Structural mechanisms of the industrial revolution
Based on a lecture by Michel Oris[1][2]
Agrarian Structures and Rural Society: Analysis of the Preindustrial European Peasantry ● The demographic regime of the Ancien Régime: homeostasis ● Evolution of Socioeconomic Structures in the Eighteenth Century: From the Ancien Régime to Modernity ● Origins and causes of the English industrial revolution ● Structural mechanisms of the industrial revolution ● The spread of the Industrial Revolution in continental Europe ● The Industrial Revolution beyond Europe: the United States and Japan ● The social costs of the Industrial Revolution ● Historical Analysis of the Cyclical Phases of the First Globalisation ● Dynamics of National Markets and the Globalisation of Product Trade ● The Formation of Global Migration Systems ● Dynamics and Impacts of the Globalisation of Money Markets : The Central Role of Great Britain and France ● The Transformation of Social Structures and Relations during the Industrial Revolution ● The Origins of the Third World and the Impact of Colonisation ● Failures and Obstacles in the Third World ● Changing Methods of Work: Evolving Production Relationships from the End of the Nineteenth to the Middle of the Twentieth Century ● The Golden Age of the Western Economy: The Thirty Glorious Years (1945-1973) ● The Changing World Economy: 1973-2007 ● The Challenges of the Welfare State ● Around colonisation: fears and hopes for development ● Time of Ruptures: Challenges and Opportunities in the International Economy ● Globalisation and modes of development in the "third world"
This course aims to provide a detailed and structured analysis of the structural mechanisms that enabled the rise of the Industrial Revolution, beginning in the late eighteenth century. We will look at the early development of industry with a focus on how modest technological advances and accessible initial investment laid the foundations for the transformation of society. We will begin with an in-depth examination of small manufacturing firms in England, highlighting how they benefited from a low cost of entry, facilitating the emergence of a new class of entrepreneurs. We will examine the variable but often high profit rates of these early firms and their role in promoting continuous reinvestment and innovation. We will then explore the evolution of transport infrastructure and its impact on firm size and scope, ranging from protective isolation from local markets to increased competition brought about by lower transport costs. Particular attention will be paid to the social consequences of industrialisation, including precarious working conditions, the use of women's and children's labour, and the social mobility resulting from industrialisation. An examination of patterns of industrial development and their spread across Europe will complete our analysis, enabling us to understand the influence of the Industrial Revolution on the global economy. In summary, the aim of this course is to examine the many facets of the Industrial Revolution in a descriptive and methodical way, highlighting the economic, technological, social and human dynamics that marked this fundamental period.
Low investment costs[modifier | modifier le wikicode]
The start of the First Industrial Revolution, which took place in the second half of the 18th century, began with a relatively limited level of technology and low capital intensity compared with what it later became. Initially, the companies were often small, and the technologies, although innovative for the time, did not require such massive investments as those needed for the factories of the late Victorian era. The textile industries, for example, were among the first to become mechanised, but early machines such as the spinning jenny or the power loom could be operated in small workshops or even in homes (as was done in the "putting-out" or "domestic system"). James Watt's steam engine, although a significant advance, was initially adopted on a relatively modest scale before becoming the driving force behind large factories and transport. This was partly because production systems were still in transition. Manufacturing was often still a small-scale activity, and although the use of machines enabled an increase in production, it did not initially require the huge facilities that we associate with the later industrial revolution. Moreover, the first phase of the Industrial Revolution was characterised by incremental innovations, which allowed for gradual increases in productivity without requiring huge capital outlays. Companies could often self-finance their growth or rely on family or local financing networks, without the need to resort to developed financial markets or large-scale borrowing. However, as the revolution progressed, the complexity and cost of machinery increased, as did the size of industrial plants. This led to an intensification of the need for capital, the development of dedicated financial institutions, and the emergence of practices such as raising capital via shares or bonds to finance larger industrial projects.
