Industrial capitalism is a new phase of the capitalist economic system, which develops throughout the nineteenth century.
He has a degree in History from the Autonomous University of Barcelona (2009) and a Master's in World History from Pompeu Fabra University (2011).
17/06/2019 | Last update: 26/06/2022
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Industrial capitalism was a new phase in the development of the capitalist economic system, which developed throughout the nineteenth century, originated from the technological and liberal revolutions initiated in the late eighteenth century. With this new stage the phase of the so-called commercial capitalism, also known as mercantilism, which originated from the end of the fourteenth century and lasted until the arrival of industrial capitalism, was overcome.
Between 1850 and 1914, industrial capitalism developed and consolidated in Europe. It was a time of economic growth thanks to the political and technological changes that had occurred in the continent. But in order for industrial capitalism to develop, a series of requirements had to be met, among which one of the most important was that there had been a process of agrarian expansion and specialization.
The increase in production and productivity in the countryside, thanks to the application of technical innovations, led to a growth in demand, prices and profits. All this was motivated by population growth.
The growth of the industry in the nineteenth century came about thanks to agricultural growth, that is, the agricultural revolution started at the end of the eighteenth century and continued during the nineteenth century especially in England and then in most countries of Europe. The agrarian revolution had as main characteristics:
The agrarian revolution caused the increase of production and productivity in the field. And also the specialization of crops, with a strong geographical component. This process was made possible by the growth in demand (made more food and more labour available to the population).
The countryside gave more products and more population. The introduction of capitalism in the countryside meant the liberation of peasant labour, which could be dedicated to other tasks (industrial activities).
The industrial expansion happened in those places where previously growth and specialization of agriculture took place. Following the model of the English industrial revolution, it moved to mainland Europe. The European capitalists adopted the English machinery, its way of producing… It was decided to copy the English system, notwithstanding adopting a certain physiognomy according to each national economy. The role of the State strongly determined the economic policy of each country (liberalism versus protectionism).
Industrialization processes seem the same everywhere, but they have a different physiognomy. During the second half of the nineteenth century, industrialization became widespread:
The nineteenth century brought great improvements in the means of transport, thanks to the arrival of the steam engine on the railway and on the ship. There were also improvements in communication channels.
The railway represented an authentic technical revolution. Its construction and development, during the second half of the 19th century, was an important stimulus to steel and mechanical production.
The railroad was a magnificent means of transport for goods in tonnage. It allowed reaching places where until that moment it was not possible to arrive. It facilitated the growth in passenger traffic and its mobility. Along with the rail network, the road network was improved too. The train never hurt the carters. It ensured the supply of food in large cities and the transport of goods in industrial places.
The new means of transport allowed deepening the changes in agriculture and favoured their specialization. In addition, the railroad had a huge cultural impact. It was part of the culture of the 19th.
The consequences of the introduction of the steam engine in maritime navigation were transcendental, and meant a strong stimulus to the construction of large ships. Steam increased speed and travel safety. Speed was a fundamental piece that traditional navigation did not have. It had a great impact on agriculture worldwide, since transport allowed agricultural specialization internationally. And it facilitated the articulation of the American agricultural and livestock market.
Moreover, it stimulated the transoceanic migrations, and it involved the construction of modern ports and port facilities. Finally, as for the railroad, the steamboat had powerful cultural implications: it was part of the day-to-day of cities.
Roads and main roads were built throughout Europe during the 19th century. The existing ones were also improved. These communication ways had to connect the industrial and commercial centres. Maritime channels development were also undertaken:
First, the telegraphy with wires began to be developed, and then wireless. The first submarine cable is from 1866. The Italian engineer Guglielmo Marconi was the inventor of the wireless telegraph (1891-1892).
Since the nineteenth century, national postal companies began to be created. The stamp emerged in 1840 in England. The seal introduced a huge qualitative and quantitative change, without any precedent in history.
The expansion of trade depended largely on economic political trends of each state, as the states legislated on trade following certain economic pathways that greatly affected him. In the nineteenth century trade became a state policy, and each government followed different economic trends accordingly to their interests:
During the first half of the nineteenth century, and until 1860, protectionism was the decisive policy on trade in Europe. Britain, on the other hand, was betting on free trade. And that changed the scene in Europe, which during the second half of the century passed to free trade.
