1. Development of Capitalism during
the Industrial Revolution
Mili Brasco
Emi Molmenti
Fede Tear
Joaco Diaz walker
Paka Muller
2. The Industrial Revolution refers to the greatly increased
output of machine made goods.
It began in England in the 1700’s because of several
factors:
• Large deposits of coal: main source of energy used
• Shortage of wood: originated the search for alternative sources of fuel
• Commercial-minded aristocracy: which were willing to invest on the
country’s industry
• The system of free enterprise; limited government involvement and the
government support for commercial projects: facilitated the projects to be
developed
• Cheap cotton produced by slaves in North America: made the massive
production of cotton possible
• The high literacy rates; The rule of law; protection of assets and the
valuable immigrants.
Industrial Revolution
1700-1900
3. Apart from the steam engine and the factories that were the
iconic innovations of the industrial revolution as we have
seen, there were others such as:
Flying Shuttle: It allowed a single weaver to weave much
wider fabrics, and it could be mechanized, allowing for
automatic machine looms. This was made by just adding
wheels or rollers to the shuttle. This sped up textile
production.
https://www.youtube.com/watch?v=7O98vJ8VEF4
Spinning Jenny: Invented by James Hargreaves - the
first hand-powered multiple spinning machine to
improve upon the spinning wheel. It supplied the demand
of yarn by increasing the spinners' productivity even more.
The machine produced coarse thread.
https://www.youtube.com/watch?v=ex1Atx1tQPk
Innovation created during
Industrial Revolution
4. Innovation created during
Industrial Revolution
• Cotton Mills: factories where
cotton was spun into thread. In
woollen mills, wool was spun in a
similar way. Weaving machines
turned the thread into textiles, such
as cloth and carpets.
• Cotton and wool industries employed
thousands of workers, mostly in the
north of England.
5. • Mill workers lived in small houses close to the factories
The city of Manchester, with so
many mills and factories, the air
was polluted by smoke and dirt.
Plan of mill workers house built by the Strutts,
Belper
Fun Fact
Factory managers usually
stopped workers from
whistling or singing while
they worked - not that they
often felt like whistling or
singing.
6. Adam Smith and His Invisible
Hand of Capitalism
• Considered the founder of modern economics
• Believed in free economy, or free markets
• Economic liberty guaranteed economic progress
• Three Natural Laws of Economics:
– Law of Self Interest: People work for their own good
– Law of Supply and Demand: Enough goods will be
produced at the lowest possible price to meet demand
in a market economy
– Law of Competition: Competition forces people to
make a better product
7. Further Ideas – Adam Smith
• He called the mechanism by which this self-
regulation occurs “the invisible hand,” in his
groundbreaking book, The Wealth of Nations.
• While Smith couldn't prove the existence of
this “hand” (it was, after all, invisible) he
presented many instances of its working in
society.
"It is not from the benevolence of the
butcher, the brewer, or the baker that we
expect our dinner, but from their regard to
their own interest."
8. His ideas portrayed on Society:
• Essentially, the butcher, the baker, and the
candlestick maker individually go about their
business. Each produces the amount of meat,
bread, and candlesticks he judges to be
correct. Each buys the amount of meat, bread,
and candlesticks that his household needs.
And all of this happens without their consulting
one another or without all the king's men telling
them how much to produce. In other words, it's
the free market economy in action.
9. In making this discovery, Smith founded what is
known as classical economics. The key doctrine
of classical economics is that a laissez-
faire attitude by government toward the
marketplace will allow the “invisible hand” to
guide everyone in their economic endeavors,
create the greatest good for the greatest number
of people, and generate economic growth. Smith
also delved into the dynamics of the labor
market, wealth accumulation, and productivity
growth. His work gave generations of economists
plenty to think about and expand upon.
10. Thomas Malthus and
David Ricardo
• Smiths ideas influenced Malthus and Ricardo.
• They believed that natural laws governed
economic life.
• Opposed government efforts to help poor
workers
• Their ideas formed the foundation of laissez-faire
capitalism:
– http://www.importanceofphilosophy.
com/Politics_LaissezFaire.html
11. David Ricardo
-His theory suggested that if a country is more productive
in one product over another, it makes more sense to put
their resources into the more productive product. This
country will then export this product in return for a
product that they need but is more beneficial to out
source.
•-Ricardo's contribution to Society introduced the theory
of free trade, and giving and receiving internationally.
This theory is highly valid in today's economy and public
relations to production planning by finding more cost
effective ways of producing and transporting goods
between countries such as China and other
manufacturing countries for input and output.
12. Thomas Malthus
• -His theory stated that increases in population
would eventually diminish the ability of the world to
feed itself and based the conclusion on the thesis
that populations expand in such a way as to
overtake the development of sufficient land for
crops
• -Thomas Malthus’ contribution to society is
basically the population growth vs food supply. He
analyzed that if society was to grow then they
would be unable to feed themselves, there would
not be enough food supply. In having this view
Malthus created an awareness throughout society.
13. Capitalism
• Economic system in which the factors of production are privately owned
and money is invested in business ventures to make a profit
• Replaced feudal empires (i.e. Holy Roman Empire) and monarchies
• Created markets where buyers and sellers of goods and services agreed
on prices
• Created market types:
– Competition: A competitive market is one in which a large numbers of
producers compete with each other to satisfy the wants and needs of
a large number of consumers. In a competitive market no single
producer, or group of producers, and no single consumer, or group
of consumers, can dictate how the market operates.
– Monopoly: Only one company exerts control over most of a market.
– Oligopoly: A situation in which a particular market is controlled by a
small group of firms. There are at least two firms controlling the
market.
• Long distance trade increased dramatically due to innovation in
transportation
14. Capitalism continued
• Individuals and businesses own property and the
means of production.
• Progress results when individuals follow their
own self interest.
• Businesses follow their own self interest by
competing for the consumer’s money. Each
business tried to produce goods or services that
are better and less expensive than those of
competitors.
• Government should not interfere in the economy
because competition creates efficiency in
business.
15. How did capitalism bring about
the Industrial Revolution?
• The connection is that it:
– Led to investing in factories
– Led to increased production and higher
demands for raw materials
– Led to world wide trade
– Led to new inventions and new innovations
– Led to changes in transportation, agriculture,
and communication
16. Summary of Institutional Capitalism
• English Parliament was firmly under the control of the
capitalist classes.
• Increase in agricultural production and turned the established
rules of land ownership on their head.
• Lands previously held in common by tenant farmers changed
into large private farms, worked by a smaller labour force.
This increased the agricultural production and caused the
displaced peasants to head for the cities. Subsequently, there
was an abundant labour supply to mine coal and iron, and
man the factories.
• The revolution moved economic power away from the
aristocratic classes and into the hands of the new middle
class, the bourgeoisie.
