Industrialization and Economic Development: A Historical Overview
Industrialization and Economic Development
Early Industrialization and its Human Costs
The migration to towns during early industrialization resulted in squalid living conditions for many, who worked in the so-called “satanic mills.” These conditions represented a significant human cost during the beginnings of industrial development. Behind the monetary compensation, the analysis of early industrial workers reveals a challenging situation.
Economic Development and Improved Conditions
As economic development progressed, living and working conditions in developed countries saw significant improvement. Economic growth brought not only economic, technological, and organizational changes, but also altered labor markets and labor relations. Industrial relations evolved alongside these organizational shifts.
The Rise of New Manufacturing Philosophies
A new dynamic and manufacturing philosophy emerged, initially reflected in the principles of scientific management (Taylorism) and its practical application in Fordism.
General Characteristics of Industrialization Models
European Trends
General trends across Europe (including Britain) included a drop in birth rates, a decline in the primary sector, growth in the secondary and tertiary sectors, increased urban populations, and a relative decline in consumption due to increased investment in domestic spending. Government spending saw minor reductions in most European countries, and school enrollment rates varied.
Great Britain: The First Industrialized Nation
Early Dominance
In the early 19th century, Britain was the leading industrial and commercial power. It fostered an institutional environment conducive to capitalist production, benefited from abundant natural resources (especially coal), and possessed a developed agricultural sector. Combined with technological advancements (such as the steam engine), increasing demand, and a large, cheap labor pool fueled by population growth, these factors propelled the textile and metallurgical industries.
Structural Characteristics and Differences with Europe
While Britain served as a model, its industrialization differed from other European nations. Britain experienced a more pronounced structural shift, with a rapid decline of the primary sector and a faster rate of urbanization. However, this structural change was not matched by a high investment rate, which was offset by substantial capital inflows and low school enrollment.
The Climacteric Crisis
The factors that initially drove Britain’s economic development eventually hindered its growth. Between 1873 and 1913, the “climacteric crisis” brought economic hardship, slowing development and eroding Britain’s global leadership. Several explanations for this decline exist, including early industrialization, loss of comparative advantage, lack of protective tariffs, and institutional rigidities.
France: Early Industrialization, Slower Growth
France was among the first to industrialize, but its growth was slower and more sluggish than Britain’s. This slower pace was attributed to stagnant fertility rates, a slower formation of the internal market due to geographical factors, and a more gradual structural change.
Germany: Late Industrialization, Rapid Growth
Germany, initially a latecomer, experienced rapid industrialization in the latter half of the 19th century, becoming the third-largest industrial power by 1913. This growth was achieved despite initial challenges, including a lack of political and economic unity and the persistence of the feudal system. Key factors in Germany’s success included state intervention, a new generation of entrepreneurs who revitalized heavy industry, and the role of banks in financing industrial development.
Japan and the U.S.: Divergent Paths to Industrialization
Japan and the U.S. followed distinct industrialization paths, influenced by differing natural resource endowments, the role of foreign trade, demographic factors, and growth rates.
The U.S.: A Resource-Rich, Expanding Market
The U.S. benefited from vast natural resources and an expanding domestic market driven by elastic consumption, rising per capita income, and the success of American products. Rapid technological innovation, a trend towards industrial concentration, and new forms of production organization also contributed to its growth.
Japan: Resource-Scarce, State-Led Development
Japan, with limited resources and a smaller domestic market, relied on state intervention and foreign trade. The Meiji Restoration fostered institutional changes, while early industrialization was hampered by a less-educated workforce. Japan focused on textile exports and developed agricultural exports. State involvement in heavy industry and a dual industrial structure (combining large, modern firms with semi-artisanal methods) characterized its development. Rapid capital formation and a trend towards concentration in large enterprises (zaibatsu) also played significant roles.