Industrial Society

1
Industrial Society

• History 106
• April 13, 2009

2
Reminders

• Readings for this week (Week 3) Bentley and
  Ziegler, chapter 35, first part, pp.977-990
  watch video on Model T and  video on Ford and
  European auto manufacturing. (Finish reading
  Things Fall Apart.)
• Today and tomorrow in sections Quiz on Middle
  East documents advice on Things Fall Apart
  paper discussion of Middle East documents.

3
1920s A Ponzi Scheme Prosperity?
4
(No Transcript)
5
Bigger and Better Ponzi Schemes
Bernard Madoff has pleaded guilty to fraud in a
Ponzi scheme involving as much as 65 billion.
6
Hyperinflation in Germany, 1923

• By the end of the brief period of runaway
  inflation in Germany, one US dollar was worth
  4,200,000,000,000 German marks.
• Picture shows German currency being used as
  wallpaper.

7
From Prosperity to Depression

• The New York Times reports the 1929 Stock Market
  crash
• Oct. 22, 1929 Amid scenes of wild confusion and
  drastically lower prices, the stock market
  continued yesterday to pay the piper for its long
  dance of advancing and inflated prices...
• Oct. 24 FINANCIAL MARKETS Heavy Break in
  Stocks Second Largest Day on Record-- Money 5
  Per Cent.
• Oct. 24 PRICES OF STOCKS CRASH IN HEAVY
  LIQUIDATION, TOTAL DROP OF BILLIONS PAPER LOSS
  4,000,000,000
• Oct. 26 BERLIN IS RELIEVED BY OUR STOCK CRASH
  Newspapers Agree That Slump Here Will Return
  Capital to European Markets.
• Oct. 29 FINANCIAL MARKETS Another Violent Break
  in Stocks--Money 6 Per Cent, Sterling Higher...
• Oct. 30 FINANCIAL MARKETS Further Fall of
  Extreme Violence in Stocks, in Largest Recorded
  Day's Business
• Oct. 30 FALLS DEAD AT TICKER AS STOCKS DECLINE
  Providence Merchant Worried Over His
  Holdings--Kansas City Man Shoots Himself
• Oct. 30 Women Traders Going Back to Bridge
  Games Say They Are Through With Stocks Forever

8
The Great Depression Two Interpretations

• Free market account
• Minor downturn converted into a depression by
  unwise government policies.
• The United States Federal Reserve Board
  restricted the money supply when it should have
  expanded it.
• Policymakers, including FDRs New Deal,
  restricted trade, attacked successful businesses
  and gave harmful concessions to special interest
  groups, especially labor unions.

9
The Keynesian Alternative

• For the British economist John Maynard Keynes,
  the Great Depression was the result of
  insufficient spending by the private sector.
• Governments should stimulate the economy in
  depressions by deliberately spending more than
  they take inplanned deficit spending.

John Maynard Keynes, 1883-1946
10
A Structural Interpretation

• The 19th Century Industrial Revolution
• Products Textiles, Iron and Steel
• Transportation Railroad
• Power Source Steam Engine
• Fuel Coal

• A Second Industrial Revolution
• Products Consumer Goods
• Transportation Automobiles
• Power Source Electric Motors
• Fuel Petroleum (and coal)

11
The Depression, Creative Destruction and the
Long Wave

• The Austrian economist Joseph Schumpeter claimed
  that economic change (and growth) came through
  gales of creative destruction. Old patterns of
  production and business gave way to new ones.
• A Russian theorist, Nikolai Kondratiev, argued
  that these transitions came in long economic
  cycles lasting 50-70 years.
• By these accounts, the Depression marked the
  inevitable but jarring transition from the first
  to the second industrial revolution.

Joseph Schumpeter 1883-1950
12
The Depression as an International Crisis

• American historians still debate whether domestic
  US forces caused Great Depression of the 1930s or
  whether it was an import from abroad.
• Depression causes retreat from globalized
  international economy
• Declining spending in industrialized nations
  damages economies of colonies and underdeveloped
  nations.
• A brief video focusing on the Depressions impact
  on Chile is here

13
Experiences of Industrialization

• The Growth of Big Business
• Speed, Scale and Scope
• The Invention of Management
• Bureaucracy and its iron cage
• The disenchantment of the world?
• Toward a globalized corporate world?

Max Weber, 1866-1920
14
Early Twentieth Century Multinational Corporations

• American and European manufacturers looked for
  markets around the world. Companies making
  everything from cigarettes to giant farm machines
  were operating in dozens of nations and several
  continents.

15
Selling Farm Machinery in Russia and Sewing
Machines in Japan
16
Multinationals Today
Nike factory, China Call Center,
India McDonalds, Russia
17
Experiences of Industrialization Labor

• Karl Marx on capital and labor
• Masses of laborers, crowded into the factory,
  are organized like soldiers.Not only are they
  slaves of the bourgeois class, and of the
  bourgeois State they are daily and hourly
  enslaved by the machine, by the overlooker, and,
  above all, by the individual bourgeois
  manufacturer himself.
• The proletarians have nothing to lose but their
  chains. They have a world to win.

Karl Marx 1818-1883
18
The Fate of Marxs Prophecy

• Industrial capitalism Worker impoverishment or a
  better life?
• The labor movement Revolution or reform?
• Did industrial workers benefit from imperialism?
• Unity and division in the working class Race,
  ethnicity and gender
• Work skill, satisfaction and power

19
Scientific Management Studying Work,
Controlling Workers

• In the 19th century, skilled workers often
  controlled the pace and processes of their labor.
  
• Frederick W. Taylor became obsessed with the idea
  of putting the planning and organization of work
  in the hands of management. Workers would follow
  detailed orders.

Frederick W. Taylor 1856-1915
20
Scientific Management

• Workers resisted Taylors prescriptions (known as
  Scientific Management or Taylorism) but business
  leaders and politicians around the world were
  drawn to them.
• Even Lenin, leader of the Russian Revolution,
  endorsed aspects of Scientific management The
  Taylor system represents the tremendous progress
  of scienceand points the way towards an immense
  increase in the efficiency of human labor.
• YouTube video on Taylorism and autmobile
  manufacture