Self-financing capacity at the end of the 18th century reflected the unique economic conditions of the time. The relatively low cost of initial investment in the first factories enabled individuals from the artisan or petty bourgeois classes to become industrial entrepreneurs. These entrepreneurs were often able to raise the necessary capital without recourse to large loans or significant outside investment. The low cost of technology at the time, which relied mainly on wood and simple metal, made initial investments relatively affordable. What's more, the skills needed to build and operate the first machines were often derived from traditional crafts. As a result, although specialised labour was needed, it did not require the level of training that later technologies did. This meant that labour costs remained relatively low, especially when compared with the wage and skill levels required to operate the advanced industrial technologies of the mid-20th century. This was in stark contrast to the situation in Third World countries in the mid-20th century, where the introduction of industrial technologies required a much higher level of capital and skills, beyond the reach of most local workers and even local entrepreneurs without external assistance. The investment required to start up an industrial activity in these developing countries was often so large that it could only be covered by state funding, international loans or foreign direct investment. The initial success of entrepreneurs during the British Industrial Revolution was therefore facilitated by this combination of low cost of entry and adapted craft skills, which created an environment conducive to innovation and industrial growth. This led to the formation of a new social class of industrialists, who played a leading role in driving forward industrialisation.
In the early stages of the Industrial Revolution, plant requirements were relatively modest. Existing buildings, such as barns or sheds, could be easily converted into production spaces without requiring heavy investment in construction or fitting out. This contrasted with later industrial facilities, which were often vast factories specially designed to accommodate complex production lines and large teams of workers. As for circulating capital, i.e. the funds needed to cover current expenses such as raw materials, wages and operating costs, it was often higher than the investment in fixed capital (machinery and plant). Companies could use bank loans to finance these operating costs. Banks at the time were generally prepared to grant credit on the basis of title to raw materials, semi-finished or finished products, which could be used as collateral. The credit system was already quite developed in England at this time, with established financial institutions able to provide the working capital needed by industrial entrepreneurs. In addition, payment terms in the supply chain - for example, buying raw materials on credit and paying suppliers after selling the finished product - also helped to finance working capital. It is important to note that access to credit played a crucial role in the development of the industry. It allowed companies to rapidly expand production and take advantage of market opportunities without having to accumulate large amounts of upstream capital. This facilitated the rapid and sustained economic growth that became characteristic of the industrial period.
The reinvestment of the profits generated by the Industrial Revolution was one of the driving forces behind its spread beyond British borders. These profits, which were often substantial due to the improved efficiency and productivity brought about by new technologies and the expansion of markets, were allocated to a variety of purposes. On the one hand, manufacturers injected part of these sums into technological innovation, acquiring new machines and perfecting production processes. This led to a virtuous spiral of continuous improvement, with each advance generating more profits to reinvest. At the same time, the search for new markets and cheaper sources of raw materials encouraged British companies to expand internationally. This expansionism often took the form of investment in the colonies or other regions, where they established industries or financed industrial projects, thus transplanting British practices and capital. Infrastructure, essential to industrialisation, also benefited from these profits. Rail networks, canals and ports were developed or improved, not only in the UK but also abroad, making trade and industrial production more efficient. In addition to these direct investments, British colonial influence served as a vehicle for the spread of technology and industrial methods. This created a favourable ecosystem for the expansion of industrialisation in the colonies, which in turn provided the essential raw materials to supply British factories. In the area of international trade, surplus capital enabled UK companies to increase their global footprint, exporting manufactured goods in large quantities while importing the resources needed to produce them. Finally, the mobility of engineers, entrepreneurs and skilled workers, often financed by industrial profits, facilitated the exchange of skills and know-how between nations. These technology transfers have played a key role in the generalisation of industrial practices across the world. All these factors combined to make the Industrial Revolution a global phenomenon, transforming not only national economies but also international relations and the global economic structure.
