Demographic Shifts, Economic Cycles, and Industrial Evolution

Posted on Mar 2, 2025 in Economy

Demographic Shifts and Agriculture

Declining birth rates and slowing population growth.
Increased migration towards urban centers, creating a rural exodus.
Intercontinental migrations did not hinder this slowing population growth.
Agriculture suffered a crisis caused by the transportation revolution.
Food arrived in Europe at low prices, creating competition for local agriculture.
New, more modern agriculture emerged in Europe, contrasting with more traditional, less technologically advanced methods.
Capitalism transformed European countries, leading to the adoption of protectionist policies.

The capitalist economy is characterized by different stages of an economic cycle.
There are phases of prosperity, followed by crises, and ending with a recovery period.
Two types of fluctuations exist: short-term (approximately every 10 years) and long-term (approximately every 50 years).
Cycles:
- First cycle: Based on cotton and steam iron.
- Second cycle: Based on rail, steel, and electricity.
- Third cycle: Based on the combustion engine, oil, and chemical industries.
Causes of long-term cycles are related to technological innovations and precious metals; short-term fluctuations relate to production, trade, investment, and employment.
Three types of crises:
- Agricultural crises: Transmitted through industrial price rises; abundant food was followed by good harvests and lower prices to overcome crises.
- Intermediate crises: Crises of agricultural origin that spread to other economic activities.
- Industrial crises: Crises of overproduction, often tied to a financial crisis.

Two forms of industrial concentration exist:
Vertical: Companies gathered in a single set of processing activities.
Horizontal: Multiple firms manufactured the same product.
Concentration types:
- Cartels: Companies agreed not to compete with each other.
- Trusts: Several companies placed under a single board of administration.
- Holdings: A financial entity overseeing several companies.

At the end of the 19th century, steam was still the main energy source, but it presented obstacles to industrial expansion.
The emergence of the electric motor and the internal combustion engine resolved these difficulties.
Scientific and technical research focused on new areas, including atoms and viruses.
Three rapidly developing areas:
- Electricity: Power was the only easily transportable form of energy capable of multiple uses. Its main advantage was its ability to be used over long distances.
- Oil and the Automobile Industry: Around 1900, the car industry was a craft industry. In 1906, a vehicle cost six times the monthly salary of a worker. Mass production led to a spectacular drop in prices and increased sales. The paradigmatic case was Ford during the 1920s, which produced half of the world’s cars. The new industry became the engine of industrial growth, as entire sectors were involved in the expansion of the automobile.
- Chemical Industry: Experienced strong growth with a wide range of applications, such as explosives.

The objective was to maximize work performance by avoiding any unnecessary disruption.
Taylorism:
- Chronometric control of the work process.
- Elimination of useless gestures.
- Ensuring everyone performs useful tasks.
Ford fully applied these new theories.
Fordism:
- Extreme standardization of production.
- Production organized in a logical sequence and segmented to the maximum.
- Tools were brought to the worker.
- Goal: Allow for extraordinary earnings and cost reduction.
To achieve this increase in productivity, a more accelerated pace was required.
Taylorism had favorable effects, such as a reduction in labor costs and lower wages.
Babbage: Proposed another method whereby the segmentation of the production process allows each party to implement the necessary amount of specialized work.