Second Industrial Revolution: Capitalism and Imperialism 1870-1914
Item 5. The Second Industrial Revolution: Imperialism and the Era
It should be noted that both phenomena may be framed in the period 1870 to 1914 and have in common that they involve the global expansion of the capitalist model and its consequences: the globalization of the capitalist economy.
1 – New Forms of Capitalism
1.1. The Spread of Industrialization
Britain is the world’s leading power due to its control of trade. London is the capital of international trade, and its currency is sterling. To be the most industrialized country on the planet, it has the highest rates of workforce in the secondary sector and urban population.
France, Germany, Belgium, the Netherlands, Catalonia, and Northern Italy have advanced in their industrialization processes during the second half of the century. It has also begun to be incorporated into the process of peripheral Europe: Russia, Spain, etc.
1.2. The New Industrial Powers
Germany: From unification, it experienced very rapid and intense economic and industrial development. As latecomers to industrial development, they plan to do so in the new sectors: electricity, chemistry, engineering, etc. The German state intends to make the Empire a great power. The consequence of this is that it sharpens and increases economic rivalry with Britain.
USA: This is another example of rapid industrialization due to an abundance of resources, the arrival of immigrant labor, and westward expansion (rail, oil, etc.).
1.3. The Rhythms of the Capitalist Economy
The exportation of the capitalist model led to the creation of a global market in which the consequences of economic phenomena are experienced in a chain. The capitalist system is characterized by alternating cycles of expansion, economic prosperity, and cycles of crisis of industrial overproduction. These alternative scenarios had to occur. Since the Second Industrial Revolution, the dimensions of the phenomena themselves have become international. Capitalist economic crises are cyclical and cause decreased benefits for employers and an increase in unemployment among workers.
1.4. The First Great Depression of Capitalism: 1873-1876
It is called The Great Depression. The arrival in Europe of more competitive agricultural products from peripheral economies (USA, Australia, Argentina, etc.) eventually caused significant decreases in prices and the collapse of the sector. As consumption was reduced, industry and finance were equally affected. There was a descent in prices (lost profits), rising unemployment, falling wages, etc.
In response, companies will seek new technical solutions and participate in the development of technological innovations. Competition, corporate concentration, and the monopoly of the markets created a stronger alliance between the foreign policies of the various European governments and the interests of big capital.
The powers sought to end the crisis through aggressive imperialist policies, the return of the state of the economy (militarization, heavy industry), and the development of nationalist protectionist policies. The interests of the ruling classes are assumed in foreign policy by national governments.
2 – The Second Industrial Revolution
2.1. The Concentration of Enterprises
Associated capital and industry through new business models:
- The Trust meets the same sector companies controlled by one or two large firms to monopolize the exploitation of a product and be able to regulate its price.
- The Cartel meets companies that do not merge but are associated to reach common agreements on supplies, processes, and prices, thus avoiding competition between them.
- The Holding, however, is a financial company or bank that controls the majority of the actions of various industrial and commercial enterprises.
The U.S. and Germany were the countries in which they developed such business associations that began to dominate international economic sectors.
2.2. Economic Protectionism
Economic nationalism defends the country’s products against competition from those abroad. All European countries (except Britain) opted for this type of policy with respect to agricultural and industrial products.
2.3. Technical Progress and Technological Innovations
The use of new materials and new energy sources radically transformed the industry. Steel (wide circulation, replacing iron, heavy industry-oriented, and military), electricity, and oil were imposed.
The mechanical industry developed the sewing machine, writing, cycling, and car, all products for mass consumption. The chemical industry had to offer fertilizers, medicines (aspirin), explosives, plastics, etc.
Electrical energy transformed ways of working and living for most of the population. In 1878, Edison produced the first light bulbs; in 1876, the telephone (Bell); the radio (Marconi); etc. Petroleum (gasoline) began to be used as fuel for the explosion engine.
New forms of work organization and assembly production lines (the worker concentrated on a fixed and repetitive task): Taylorism.