High profits[modifier | modifier le wikicode]
The high profit rates recorded during the First Industrial Revolution, often between 20% and 30% depending on the sector, were decisive for capital accumulation and economic growth at the time. These high profit margins provided companies with the means to reinvest and sustain industrial expansion, enabling sustained growth and the development of increasingly sophisticated industrial infrastructures. When we compare these profit rates with those of the 1950s, which fell to around 10%, and even lower in the 1970s, to around 5%, it is clear that the early industrial entrepreneurs had a considerable advantage. This advantage enabled them to reinvest significant sums in their businesses, explore new industrial opportunities and constantly innovate. This spirit of capital accumulation and reinvestment was a key driver of industrialisation. It was made possible not only by the economic benefits, but also by a certain ethos that prevailed in England during this period. The idea that money should be used productively, to stimulate employment and wealth creation, was a guiding principle that shaped British society. The relatively modest initial capital, which could be raised by individuals or small groups of investors, enabled a first wave of industrial activity. However, it was the profits from these early ventures that fuelled more substantial investment and led to a rapid expansion of industrial capacity and economic development as a whole. This virtuous circle of investment and innovation accelerated the process of industrialisation, leading to technological advances, increased production and, ultimately, a profound transformation of society and the economy.
Company size[modifier | modifier le wikicode]
The absence of an optimum or minimum size[modifier | modifier le wikicode]
Comparing entrepreneurial dynamics between the period of the Industrial Revolution and the present day highlights the changing economies and contexts in which businesses operate. During the Industrial Revolution, the low cost of entry into the industrial sector enabled many small businesses to emerge. The low cost of the technologies of the time, which were mainly mechanical and often powered by water or steam, combined with an abundance of cheap labour, created an environment where even businesses with little capital could start up and prosper. Growing demand, driven by urbanisation and population growth, as well as the absence of strict regulations, also favoured the emergence and growth of these small businesses. On the other hand, in today's world, the size of a company can be a determining factor in its resilience to crises. High fixed costs, advanced technologies, strict regulatory standards and intense international competition require substantial investment and a capacity to adapt that small businesses may find difficult to deploy. Labour, which has become more expensive as a result of rising living standards and social regulations, also represents a much more significant cost for today's businesses. As a result, the current trend is towards business concentration, where larger companies can benefit from economies of scale, easier access to finance and an ability to influence the market and withstand periods of economic downturn. However, it is important to note that today's entrepreneurial ecosystem is also very dynamic, with technology start-ups and innovative companies that, despite their sometimes modest size, can disrupt entire markets thanks to radical innovations and the agility of their structure.
The Krupp example[modifier | modifier le wikicode]
The case of Krupp is a perfect illustration of the transition that has taken place in the industrial landscape since the Industrial Revolution. Founded in 1811, Krupp began as a small company and grew to become an international industrial conglomerate, symbolising the growth potential that characterised this era of economic transformation. At the start of the Industrial Revolution, the flexibility of small businesses was an advantage in a rapidly changing market, where technical innovations could be quickly adopted and implemented. In addition, the often lax regulatory framework allowed small entities to thrive without the administrative and financial burdens that can accompany large companies in modern economies. However, as the industrial age progressed, factors such as the development of transport systems (rail, sea, road) and the globalisation of trade began to favour companies capable of producing on a large scale and distributing their products more widely. These companies, such as Krupp, were able to invest in heavy infrastructure, adopt cutting-edge technologies, extend their grip on supply chains and access international markets, giving them a competitive advantage over smaller companies. Krupp's rise reflects this dynamic. The company was able to move with the times, evolving from an iron foundry to a multinational steel and armaments producer, capitalising on wars, the growing demand for steel for construction and general industrialisation, as well as technological innovations. Against this backdrop, small businesses faced major challenges. Without access to the same level of resources, they have found it difficult to compete in terms of price, efficiency and market reach. Many have been absorbed by larger entities or have had to specialise in niches to survive. The ability to withstand crises became an attribute associated with size, and large companies like Krupp were better equipped to deal with economic volatility, wars, financial crises and political change. Their size enabled them to absorb shocks, diversify risks and plan for the long term, a capacity less accessible to smaller companies. Krupp's trajectory is therefore part of the broader logic of industrial and economic development, where corporate structures have had to adapt to the new realities of a rapidly changing world.
