Industrialization: Enterprises, States, and Welfare State Origins
Industrialization: Enterprises and States
Industrialization changed the world:
- Prosperous capitalism in EU and USA
- Poverty in the global south
- Subsistence in Asia and Africa
1850-1929: No restrictions on the mobility of people (passports were not needed).
Second Industrial Revolution (SIR)
The SIR was characterized by:
- The new mass production techniques, systematic application of science to the industry, the rise of chemical, steel, railroad, and other new capital-intensive lead industries.
- This was a time of big concentrations of capital, and it had as a consequence the creation and consolidation of national markets. Social classes took control of these classes (los ricos se quedan con los oligopolios y todos los sectores interesantes).
- Between the classical system, where no producer influenced or controlled his price, and the monopoly, where a single seller could set his price to maximize return, there was an array of intermediate possibilities. The most important was oligopoly. The American automobile industry with three major performers, and the petroleum, steel, chemical, rubber tire, machine tool, and farm equipment industries with a few giants in each, were cases in point.
The intelligent oligopolistic would, in setting his price, give thoughtful consideration to what would be most advantageous for all, so would the others in his industry. (como no ponen buenos precios, hacen el Sherman Act para regular)
The Sherman Act of 1890 was the emblematic instrument of the antitrust policy, intending to limit the dominance of trusts, cartels, and monopolies.
The US and Germany in the 1920s devised organization and management innovations to catch up with Britain.
Germany: Integration of science and industry in the chemical sector, developing innovation systems.
US: We find Taylor and Fordism. The assembly line and mass production techniques.
Industrial Policy
US was the real pioneer in industrial policy. They put forward protectionism and the developmental state. The US didn’t begin advocating free trade until 1934.
Germany also applied protectionism and the developmental state following the ideas of Friedrich List.
Spain too applied protectionism through the 1891 Tariff.
Note: Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations, making such goods more expensive so that they are not profitable. Defenders claim that protectionist policies protect producers, businesses, and workers in the sector that competes with imports in the country from foreign competitors.
The Creation of the Welfare State
Reasons:
- The communal support structures and extended family networks characteristic of traditional agrarian society progressively ended. Children could not earn an independent living, and the capacity of their parents to combine childrearing with work was impossible.
- They needed pensions and elderly care. In addition, problems emerged in industrial capitalism: industrial accidents, urban sanitary problems, and indeed unemployment (paro).
Origin: Bismarck reforms in Germany in the 1880s, which were followed by similar reforms in other European nation-states.