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lecture notes

The organizational basis of industrial capitalism and its human costs

Lecture Outline:

I.  Terms: industry, industrial revolution, industrial capitalism, and laissez-faire (mostly review from earlier lectures).   Main points—reorganization of production in order to increase profit is what led to new machines, etc....and the principle of “rationalizing” production to maximize profit had all sorts of social implications.

II.  England as the cradle of the industrial revolution and industrial capitalism (all reviewing points made in earlier lectures)

a)      politics and the state   

b)      ideology   

c)      agricultural development   

d) infrastructure

III.  The first stage of the industrial revolution:  consumable goods production

a)      the textile industry as model for the process of early industrialization   

b)      from manufactory to factory—a means of reducing costs, increasing control over labor process and work time, and thus increasing  profits   

c) profit, rationalization, and machines—labor costs are key variable for capitalists; how to reduce labor costs and increase control over labor process and labor time (reduce skill levels through mechanization, use women and children instead of men, etc.)

IV.  Second stage:  capital goods production

a)      the problem of investment  (the investment slump of the early 1800s)

b)      mining and steam power—towards the creation of a new power source and a new industry  

c) railroad industry as model for second stage of industrialization

   d) economic multipliers  and the spread of industrial growth


V.                 Organization and rationalization:  standardization, productivity, and skills

What ultimately drives system, and moves it through new advances in technology and organization, is the search for profit.  This leads to re-organization of actually production techniques, introduction of new machines, development of new business practices (including the new idea of “marketing” in the late 1800s), and the development of new forms of enterprise organization—e.g., corporations, cartels, etc.  Therefore same issues, motives, and dynamics that drove new “discoveries” in industry in early 1800s are there in 2002 (for instance, in companies deciding to close down factories in the US and move production to Asia).

A key development in mass” production in the mide-1800s was the creation of “standardized” parts.  Manufacturing, especially of machines, was still limited by dependence upon skilled labor in cutting dyes, making bolts, and other aspects of machine building; the “answer” was to perfect machines that could manufacture identical (standardized) parts, from bolts and screws to large engine parts, etc.  An early successful example was the gun-making industry...

VI.  The spread of industrialization

a)      1750s-1820s (England, Belgium).  Largely in context of private industry and market forces.   

b)      1830s-1870s (France, USA, Germany)

The French revolution may have slowed the process in France, but strengthening the small landholding peasantry and thus limiting the growth of national markets (a matter of debate among historians).  But when France did begin industrializing rapidly in 1850s-1870s, it was in context of state support and subsidies for industry (we will discuss this later).

In the USA, industrialization process relatively limited until era of Civil War.  It was policies of Lincoln administration and the North’s victory in the Civil War that really “jump-started” industrialization in the USA.  “Myth” is that this was entirely the result of free-market capitalism, but the state played a critical role, e.g., by subsidizing railroad construction, creating state-funded universities to provide people with technical skills, etc.

In German states, especially in the northern states, there was some early industrialization in first half of 1800s.  But real “take off” not until 1860s-1880s.  State played key role in supporting industrialization in Prussia, then in united German Empire (formed 1871).  (We will discuss this later)

    c) 1870s-1900 (Russia).  Again, government (this time, the Tsarist government) was the key supporter of industrialization.

VI.  Human beings as a form of capital

Capitalists faced the problems of securing, training, and disciplining the labor supply.  All of this meant huge changes in the lives of working people, which did not come without struggle.

VI.    Role of technology: 

In first stages of the industrial revolution, technologies were relatively simple.  The real key was organizational change.

In the second stage (heavy industry, late 1800s), technologies became more complex.  For instance, new technology was crucial in the steel industry, chemical industries, then in electronics.  The actual scale of production also became larger—some factories now had thousands of workers. 

The emphasis on mass production made possible a shift not only mass production of “heavy industrial goods” (machinery), but also by end of 1800s allowed for the early stages of “consumer”-aimed industrial mass production--many of the basic commercial technologies you know today emerged then (telephones, automobiles, electricity, etc).

VII.           Industrialization, World Markets, and Imperialism

As we will discuss later, the industrializing countries needed raw materials from the non-European world (rubber, copper, etc).  Also, by the late 1800s, they needed to expand markets not only for goods, but also for capital (investments).  In these ways, the process of industrialization would involve the European powers and the USA in the affairs of peoples in Asia, Africa, and Latin America to a greater extent than ever before in history.