Transport costs[modifier | modifier le wikicode]
High costs: an advantage in the early stages of industrialisation[modifier | modifier le wikicode]
Before the spread of steamboats and the development of railways, the high cost of transport had a significant impact on industrial and commercial structure. Factories tended to produce for local markets, as it was often too expensive to transport goods over long distances. This period saw the proliferation of small, scattered factories, which met the immediate needs of the local population, with each region often developing its own specialities based on the resources and skills available. Industrial production took place close to sources of raw materials such as coal and iron ore to minimise transport costs. This constraint also stimulated significant investment in transport infrastructure, such as canals and railways, and encouraged the improvement of existing roads. When railways became commonplace and steamboats became widespread, the dynamic changed radically. Transport became cheaper and faster, allowing larger, centralised factories to mass-produce and sell their products in wider markets, benefiting from economies of scale. This began to squeeze out small local factories that couldn't compete with the large-scale production and widespread distribution of the big companies, profoundly transforming the industrial economy.
High transport costs at the start of the Industrial Revolution effectively created a form of natural protectionism, shielding local infant industries from competition from larger, more established firms. These transport costs acted as unofficial barriers, isolating markets and allowing companies to concentrate on supplying demand in their immediate vicinity. In those days, competition was essentially local; a company only needed to compete within a limited area, where prohibitive transport costs acted as a barrier to distant competition. In its early stages, the Industrial Revolution was strongly marked by its local and regional character. In England, for example, it was the Lancashire region around Manchester that was the cradle of many industrial innovations and developments. Similarly, in France, the Nord and Alsace regions became key industrial centres, as did Catalonia in Spain and New England in the United States. These regions benefited from their own favourable conditions for industrialisation, such as access to raw materials, craft skills and capital. On an international scale, these same transport costs played a crucial role in protecting continental European industries from British industrial supremacy. England, a pioneer of industrialisation with a significant technical lead, could not easily flood the rest of Europe with its products because of these high transport costs. This offered a respite to industries on the continent, allowing them to develop and advance technologically without being swamped by British competition. In this context, high transport costs had a paradoxical impact: they restricted trade and the spread of innovation, but at the same time they encouraged industrial diversification and the development of local capabilities. This is what enabled many regions of Europe and North America to lay the foundations for their own industrial development before the era of globalised trade and large-scale distribution.
The development of transport infrastructure, particularly railways, in the second half of the 19th century considerably reduced travel costs and times. The train, in particular, revolutionised the transport of goods and people, making it possible to trade over longer distances and at much lower cost than traditional methods such as transport by cart, horse or waterway. This reduction in transport costs had a major impact on industrial organisation. Smaller industries, which had thrived in a context of high transport costs and were therefore protected from outside competition, began to feel the pressure of larger, technologically advanced companies capable of mass production. These large companies could now extend their commercial reach, distributing their products to much wider markets. With the railway, large companies could not only reach distant markets, but also benefit from economies of scale by centralising their production in larger factories, which reduced their unit costs. This meant that they could offer their products at prices that small local industries, with their higher cost structures, could not compete with. It was against this backdrop that many small businesses were forced to close or transform, while previously isolated industrial regions were integrated into a national and even international economy. The industrial landscape was reshaped, favouring areas with privileged access to new transport infrastructures, and laying the foundations for the globalisation of markets that we know today.