In 1860, the Cobden-Chevalier Treaty (trade agreement between France and Great Britain) was signed. It established a free trade zone without tariffs for determined manufactured goods between the two nations. This type of agreement was of enormous importance, and throughout the 19th century others treaties were signed throughout Europe. Countries began collaborating with each other at other levels:
The “most favoured nation” clause was also introduced, whereby if Belgium and France agreed with each other, any state that had agreed with one of the two previous states became the collaborator of the other.
The free trade period changed trade relations between countries. But from 1870s (1873-1896 Long Depression), there was a certain return to protectionist politics. The economic crisis of the end of the century brought back certain protectionist approaches, motivated by:
Business and investment led to economic growth and the development of capitalism throughout the second half of the 19th century. A series of instruments, new or already existing, were developed to make investments and to do business within capitalism: the Stock Exchange as a place of speculation to make money, and the large commercial bank (the great national banks are now born).
In capitalism, there are no moral limits. The states promoted legislative changes to adapt the financial structures to the investments that the bourgeois classes needed to make for the smooth running of their businesses. In the 19th century, national banks were created with the objective of regulating the banking system, monetary policy (instrument of economic policy) and the national and expansive legal framework.
London was the most important financial centre in the 19th century.
The companies changed. The business structure turned to be concentrated on. Family businesses were transformed into corporations, limited or multinational companies, to raise more capital. At the end of the 19th century, we found the boom in business concentration. Capitalist magnates sought to gain control of the market. And there were also changes in the organization of work: the “scientific organization” was introduced to increase productivity. Different work processes: chain work, Taylorism…
This stage is characterized by a slow economic development of capitalism and industrialization, even at a very early stage. Difficulties of this period:
During the central part of the 19th century, economic growth accelerates the expansion and growth of capitalism. This stage was characterized by different points:
These elements influenced economic growth (quantitative elements) but there were also qualitative elements, such as social and political ones. The world of revolutions of 1848 failed, but after 1848 everything was different: a more bourgeois society broke through. The beneficiaries were not always those who participated in the barricades.
The Long Depression of 1873-1896 was the first major crisis of the capitalist system. It produced a strong economic slowdown, economic contraction, and the beginning of the British economic decline. Key features:
The last stage, which begins at the end of the 19th century and reaches the outbreak of the First World War, is that of the recovery of economic growth: both quantitative and qualitative. There were three great elements that made it possible:
Technological changes stimulated the market, made it grow inside and outside. People bought more things and this generated consumerism, thanks to the increase in purchasing power. On the other hand, European colonial and imperial expansionism allowed European production to be placed in more parts of the world.
Changes in business organization, and technological changes of the late nineteenth century led to the Second Industrial Revolution. Although it was an uneven process:
Where the second industrial revolution took place, it occurred the concentration and merger of companies, the break with market laws and an increasingly clear relationship between industrial and financial capitalism, between banks and companies. The new forms of work organization came to make capital more productive, make workers more productive, and increase consumption.
But in agriculture there was a certain return to protectionism, with the closure of borders. Attempts were made to reduce costs in the production of European agriculture through technical improvement and the use of new technologies. Also, from changes in certain habits of our diet. But it had a great cost: the expulsion of people from the countryside who were forced to emigrate to the city.
The nineteenth century was a period of population growth. The population doubled across the planet. What was the region that grew the most? The European continent grew the most, but Asia was the most populous continent.
Population growth happened also in the European colonies, and in the territories that had previously been colonies. North America was, in a demographic sense, an eminently European continent. But 19th century the population growth occurred basically in the European continent. Europe’s growing overpopulation could have marched now to other parts of the planet.
Why was population growth in the nineteenth century?
The most relevant phenomenon of the nineteenth century was the migratory event, the greatest in the history of mankind. It was a migratory movement from Europe mainly towards America. The point of arrival was New York City. The numbers are as follows:
It was a movement of 50 million people who arrived in America. Between the 19th century and the first half of the 20th century, the arrival of emigration was distributed as follows:
Factors that explain the migratory phenomenon:
As for the origin of the emigrants, in 1840 they were mainly Irish and German families. At the end of the 19th century, European immigrants came from Eastern Europe, from Italy and Greece. In the early 20th century, however, immigration comes from China and Japan.
