Part 1: Capitalism Part 2: Industrialization Theme: Comparing social and economic systems and understanding those systems as responses to change and development - PowerPoint PPT Presentation


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Part 1: Capitalism Part 2: Industrialization Theme: Comparing social and economic systems and understanding those systems as responses to change and development


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Title: Part 1: Capitalism Part 2: Industrialization Theme: Comparing social and economic systems and understanding those systems as responses to change and development

Part 1 Capitalism Part 2 Industrialization The
me Comparing social and economic systems and
understanding those systems as responses to
change and development
  • Lesson 6

Putting It All Together
More incentive, more capability, more demand,
more supply
Steam powered machines
Triangular trade
More goods, more money, but some unpleasant
social developments
Word Association
  • Capitalism

  • An economic system with origins in early modern
    Europe in which private parties make their goods
    and services available on a free market and seek
    to take advantage of market conditions to profit
    from their activities

Adam Smith (1723-1790) (Review from Lsn 4)
  • Focused on economics and held that laws of supply
    and demand determine what happens in the
  • Wrote An Inquiry into the Nature and Causes of
    the Wealth of Nations in 1776 which argued the
    virtues of a free market economy

Adam Smith (Review from Lsn 4)
  • Free enterprise system
  • The role of self-interest and laissez-faire
  • Through an invisible hand self-interest guides
    the most efficient use of resources in a nations
    economy, with public welfare coming as a
  • State and personal efforts to promote social good
    are ineffectual compared to unbridled market
  • Provides the intellectual rationale for free
    trade and capitalism
  • (Well discuss capitalism in Lsn 6)

Precursors to Capitalism
  • Population growth
  • Improved nutrition from the Columbian Exchange
    and reduced mortality as a result of recovery
    from epidemic disease led to dramatic population
    growth in Europe
  • 1500 population was 81 million
  • 1700 population was 120 million
  • 1800 population was 180 million

Precursors to Capitalism
  • Urbanization
  • Population growth led to the growth of cities as
    centers of government, commerce, and industry
  • Madrid, Paris, and London were especially
  • Significant growth also occurred in Amsterdam,
    Berlin, Copenhagen, Dublin, Stockholm, and Vienna

18th Century London
Capitalist System
  • Center of the system is the free market in which
    businessmen compete with each other, and the
    forces of supply and demand determine the prices
    received for goods and services

Capitalist System
  • Private parties pursuing their own economic
    interests hire workers and decide for themselves
    what to produce
  • Economic decisions are the prerogative of
    capitalist businessmen, not governments or social
  • Private parties own the land, machinery, tools,
    equipment, buildings, workshops, and raw
    materials needed for production

Capitalist System
  • If businessmen organize their affairs
    efficiently, they realize a profit
  • If they are inefficient, they incur losses or
    maybe even lose their businesses
  • One way to spread the risks were the joint stock
    companies we discussed in Lesson 3
  • Insurance companies also were formed to mitigate
    financial losses

Developments that Fueled Capitalism
  • Wanting to make money was nothing new, but during
    early modern times, several developments
    transformed the economic order
  • Efficient networks of transportation and
    communication allowed businessmen to take
    advantage of market conditions
  • Banks held funds for safekeeping and granted
  • Business newsletters provided information about
    not just the markets, but about the political
    impacts on the economy
  • Stock exchanges provided markets to buy and sell

Capitalism and Politics
  • Capitalism grew with the active support of
    governmental authorities within the context of
  • Especially the English and Dutch
  • Remember the discussion of trading post empires
    from Lesson 3
  • Fortified trading posts
  • Joint stock companies
  • Seven Years War

Organizational Changes
  • Guild system
  • Had monopolized the production of goods such as
    textiles and metalwares in European cities for
  • Fixed prices and wages and regulated standards of
    quality but did not seek so much to make a profit
    as to protect markets and preserve members
    positions in society
  • Thus the system discouraged competition and
    sometimes resisted technological innovation
  • Putting-out system
  • Capitalist entrepreneurs sidestepped the guild
    system by moving production to the countryside
    where labor was cheaper
  • Delivered unfinished materials to rural
    households where workers would turn them into
    finished goods
  • Putting-out system produced such items as cloth,
    nails, pins, and pots

Capitalism and Social Change
  • The putting-out system brought considerable new
    wealth to the countryside
  • Increased wealth brought material benefits but
    also undermined long-established patterns of
    rural life
  • The new income allowed young adults and women to
    become increasingly independent of their families
  • At the same time, young nuclear families
    (husband, wife, children) were strengthened
    because love became more of the reason for
    marriage than improving financial interests of
    extended families

Moral Implications
  • Profit-making motives challenged traditional
    beliefs that encouraged individuals to look at
    the welfare of the larger community rather than
    just their own
  • Adam Smith countered that society as a whole
    prospered when individuals pursued their own
    economic interests
  • Nonetheless, capitalism generated social strains
    that sometimes manifested themselves in violence
    such as robbery

  • Are unions good or bad?
  • Should the government provide for individual
    members of society or is Smith right that all of
    society prospers when individuals pursue their
    own economic interests?
  • What does all this say about contemporary issues
    such as social security, national health
    insurance, agricultural subsidies, and welfare?

