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The rise of industrial capitalism and the myth
1. The Rise of Industrial Capitalism and
the Myth of the “Free Market”
2. Economic Change, U.S., 1870-1920
1870 1900 1920
Farms (millions) 2.7 5.7 6.4
Land in Farms
(million acres) 408 841 956
Employment in
Manufacturing
(millions) 2.5 5.9 11.2
% in Agricultural
Workforce 52 27
% in Industrial
Workforce 29 44
Railroad Track
(miles) 53 258 407
GNP (billions $) 7.4 18.7 91.5
Life expectancy 42 47 54
3. Industrialization
• Process by which goods are made (most often
in factories)
• Often = a segmentation of tasks and labor
• By 1900 2/3 of American workers = wage
workers
– Owning farm/artisan shop = economic
independence
– Working for wages = economic dependence
4. Capitalism
• An economic system that encourages private
enterprise
– Countries do not have to be capitalist to be
industrialized
– In the U.S. industrialization and capitalism
developed together
5. The “Free Market”
• Idea that companies and individuals do (or
should) compete free from government
influence
• A MYTH in the U.S. because GOVERNMENT
HAS ALWAYS BEEN AN INFLUENCE!!!!!!!!
– Business owners = greatest proponents of
government interference in the market, especially
for tax breaks
– They welcome the interference even if they don’t
“believe” in it.
6. Where does the Myth begin?
• Roots in 19th
century America as it became
industrialized
– Large, growing industrial labor force
– New technologies and industries
• 1890-1910: typewriter, hand-held cameras,
telephones, electricity, steel industry, oil industry, air
travel, automobiles—all brought radical changes to
people’s lives
7.
8.
9. Taylorism
– New ways of Producing goods:
• Taylorism: a new system of organization and
segmentation of labor
– Deskilled the workforce, made skilled workers obsolete
– Made hiring easier
– Made labor strikes difficult
10. Expansion of Railroads
• East to West to connect to the transcontinental
railroad
– Created jobs
– Shipped large volume of goods
– connected new areas of commercial farming and
industrializing cities to a national market
• DEPENDENT ON FEDERAL AND STATE SUBSIDIES
» Funding
» Tax breaks and high tariffs
» Land grants
» Indian removal via federal and state military
12. Corporate Consolidation
• Required to build large industries with
multiple investors
• 1830s-1840s: Laws of Incorporation passed
– Allowed the selling of stocks to build businesses
– Allowed for “Limited Liability”
• Guarded stock owners from paying for business losses
• The Government provided these laws to
encourage investment and the growth of
companies. The number of corporations
increased dramatically.
13. Corporate Consolidation
• Business owners depended on consolidation
to compete in a volatile market
– Horizontal integration: buy like businesses
– Vertical integration: buy up all things that
business depended on to make a product
– Each of these methods were employed to
eliminate competition! Created monopolies
14. Justifications for Corporate
Consolidation
• “American Dream”
• “Survival of the Fittest”
• Individual wealth would be used on behalf of
the community
• Many people criticized monopolies as immoral
15. Conclusion
• The US did not become an industrialized
nation because of the “free market.” The
government was very involved.
– Subsidized railroads
– Passed limited liability laws
– Crushed labor strikes
– Enacted high tariffs
– Used army to remove Indians from western lands