Social conditions relating to employment[modifier | modifier le wikicode]
The Industrial Revolution brought about profound changes in social structure, notably through the movement of people from the countryside to the cities. This massive movement was largely due to enclosures in England, for example, which pushed many peasants off their traditional land, as well as to agricultural transformations that reduced the need for labour. Landless peasants and those who had lost their livelihood as a result of the introduction of new farming methods or mechanisation found themselves looking for work in the cities, where the emerging industrial factories needed labour. This migration was not motivated by the lure of social betterment, but by necessity. Jobs in industry often offered low wages and difficult working conditions. The absence of social legislation at the time meant that workers had very little protection: they worked long hours in dangerous and unhealthy conditions, with no job security, no insurance against accidents at work, and no right to retirement. Historians often speak of "negative social fluidity" during this period to describe the phenomenon where individuals, far from climbing the social ladder, were instead drawn into a precarious and often exploitative working environment. Despite this, for many, factory work represented the only opportunity to earn a living, even if it meant enduring difficult conditions. It was only gradually, often as a result of crises, trade union struggles and political pressure, that governments began to introduce laws to protect workers. The first laws on child labour, working conditions, working hours and safety laid the foundations for the social protection systems we know today. But these changes took time and many suffered before these protections were introduced.
Working conditions during the Industrial Revolution reflected the market dynamics of the time, when an oversupply of labour allowed employers to charge very low wages. Women and children were often employed because they constituted an even cheaper workforce than adult men and because they were generally less inclined to unionise and demand better working conditions. These groups were often paid a fraction of what adult men were paid, which further increased the companies' profit margins. In this context, the wages paid to the workers were often no more than the subsistence minimum, calculated according to what was strictly necessary for the survival of the worker and his family. This approach, sometimes described as a "subsistence wage", left little room for personal savings or improved living standards. A direct consequence of the lack of regulation and social protection was a system where lower wages could be used as a lever to increase profit margins. The entrepreneurs of the Industrial Revolution, often praised for their ingenuity and entrepreneurial spirit, also benefited from a system where production costs could be squeezed to the detriment of workers' welfare. The fact that profits did not have to be shared meant that factory owners could reinvest more of their profits in expanding their businesses, buying new machinery and improving production processes. This undoubtedly contributed to the acceleration of industrialisation and overall economic growth, but this growth came at a high social cost. It took decades of workers' struggles, social activism and legislative reforms to begin to create a more balanced and fair working environment, where workers enjoyed protections and a fairer share of the fruits of economic growth.
Industrialisation, especially in its early stages, benefited significantly from the participation of women and children in the workforce, often under conditions that would be considered unacceptable today. The textile industry, for example, massively recruited women and children, partly because the newly invented machines required less physical strength than previous manual production methods. Dexterity and precision became more important than brute strength, and these qualities were often associated with female workers. What's more, employers could pay women and children less than men, thereby increasing their profits. In the context of the time, child labour was unregulated at the start of the Industrial Revolution. Children were often employed for dangerous tasks or in confined spaces where adults could not easily work. Their wages were derisory compared to those of adult men, often up to ten times less. This reinforced the advantageous position of employers: the abundance of available labour drove down wages overall and increased competition for jobs, contributing to the precariousness of workers' situation. Women were paid around a third of what men were paid for the same work, a disparity that reflected the social norms of the time, when women's work was often considered less valuable. This exploitation of female and child labour is now seen as one of the darkest periods in Western history, and led to the emergence of the first laws on child labour and a more critical examination of working conditions in the fledgling industries. So while industrialisation brought major economic and technical advances, it also highlighted the need for regulation to protect the most vulnerable workers from exploitation. The social movements and reforms that followed were motivated by the recognition that economic progress should not come at the expense of people's dignity and health.
