities of additional consequences: there was a greater likelihood of an importance on domestic production of producers' supplies instead of consumer goods; the utilization of capital intensive system of production instead of labor intensive system; the appearance of bigger scale production plants; dependence on advanced international technology instead of using local or national methods. 4. The greater the backwardness of the economy, the lesser the likelihood that the agricultural sector could supply a growing market to industry and industry's increasing reliance on increasing productivity and inter-industrial sales in order to develop and expand. This uneven growth was often made practical through the intervention of the state. Gerschenkron's propositions offered the prospect of merging institutions, ideology and the historical pattern of industrialization, particularly with the example of Russia. But his model has its limitations. Little consideration is given to the domestic classes and special interest groups that seek to restrain the state from intervening. The term 'backwardness' is too closely associated with technological backwardness and not enough emphasis on the backwardness of the state and its political agenda. He focuses less on the opportunities or limitations. Also, his theoretical structure sidelines the many developmental disappointments of states seeking to industrialize and modernize. Further, 20th century issues such as globalization and international trade were less important in Europe in the 19th century. Conclusion The main strength of capitalism is that industrialization has raised wealth for the masses. This is substantiated by reduced work hours, children and the elderly are not allowed to work and the life expectancy in general has risen. Marxism basically saw industrialization as polarizing society between the ruling elite and the working classes. He viewed it as a feudalistic economic model but which would develop into socialism and gradually into communism. Gerschenkron believed that financial institutions were at the core of economy building which is perhaps why the capitalist form of the industrial revolution was so successful. References Gerschenkron, Alexander. Economic Backwardness in Historical Perspective. Harvard University Press, Boston, 1966. (pp. 7, 26) Kolakowski, Leszek, Falla, P.S. (2005). Main Currents of Marxism: The Founders, The Golden Age, The Breakdown. W. W. Norton & Company. pp.130 Wikipedia (2007). Industrial Revolution. [Accessed 1-4-07] Read More