Health And Wealth Of Nations Essay 2

Topics: Industrial Revolution, Socialism, Communism Pages: 6 (1822 words) Published: March 14, 2015
“What were the main causes and consequences of the Industrial Revolution?”

Living in a time where economies and business belongs to the most important things in the world, you could ask yourself where it all began. The origin is the Industrial Revolution which brought major changes to the economy but also to the society. This essay will argue that the Industrial Revolution shaped the world as it is today. Throughout the course of this essay, we will look at what started the Industrial Revolution and how it has moulded the way our society works today. The causes will mainly be explained by the use of “The First Industrial Revolution”, written by Phyllis Deane. In the beginning of the book Deane stated several necessary changes to achieve an Industrial Revolution. These changes will be clarified and supported by different sources. Modern science, it widespread and application, as well as empirical knowledge about the process of production for the market is necessary1.This aspect is highly important. In order to grasp a comprehension of the Industrial Revolution, this point is compulsory. Without modern science, there will not be an incentive to use or invest in capital, simply because the capital cannot improve the productivity. It will only be invested in capital if the price for labour is really high but this change will not affect the output of companies as much as newly developed technology could do. The empirical knowledge of production is also highly significant. By gathering and applying empirical knowledge you can easily maximize your production output. It can start very simply by calculating the marginal cost/revenue. Later on, it will get more difficult as you start to work out the total cost. However, towards the end, you will know how many workers you have to employ to get the biggest output for the lowest cost. In order to create a larger dimension for your business venture, it is important to broaden your economic horizons. Prior to the Industrial Revolution families and mainly families working in the agrarian culture produced only for their own household or for local consumption2. The local purchasing power can be very low and the market had no expansion possibilities. Therefore, it is significant to specialize in national and international markets. This will bypass the problem of a small local demand as the demand of national and international markets are higher3. Specialization is also an important factor but it depends on the market, as mentioned by Adam Smith in the 1770’s. Without specialization you cannot obtain economics of scale, which is an effect that describes the cost advantages of companies due to their size and output. This effect can lower cost and make a product available to the population4. As will be explained later, International trade can also give access to raw materials like cotton5. The movement of the population from rural to urban communities is one of the most common features of the Industrial Revolution6. In the sixteenth century many English landlords enclosed their property, which was mainly farmland, thus clearing it from peasants7. The peasants then chose to move to the cities to look for employment. Therefore, the peasants supplied the factories with workers, this of course being extremely important for the initial stages of the Industrial Revolution. The bigger cities also created a huge prospect for specialization. Due to the concentration of the industry in one location, bigger investments paid off. This was especially evident in transport such as trains or larger harbours8 Another important factor is the enlargement and depersonalization of the typical production so that it will be based less on the family or the tribe and more on the corporate or public enterprise9. The enlargement of the unit of production is necessary to extend the market but the concept of depersonalization of working is slightly different. Depersonalization means the process of moving from...

Bibliography: Phyllis Deane, The First Industrial Revolution (Cambridge, 1969)
Tom Kemp, Industrialization in Nineteenth Century Europe, (New York, 1985)
Tom Kemp, Historical Patterns of Industrialization, (New York, 1993)
Robert Allen, The British Industrial Revolution in Global Perspective, (Cambridge, 2009)
Colin White, Understanding Economic Development, (Cheltenham, 2009)
Oded Galor ‘ From Stagnation to Growth: Unified Growth Theory’ in Philippe Aghion and Steven N. Durlauf (Eds), Handbook of Economic Growth, (Amsterdam, 2005) (accessed on 02.12.2014)
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