Industrialization Rise
Capitalism The rise of Industrialization
The ideas of Smith and the physiocrats provided the ideological and intellectual background for the Industrial Revolution-the material side of the sweeping transformations in society and the world that characterized the 19th century. No precise date can be given for this “revolution”; it is generally conceded to have begun in the late 18th century.
The fundamental characteristic of the industrialization process was the introduction of mechanical power (originally steam) to replace human and animal power in the production of goods and services. As the mechanization of production gained momentum in England and gradually spread to other parts of the world, several fundamental changes occurred. Production became more specialized and concentrated in larger units, called factories. The artisans and small shops of the 18th century did not disappear, but they were relegated to the periphery of economic activity in the leading nations, especially in England, the United States, and Germany. The modern working class began to emerge; workers no longer owned their tools, they had little property, and generally they had to exchange their labor for a money wage. The application of mechanical power to production brought with it a great increase in worker efficiency, which made goods abundant and cheap. Consequently, the real standard of living rose throughout much of the world during the 19th century.
The development of industrial capitalism had serious human costs. The early days of the Industrial Revolution were marred by appalling conditions for large numbers of workers, especially in England. Abusive child labor, long working hours, and dangerous and unhealthy workplaces were common. These conditions led Karl Marx, who spent most of his adult life in England, to produce his massive indictment of the capitalistic system, Das Kapital (3 volumes, 1867-94). Marx’s work, which is the intellectual foundation for the kind of Communist economic systems used in the former Union of Soviet Socialist Republics (USSR), struck at the fundamental principle of capitalism-private ownership of the means of production. Marx believed that land and capital should be owned collectively (that is, by society) and that the products of the system should be distributed according to need.
Capitalism was also beset by cycles of ‘boom and bust,’ periods of expansion and prosperity followed by economic collapse and waves of unemployment. The classical economists who refined the ideas of Adam Smith had no ready explanation for the ups and downs of economic life, being content to view such cycles as the inevitable price that society had to pay for the material progress experienced under capitalism. Marxian criticisms, along with frequent depressions in the major capitalist nations, helped establish vigorous trade-union movements that fought to raise wages, shorten working hours, and improve working conditions.
In the late 19th century, especially in the United States, the modern corporation, with its limited liability and immense financial power, began to emerge as the dominant form of business organization. The tendency toward corporate control of manufacturing led to many attempts to create combines, monopolies, or trusts that could control an entire industry. Eventually, the public outcry against such practices was great enough in the United States to lead Congress to pass antitrust legislation. This legislation attempted to make the pursuit of monopoly by business illegal, using the power of the state to force at least a bare minimum of competition in industry and commerce. The antitrust laws never succeeded in restoring to industry the competition of many small businesses that Adam Smith had envisaged, but it did impede the worst tendencies toward creating monopolies and restraining trade.
Despite such difficulties, capitalism continued to expand and prosper almost without limit throughout the 19th century. It was successful because it demonstrated an enormous ability to create new wealth and to raise the real standard of living for nearly everyone touched by it. As the century closed, capitalism was the dominant economic and social system. (1)
The Capitalism contents in this legal Encyclopedia also include: Capitalism, Capitalism Characteristics, Capitalism Origins, Capitalism Mercantilism, Modern Capitalism Beginnings, Physiocrats, Adam Smith, Industrialization Rise, Capitalism in the 20th Century and Capitalism Future.
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