The First Industrialization: A Transformation of Economy
The First Industrialization
The Industrial Revolution marks the starting point of modern economic growth. While the speed of change wasn’t revolutionary in itself, the consequences were. It’s a process of economic change involving multiple factors.
Key Characteristics of Industrialization
- Economy-wide Impact: Affects the entire economy.
- Unprecedented Growth: Significant economic expansion.
- Real Growth Per Capita: Increased wealth per person.
- Sustained Growth: Growth continues even during stagnation.
- Sectoral Shift: Agriculture declines, while industry and services grow.
- High Productivity Change: Boost in productivity driven by:
Drivers of Productivity
- New materials
- New machinery
- New organizations: product manufacturing and business structures
- New energy systems
England: The Birthplace of the Industrial Revolution (1760-1840)
The Agrarian Revolution
- New Techniques:
- No fallow land
- Leguminous fodder crops
- Increased livestock
- Norfolk four-course rotation
- Organizational Techniques: Enclosures
- Expanding acreage and land privatization
- Emergence of landowners, tenants, and employees
Industrial innovation is driven by profit motives. Profit depends on labor contracting and population growth, leading to rural-urban migration.
Agricultural development and production could have been absorbed by population growth, but production increased due to population growth and improved techniques, tools, and seed selection.
Agricultural Impacts on Industrial Change
- Increased agricultural production through extensive and intensive methods, leading to more food and a larger population.
- Transfer of production factors from rural to urban areas.
- Creation of an internal market.
In contrast, Spain’s agriculture did not innovate, resulting in no increase in per capita income.
Industry
Textiles
- Yarn Production:
- Manual home workers
- Machines: Jenny, water frame, mule Jenny
- Weaving: Not mechanized until the 19th century (steam engine: Watt’s invention in 1764, Savery’s spread in 1698)
Challenges of Early Textile Production
- Higher costs
- Difficulty increasing work intensity
- Fraud
Solution: Factories
- Concentrated production
- Mechanization
- Use of inanimate energy (steam and water)
- Division of labor
- Salaried workers under labor discipline
Initially, people were reluctant to work in factories due to strict regulations. UK employers resorted to forced labor.
The Steel Sector: Profit and Refining
- Wood scarcity led to deforestation.
- Darby’s coal breakthrough in 1709, with slow adoption.
- Steel became cheaper between the first and second Industrial Revolutions.
Chemical Industry
- Developed in the 18th century.
- Procedures for finishing in the textile industry.
- Mining: explosives.
Transport
- Road transport improvement
- Improved canals
- Railways
Macro Effects of Improved Transport
- Forward Connections:
- Speed, consistency, security
- Lower costs
- Integration of national and international markets
- Addresses isolation issues from the 19th century
- Backward Connections:
- Demand for steel products
- Demand for the construction industry
- Financial demand
- Application for employment
Micro Effects
Large companies, particularly in the rail sector, emerged.
Types of British Companies in the Late 18th and Early 19th Centuries
- Individual or family-owned, without stock.
Capital Sources
- Self-financing, loans from family, friends, and new partners.
- Working capital: bank loans.