  • The process that transformed agrarian and
    handicraft-centered economies into economies
    distinguished by industry and machine manufacture
  • Key to the process were technological and
    organizational changes that transformed
    manufacturing and led to increased productivity
  • Machines
  • Factories

Importance of Coal
  • Until the 18th Century, wood had been the primary
    fuel in Great Britain
  • Britains natural abundance of coal allowed it to
    convert to this more efficient fuel which paved
    the way for industrialization through such means
    as iron production and the steam engine

Woman coal drawer in a British mine
Importance of Textiles
  • In addition to coal, the triangular trade
    supplied Britain with large amounts of cotton
    from America
  • Consumer demand for cotton products transformed
    the British cotton industry and started the
    larger industrial expansion

Mechanization of the Cotton Industry
  • Demand for cotton products encouraged the
    development of faster spinning and weaving
  • In 1733, John Kay invented the flying shuttle
  • Before cloth could be woven only up to the width
    of a man's body because he had to pass the
    shuttle backwards and forwards, from hand to hand
  • Kays invention allowed the shuttle, containing
    the thread, to be shot backwards and forwards
    across a much wider bed

Social Impact
  • With the Flying Shuttle, one worker could do the
    work of two, even more quickly
  • This threatened jobs and in 1753 an angry mob of
    weavers, afraid of the competition, wrecked Kays
    house and destroyed his looms
  • Moreover, manufacturers formed an association
    which refused to pay Kay any royalties
  • He lost all of his money in legal battles to
    defend his patent and died a poor man

Portion of a mural depicting Kay escaping from
his home after being attacked by local textile
Other Inventions The Spinning Jenny
  • In 1764, James Hargreaves invented an improved
    spinning jenny, a hand-powered multiple spinning
    machine that was the first machine to improve
    upon the spinning wheel
  • The original spinning jenny used eight spindles
    instead of the one found on the spinning wheel
  • Later models had 120 spindles
  • Like Kay, Hargreaves suffered from violence at
    the hands of workers who saw his machine as a
  • In 1768 a group of spinners broke into
    Hargreaves house and destroyed his spinning
    jenny machines

Other Inventions The Mule
  • In 1779, Samuel Crompton invented the mule
  • It was adopted for steam power in 1790
  • A worker using a steam-driven mule could produce
    a hundred times more thread than a worker using a
    manual spinning wheel

Steam Power
  • Steam engines burn coal to boil water and create
    steam which then drives mechanical devices that
    perform work
  • In 1756, James Watt developed a general-purpose
    steam engine which used steam to force a piston
    to turn a wheel whose rotary motion converted a
    simple pump into an engine that had multiple uses

Steam Power
  • By 1800, thousands of Watts steam engines were
    in operation in the British isles, especially in
    the textile industry
  • In 1773, James Watt and Matthew Boulton formed a
  • In 1785, Edmund Cartwright patented the first
    version of his power loom which combined the
    steam engine and the textile industry
  • Cartwright set up a factory in Doncaster.

James Watt
  • Cartwrights Doncaster factory was just one of
  • By the end of the 19th Century, the factory had
    become the predominant site of industrial
    production in Europe, the United States, and Japan

  • The size and cost of machines led to production
    being centralized in selected locations
  • Mass production strongly encouraged new divisions
    of labor and specialization
  • In the handicraft traditions, a single worker did
    the entire job
  • In the factory system, each worker performed a
    single task

Adam Smiths Description of Work at a Pin Factory
  • One man draws out the wire, another straightens
    it, a third cuts it, a fourth points it, a fifth
    grinds it at the top for receiving the head and
    the important business of making a pin is, in
    this manner, divided into about eighteen distinct
    operations, which, in some manufactories, are all
    performed by distinct hands, though in others the
    same man will sometimes perform two or three of

Working Conditions
  • Factory work required strict discipline, a fast
    pace, and close supervision
  • Work became monotonous and repetitive
  • Safety suffered
  • Workers lost their broad-range of skills, could
    easily become obsolete to technological
    developments, and became completely dependent on
    the factory owners for their livelihood
  • Some workers such as the Luddites revolted
    against the new system by destroying textile

Luddites burning a textile machine
Industrial Capitalism Mass Production
  • Eli Whitney developed the technique of using
    machine tools to produce large quantities of
    interchangeable parts in firearm making
  • Allowed unskilled workers to make a particular
    part of the musket, replacing skilled workers who
    used to make the complete product
  • By the 19th Century, mass production of
    standardized articles was becoming the hallmark
    of industrial societies

Industrial Capitalism Assembly Lines
  • Introduced by Henry Ford in 1913 for automobile
  • Used a conveyor built to carry components past
    workers at the proper height and speed
  • Each worker performed a specialized task from his
    fixed point
  • Reduced the time to produce a chassis from 728 to
    93 minutes
  • Increased production meant lower prices so that
    millions of ordinary Americans could own cars

Industrial Capitalism Corporations
  • Corporations are private businesses owned by
    individual and institutional investors who
    finance the business through the purchase of
    stocks representing shares in the company
  • By the late 19th Century, corporations controlled
    most businesses requiring large investments in
    land, labor, or machinery

Industrial Capitalism Monopolies
  • To protect their investments some big businesses
    sought to eliminate competition by forming
  • Vertical monopolies dominated all facets of a
    single industry
  • Through Standard Oil Company, John D. Rockefeller
    controlled almost all oil drilling, processing,
    refining, marketing, and distribution in the
    United States

Industrial Capitalism Monopolies
  • Horizontal monopolies tried to eliminate
    competition by the consolidation or cooperation
    of independent companies in the same business
  • Ensured prosperity of the cartel members by
    absorbing competitors, fixing prices, regulating
    production, or dividing up markets
  • IG Farben, through the merger of many chemical
    and pharmaceutical manufacturers, was able to
    control 90 of production in chemical industries

  • What were the good things about
  • What were the bad?

  • Part 1 Socialism
  • Part 2 Global Depression

Migrant Mother taken by Dorothea Lange in 1936