Capitalism and the First Industrial Revolution

It is now almost an axiom of the theory of economic development that the path to prosperity lies through the Industrial Revolution.

-Phyllis Dean

The world can be divided into rich and poor regions due to the growing difference in their economic growth rates. In 1980, the World Bank’s Independent Commission on International Development Issues, led by former West German Chancellor Willy Brandt, established a visual diagram between strong and poor economies now called the “Brand Line”.

These differences have their roots in the processes of modern industrial capitalism, which began in England in the second half of the 18th century. Prior to that time, most nations shared a slow degree of economic growth, which manifested itself in a lack of adequate living standards.

But then the industrial revolution began. And certain regions of the world began to develop themselves at a faster pace than others, which were economically backward. This economic boom was the result of a large-scale business base in the manufacturing sector. Socio-economically, the future of a man born before this period was determined by the cradle in which he rested in childhood: it was the legacy of his ancestors. If he is born poor, he is likely to remain poor, and if he is born into nobility, the title and associated properties remain with him and pass to his descendants.

A question to ponder is: Why did this extraordinary event happen in England, and not in a more developed country like France, which had a high level of culture and economic prosperity at the time?

One factor that can be considered is religion. Protestantism played a favorable role in the realization of wealth and trade, while in Catholic countries the desire to acquire money tended to be suppressed. As evidence, in places like France, a businessman was not as well regarded as a bourgeois professional, such as a lawyer or physician.

The presence of a powerful class of merchants (who acquired knowledge of these skills due to their experience in foreign trade) was a powerful factor in the development of the capitalist system in England. In addition, the appearance of new trading partners in the new American colonies and the abdication of the Catholic King James II in favor of his daughter Mary II during the Glorious Revolution of 1688 changed society’s general attitude towards the use of capital. and the growth of competitive markets.

The British Agricultural Revolution, which began in the 18th century and changed increasingly used agricultural techniques (such as crop rotation, fallow land, and new methods for improving animal breeds), also provided connections with the discovery of important new techniques that formed the basis of this nascent capitalism.

Politically, due to special laws issued by the Parliament of Great Britain, a new class of landowners emerged when they were given possession of land, which they used to grow crops. These lands were extensively cultivated with the help of new agricultural methods and were also leased to tenant farmers. This brought about two particular results: First, it led to food surpluses. Second, large numbers of peasants lost their ability to support themselves in the traditional use of their land and therefore had to find outlets for their labor in places that could be far removed from their local environment.

Another event worth noting is the introduction of the factory system during this period. As merchant-capitalists equipped them and recruited skilled workers, this increased division of labor prompted a process of permanent technological change that has profound consequences to this day.

Factory production created a strong incentive to design and build better machines, which led to greater savings in labor and the ability to produce a larger volume of goods. This in turn allows for new merchandise, new processes and new specialization.

The introduction of this factory-based production allowed capitalists to make new fortunes while producing cheap goods. It was the entrance to a new stage of production, where an individual enterprise increased its operations by accumulating capital, while still employing more workers, and where profits were redirected into the business to increase its growth rate.


Edgar Pereira works at Elite Digital Marketing and is a Writing Fellow with the Fellowship for Freedom in India.

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