Ch. 15: The Industrial Revolution I. Understanding Economics a. The Three Economic Questions i. People have unlimited wants, but limited resources. ii. 3 basic questions: 1. What should be produced? 2. How should it be produced? 3. Who should get it? iii. Societies answer in different ways: tradition, government decides, or economic freedom. b. Free Enterprise System i. People are free to make choices on what to buy, where to work, what to make economic freedom, or free enterprise system. ii. People can own property and use it as they see fit. iii. People can invest in private businesses to make profit. iv. Competition among producers gives consumers choice, improves quality, and reduces price. v. Less successful competitors go out of business. vi. Government interference is limited supplies some services, sets rules, referees disputes. vii. Law of Supply and Demand 1. Supply = how much of a good is made available 2. Demand = how much consumers are willing to buy 3. Interaction determines prices and what goods are produced. viii. System flourished in Britain & encouraged Industrial Revolution. c. Adam Smith i. Wrote Wealth of Nations (1776) to explain benefits of division of labor, and explain supply and demand. Attacked mercantilism and supported laissezfaire. ii. Invisible Hand guided individual actions for common good.
II. The Industrial Revolution a. Economic rather than political. Introduced mass production, new energy sources (steam) and factories. b. Causes of the Industrial Revolution i. Began in Britain. 1. Geographical advantages (harbors, rivers, coal, protected island, close to markets, good for trade) 2. Transportation and communications (coastal trade, canals, ports, postal system, newspapers, navy) 3. Large colonial empire (raw materials, markets, managerial skill) 4. Powerful middle class (participated in gov t, brought together capital, labor, and inventions) 5. Agricultural improvements: productivity improved; enclosed lands; fewer farm workers needed ii. Innovations in Manufacturing 1. New inventions improved textile industry (spinning and weaving cloth) - spinning jenny, 1764 2. James Watt improved steam engine, making steam power available. Factories could be located anywhere. c. The Shift from Home to Factory i. Background 1. Before the Industrial Revolution, most goods were produced by workers at home in the domestic system. 2. During the Revolution, large numbers of workers worked together in factories using water or steam powered machines. Speed of production increased, demand increased, and prices dropped. 3. England imported cotton, spun thread, wove cloth, and shipped it out. ii. Working Conditions 1. Factory owners got richer; workers conditions worsened. 2. Hours were long, pay was low. 3. Women and children worked for less $ than men. 4. Children did dangerous jobs. Jobs were not secure. iii. Urbanization 1. Fewer farm workers needed; workers moved to cities to work in factories.
2. Cities became crowded and unsanitary. Factories polluted air and water. 3. Local governments could not cope with needs of population. d. Changes in Transportation Technology i. Transportation improvements accelerated industrialization. ii. Steam engines powered boats and locomotives. Railroads linked cities, factories, towns, and countryside. iii. Railroad construction used coal, iron, and steel, stimulating heavy industry. e. Changes in European Society i. Middle class of capitalists (merchants, lawyers, bankers) arose & helped develop free enterprise system (capitalism). ii. Characteristics of capitalism 1. Role of Entrepreneur: owned means of production; goal, profit. 2. Role of Worker: Workers moved to cities. Labor in exchange for wages. 3. Role of government: Laissez-faire meant government did not interfere between workers and business owners. f. Family Life in the Industrial Revolution i. Pre-Industrial Rev, most people lived in villages and families worked together. Few went to school. ii. Industry rose; many men, women, and children worked in factories. Less time was spent together with family. iii. People moved to cities and lived in crowded, dirty conditions. Diseases like cholera and typhoid spread. iv. Municipal reforms improved public water supplies and sewage, limited child labor, and introduced free public education for children. v. Scientists like Louis Pasteur helped improve living conditions. Germ theory and better sanitary practices reduced infections and deaths. Pasteur developed new vaccines and pasteurization. g. Reform Movements i. Social Reforms 1. Misery & injustice disturbed middle class conscience. They also feared worker violence. Parliament banned women & children from working in mines, limited workday to 10 hours, and established workhouses. 2. Queen Victoria favored social reform and private efforts at help.
ii. Municipal Reforms 1. Cities were made cleaner and more healthful. Drinking water quality was improved and better sewage systems helped prevent diseases. 2. Street lamps & police made cities safer. 3. Free public elementary schools introduced. iii. Workers Unions 1. Workers organized into unions and went on strike for better conditions and pay. 2. Politicians like Germany s Otto von Bismarck introduced reforms like social security to win favor of working classes. iv. Political Reforms 1. Rising middle class demanded political power. 2. Britain: Reform Bill of 1832 gave Parliamentary representation to new towns and voting rights to middle class. Later, voting extended to working class. By late 1800s, all British men (not women) could vote. h. Marx and the Birth of Communism i. Karl Marx & Friedrich Engels criticized capitalism. Wrote The Communist Manifesto. Marx wrote Capital. Marx s ideas were basis of Communism; believed workers created value through labor and business owners take advantage of them. ii. Capitalists get richer and proletariat (workers) get poorer. Predicted a workers revolution. iii. After revolution, Marx predicted an equal society. Everything would be owned in common no private property. No social classes everyone cooperates everyone s needs met. (Didn t work.) i. Socialism i. Socialists believed reform necessary, but could be done without revolution. ii. Wanted state influence, equal rights, and humane treatment. Formed political parties. iii. Believed workers can improve conditions through politics; government should own basic industries and provide services like schools, housing, transportation, and health programs.
j. The Second Industrial Revolution i. Later in 19 th century, improvements in chemical, steel, and petroleum industries; introduction of electricity. ii. Thomas Edison: phonograph, light bulb, motion pictures. iii. Alexander Graham Bell: telephone. iv. Internal combustion engine cars running on gasoline. v. Marie Curie and others study radioactivity (1 st woman Nobel winner). III. The Impact of History on Nationalism a. Background i. French Rev/Napoleon unleashed nationalism. Congress of Vienna tried to contain it. Industrialization strengthened middle classes, who demanded national independence/unity. b. The Unification of Italy and Germany i. Italy (1859-1860) 1. Had been many smaller states. Prime Minister Count Camillo de Cavour of Piedmont got French to help get rid of Austrian control and began to unify northern Italy. 2. Giuseppe Garibaldi and secret revolutionary society (Red Shirts) overthrew Naples. Agreed to join with Cavour. By 1860, Italy a unified kingdom. ii. Germany (1863-1871) 1. Prussia and Austria vied for power over German states. Austria had a lot of non-germans, who would be excluded and did not want unification. 2. Economics supported Prussia. Zollverein (Customs Union) formed and other states aligned. Chancellor Otto von Bismarck used policy of blood and iron to unify through economic and military strength. 3. Prussia had industrialized early. Used diplomacy, military might, and technology to build unity and army. Wars against Denmark, Austria, and France led to unification in 1871. King of Prussia became Kaiser (emperor) of Germany.