During the Industrial Revolution, the industrialist replaced the merchant as a dominant actor in the capitalist system and affected the decline of the traditional handicraft skills of artisans, guilds, and journeymen.
Also during this period, the surplus generated by the rise of commercial agriculture encouraged increased mechanization of agriculture.
Industrial capitalism marked the development of the factory system of manufacturing, characterized by a complex division of labour between and within work process and the reutilization of work tasks; and finally established the global domination of the capitalist mode of production.
Britain also abandoned its protectionist policy, as embraced by mercantilism.
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In the 19th century, Richard Cobden and John Bright, who based their beliefs on the Manchester School, initiated a movement to lower tariffs. In the 1840s, Britain adopted a less protectionist policy, with the repeal of the Corn Laws and the Navigation Acts. Britain reduced tariffs and quotas, in line with Adam Smith and David Ricardo’s advocacy for free trade.
A new group of economic theorists, led by David Hume and Adam Smith, in the mid-18th century, challenged fundamental mercantilist doctrines as the belief that the amount of the world’s wealth remained constant and that a state could only increase its wealth at the expense of another state.
Karl Argued that capitalism did not emerge until the progressive co modification of land, money, and labour culminating in the establishment of a generalised labour market in Britain in the 1830s.
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For Polanyi, “the extension of the market to the elements of industry – land, labour and money – was the inevitable consequence of the introduction of the factory system in a commercial society.” Other sources argued that mercantilism fell after the repeal of the Navigation Acts in 1849.
A major driving force of capitalist industrialization is the strong propensity to risk capital on new techniques that hold promise of improved profit, in strong contrast to the defensive wariness of the pre-capitalist approach to technology.
In the eighteenth century, the body of scientific knowledge was too slender and weak to be applied directly to industrial processes, whatever the intention of its advocates. In fact, it was not until the second half of the nineteenth century, with the flowering of chemical and electrical sciences, that scientific theories provided the foundations for new processes and new industries.
It is indisputable, however, that as early as the seventeenth century the methods of science – in particular, observation and experiment – were being applied (not always successfully) for utilitarian purposes.
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During the eighteenth century, a notable increase in the use of waterpower occurred in industries such as grain milling, textiles, and metallurgy. The most important development in the application of energy in the early stages of industrialization involved the substitution of coal for wood and charcoal as fuel, and the introduction of the steam engine for use in mining, manufacturing and transportation.
Similarly although metallic ores had been converted into metals for centuries, the use of coal and coke in the smelting process greatly reduced the cost of metals and multiplied their uses,
whereas the application of chemical science created a host of new, ‘artificial’ or synthetic materials.
Though the term ‘industrialization’ is absent from the work of Marx and Engels, the concept is clearly present. Marx distinguishes ‘Modern Industry or ‘The Factory System’ or ‘The Machinery System’ from earlier forms of capitalist production, co-operation and ‘Manufacture’.
Modern industry is distinguished from manufacture by the central role of machinery: ‘As soon as tools had been converted from being manual implements of a mechanical apparatus, of a machine, the motive mechanism also acquired an independent form, entirely emancipated from the restraints of human strength. Thereupon the individual machine sinks into a mere factor in production by machinery.’
The conversion of hand-operated tools into instruments of a machine reduced the worker to a ‘mere’ source of motive power, and as production expands, the limits of human strength necessitates the substitution of a mechanical motive power for human muscles. In the factory system, all the machines are driven by a single ‘motive force’ the steam engine.
Industrialisation has come to be used as a synonym for sustained economic growth. It is said to occur in a given country when output and real incomes per head begin to rise steadily and without apparent limit. Expansion of total output alone, however, is not a sufficient criterion of industrialization since, if population’s rising more rapidly than output, it is compatible with declining real incomes per head.
Nor can mere abundance of capital and land (which might give rise for a time to growing real incomes per head) produce a growth in the economy which can be described as industrialization if material technology remains unchanged.
A country which retains a large, even predominant, agricultural sector may be described as industrialized if real incomes rise and technology changes.
Associated with industrialization are a number of economic and social changes which follow directly from its defining characteristics. For example, as real incomes rise, the structure of aggregate demand will change, since the income elasticity’s of demand for the various goods available differ considerably.
Again, and partly for the same reason there will be a major, sustained shift of population from the countryside into the city. Whereas there is room for argument about the length and makeup of any list of the concomitants of industrialisation, there is near unanimity upon the central identifying characteristic: the rise in real income per head.