Unit 2 - The Industrial Revolution
Unit 2 - The Industrial Revolution
Definition of the Industrial Revolution
The term "Industrial Revolution" refers to the period that began in the 1700s when power-driven machines started to perform much of the labor that had previously been done by hand.
Four Factors of Production
Land
All natural resources required for production, including essential items such as water, coal, and trees.
Labor
The human workforce applicable to both mental and physical aspects of production.
Capital
Refers to the monetary resources, equipment, buildings, and anything necessary for the production of goods or services.
Management
Individuals overseeing the operational aspects of the other three factors, ensuring efficiency and effectiveness in production processes.
Cottage Industry
Advantages of the Cottage Industry
Self-regulated Hours: Workers can choose their own working hours, allowing flexibility.
Higher Quality Products: Typically provides superior quality due to skilled craftsmanship.
Pacing: Workers can operate at their own pace, leading to personalized production rhythms.
Family Involvement: Families have the option to work together, allowing for joint economic contributions.
Disadvantages of the Cottage Industry
Vulnerability: Businesses can be easily devastated due to external pressures like competition or adverse weather conditions.
Skill Acquisition: Workers must learn specific skills which can be a barrier to entry.
Physical Demands: Requires significant physical effort, which may not be feasible for all individuals.
Longer Production Process: Inefficiencies may arise, prolonging the time needed to create goods.
Factory System
Advantages of the Factory System
Increased Production: Factories can produce goods on a much larger scale.
Lower Prices: High levels of production often lead to decreased prices for consumers.
Job Creation: Factories provide numerous employment opportunities.
Minimal Skills Required: Many factory jobs require little to no specialized training or skills.
Disadvantages of the Factory System
Long Working Hours: Often involves extended shifts leading to worker fatigue.
Dangerous Work Environment: Factories may pose risks of injury or accidents.
Unsanitary Conditions: Poor hygiene in working conditions can lead to health issues.
Child Labor: Exploitation of children as a source of cheap labor during this period.
Repetitiveness: Tasks can be monotonous, leading to decreased job satisfaction.
Labor Unions
Labor unions are organizations that advocate for improved working conditions, fair wages, and labor rights.
Mass Production
Advantages of Mass Production
Increased Output: Facilitates rapid production of items.
Lower Costs: Economies of scale allow for reduced pricing per unit.
Accessibility: Goods produced can be made available to a wider audience.
Disadvantages of Mass Production
Boredom: Repetitive tasks can lead to worker dissatisfaction.
Worker Protests: Poor working conditions may lead to strikes or protests.
Assembly Line
The assembly line method revolutionized production by enabling products to be built at a faster rate, whereby items move to workers in sequential stages.
Positive Effects of Industrialization on Society
Diverse Products: Introduction of a wider variety of goods in the market.
Increased Product Availability: More food and goods become accessible to the general public.
Affordable Goods: Lower production costs lead to cheaper products which can improve standards of living.
Negative Effects of Industrialization on Society
Child Labor: Increased exploitation of children in factories.
Hazardous Work: Many industrial jobs were unsafe.
Urban Slums: Rapid industrial growth led to the emergence of overcrowded and unhealthy living conditions.
Pollution: Industrial activities significantly contributed to environmental degradation.
Law of Supply and Demand
Prices are determined by the relationship between the availability of goods (supply) and the desire for those goods (demand).
Laissez-Faire
A doctrine that advocates for the government to have minimal intervention in business affairs, which translates to a 'hands-off' approach.
Adam Smith
Known as the leading advocate of laissez-faire economics, he envisioned a market economy characterized by a system free of government regulations. He developed theories that focused on supply and demand, competition, and the invisible hand guiding economic prosperity.
Sadler Commission Report
Investigative hearings held in Parliament that detailed the abuses occurring in British factories. Resulted in legislative changes aimed at limiting work hours and improving conditions for workers.
Development of the Middle Class
The industrial revolution spurred the growth of a middle class through increased demand for positions that required education and management, such as accountants, sales representatives, and engineers.
Types of Business Ownership
Sole Proprietorship
Advantage: Owner retains complete control over business decisions.
Disadvantage: Owner faces all business risks; potential for total financial loss.
Partnership
Advantage: Risks and financial losses can be shared among partners.
Disadvantage: Partners may be held liable for each other's actions, leading to unlimited liability.
Corporation
Advantage: Allows for a larger pool of investors and easier capital acquisition.
Disadvantage: Profits must be shared, leading to decreased individual control and influence.
Capitalism
Key ideas include:
Control of production factors by individuals.
Existence of competition.
Emphasis on private ownership, with potential for wealth accumulation.
Minimal government intervention leading to pronounced economic disparity (wealthy vs. impoverished).
Laissez-faire principles underpinning the system.
Socialism
Key ideas include:
Major industries are owned and operated by the government.
Smaller industries may be owned by private individuals.
Distribution decisions involve both the government and citizens.
Higher tax rates with a focus on reducing wealth inequality.
Communism
Key ideas include:
Complete government control over the economy.
Absence of individual freedoms often leading to dictatorial governance.
Limited consumer product availability.
Economic decisions are solely made by the government, encompassing both economic and political facets.
Important Works
Das Kapital
Critique of capitalism, positing that class struggles instigate conflicts within societies.
Communist Manifesto
Foundational text advocating for the displacement of capitalism and establishing the principles of socialism and communism.
Supply and Demand
Fundamental principle that describes how the price of goods is determined in a capitalist economy based on availability and consumer desire.
Key Figures
Vladimir Lenin: Key developer of modern communism, prominent as the leader of the Russian Revolution.
Thomas Malthus: Economist who theorized that population growth would surpass food production capabilities, predicting perpetual poverty and hardship.
Karl Marx: Known as the "Father of Communism", authored both Das Kapital and the Communist Manifesto.
Frederick Engels: Established the study of economics for Karl Marx and edited his seminal works.