The diversity of management practices among employers at the time of the Industrial Revolution reflected different social and economic attitudes. On the one hand, some bosses, motivated primarily by maximising profits, chose to employ women and children, who could be paid much less than men. This cost-cutting strategy enabled them to offer more competitive prices and make higher profits. Working conditions in these companies were often very harsh, and employee welfare was generally not a priority. On the other hand, there were bosses who took a more paternalistic approach. They might choose to employ only men, partly because of the widespread belief that a man's role was to provide for the family. These employers could see themselves as responsible for the welfare of their employees, often by providing housing, schools or medical services. This approach, while more humane, was also a way of ensuring a stable and dedicated workforce. In companies where this paternalistic mentality prevailed, there could be a sense of moral obligation or perceived social responsibility towards employees. These bosses might believe that looking after their workers was not only good for business, by maintaining a productive and loyal workforce, but also a duty to society. These two approaches reflect the complex and often contradictory attitudes of the time towards work and society. While working conditions for women and children in factories were often difficult and dangerous, the first labour laws, such as the Factory Act of 1833 in Great Britain, began to place limits on the exploitation of the most vulnerable workers. These reforms were the start of a long process of improving working conditions that would continue long after the end of the Industrial Revolution.
The simplicity of the technique[modifier | modifier le wikicode]
Adapting workers' skills during the first phase of the Industrial Revolution was relatively easy for several reasons. Firstly, early industrial technologies were not radically different from those used in proto-industry or craft workshops. Machines such as the mechanical loom were faster and more efficient than their manual predecessors, but the basic principles of operation were similar. This meant that peasants and craftsmen who already had skills in manual work could be retrained for the fledgling industry with little difficulty. What's more, the relatively simple design of the first industrial machines meant that they could be reproduced by those wishing to enter industry or expand their production without requiring a complex transfer of knowledge. What could be seen as a lack of intellectual property protection at the time actually encouraged the rapid spread of technological innovation and the growth of new industries. However, this easy access to initial industrial skills had social and educational implications. In a largely illiterate England in 1830, education was not yet considered essential for the majority of the working population. Lack of education contributed to a workforce that was perceived as more manageable and less likely to question authority or demand better pay or working conditions. Some industrialists and business lobbies saw mass education as a potential threat to this state of affairs, as a better educated population could become more aware of its rights and more demanding socially and economically. It was only much later, with the rise of more complex technologies such as the steam engine and precision engineering, that the training of the workforce became more necessary and more specialised, leading to a revaluation of technical education. This also marked the beginning of a change in attitude towards the education of workers, as literacy and numeracy skills became increasingly necessary to operate and maintain the complex machinery of the advanced industrial age. The introduction of compulsory primary education in 1880 in England was a turning point, finally recognising the importance of education for individual development and economic growth. It marked the beginning of a realisation that education could and should play a role in improving the living conditions of the working classes and in promoting social mobility.
The Industrial Revolution marked a radical transformation in the socio-economic structure of Europe and beyond. After centuries in which the majority of the population lived in agrarian societies, dependent on natural cycles and agricultural production, this new paradigm introduced a drastic change. Technological progress, the rise of entrepreneurship, access to new forms of capital and the exploitation of energy resources such as coal and later oil were the driving forces behind this upheaval. The steam engine, innovation in manufacturing processes such as steel production, the automation of textile production and the advent of the railways all played a crucial role in accelerating industrialisation. This period of rapid change was also fuelled by sustained population growth, which provided both a market for new products and an abundant workforce for factories. Urban development was spectacular, attracting rural populations with the promise of jobs and better living conditions, although this promise was often not kept, resulting in difficult urban living conditions. The economy began to specialise in industrial production rather than agriculture, and international trade developed to support and expand these new industries. Nation states began to invest in infrastructure and regulate the economy to encourage industrialisation. The social context also changed. Old hierarchies were challenged and new social classes emerged, including an industrial bourgeoisie and a proletarian working class. These changes laid the foundations for modern societies, with their own political, economic and social challenges. However, the transition from agrarian to industrial societies was not without its challenges. It brought social and economic inequalities, often deplorable working conditions, and had a significant environmental impact that continues to be felt today. Despite this, the dynamics set in motion by the Industrial Revolution are at the root of the unprecedented economic growth and technological development that have shaped the world today.