In the 19th century, cities were the spaces that grew the most, receiving the population from the countryside. The urbanization process in Europe was brutal. It was in the cities that the economic, cultural and social transformations of the 19th century took place. Cities became protagonist. London was the greatest city of the world in the 19th. The second was Paris.
Why did the city grow in the new modern society? Basically for the economic transformations: industry, commerces, services, the stock market, the positions of power, the administration, all were concentrated in the city… Everything happens, in the new society, through the city.
As the cities grew, there was also an urban segregation process. The price of land varied according to the type of the given use. The urban population was segregated according to their income. The bourgeoisie left the historical centres and moved towards the widening. It happened throughout the 19th century in cities like Barcelona, Paris, London…
Cities grew, devouring the surrounding territories. The problem of the great geographical extension of the city could only be alleviated by public transport. The train became the subway. The first subway, opened in 1863, was that of London. In Paris, it had been inaugurated in 1900. It involved one of the greatest constructions in history.
Working class that came from the countryside was concentrated in popular neighbourhoods with very low living conditions.
Poverty in the urban world was tremendous. Workers, despite having a job, were poor. The poor worked hard, but in poor condition, and they earned very little. Poverty was blamed: those who did not want to work were poor.
Urban concentration and changes in the world of work caused the emergence of new social realities. The four great social groups of the 19th century were: aristocracy, the bourgeoisie, the peasants, and workers.
The difference between the first part of the century and the second was in the workers’ world, which did not acquire great relevance until the second half of the 19th century, while the rural world and peasants were disappearing.
During the first half of the 19th century, the aristocracy and the bourgeoisie were disjointed. During the second half of the nineteenth century, it started a slow rallying between the aristocracy and the bourgeoisie, in a process of a certain confluence between the two sectors. The bourgeoisie aristocratized, and the aristocracy imitated the bourgeoisie. From now on, opera and university are fully available also for the bourgeoisie. During the century, bourgeois built their spaces of socialization, copying aristocratic features.
On the other hand, in the 19th century the working class was very heterogeneous, because it was formed by very diverse groups:
The English historian E. P. Thompson, in his classic work “The Making of the English Working Class,” described the process followed by popular classes to reach their organization as a social movement:
Capitalism led to industrialization, which created the worker (with poor living and working conditions and their traditions). To the worker the work in the factory allowed him to acquire a class conscience (influenced by the ideologues) and from there to act, which made it began to join the unions to improve their living conditions (unions that raised the system change capitalist: the revolution).
In the second half of the nineteenth century, the living conditions of the working class began to improve in some aspects, although timidly: thanks to the increase in real wages, and the tendency to reduce working hours. All this was achieved thanks to the struggle of the labour movement.
At this stage, some workers’ parties and organizations began to claim the introduction of universal suffrage. Simultaneously, governments started to take care of this electorate. It was then, that elements of the welfare state began to be introduced: in Weimar’s Germany they were born mutual societies, cooperative societies…
As of 1850, the Marxist doctrine begins to acquire importance. Trade unionism is very much developed as a way of organizing the working class. In 1864, the International Workingmen’s Association or First International was created, as a result of the affirmation of international capitalism, and the realization, by the ideologues of socialism, that the only way to fight against capitalism was through an organization of international scale. The First International meant the rupture between Marx and Bakunin around the debate about how the revolution should be made (the struggle between Marxists and anarchists ended the expulsion of Bakunin’s followers from the First International).
The First International was dissolved in 1876. A new attempt to group all the workers’ organizations took place in 1889. Within the Second International, an intense debate took place between the revisionists and the Orthodox.
This sector of the Second International begins to review Marx’s own revolutionary theory, and cast doubt on it. Marx had predicted that capitalism would contradict and end up decomposing. It seemed that this could occur at that time due to the economic crisis of the late nineteenth century. Marx did not consider that the solution to the economic crisis was imperialism, and the breaking with the laws of the market: the concentration of companies and reserving colonial spaces.
Revisionists also discussed the term revolution. They propose reform as the main term. This group talked about reforming capitalism. They no longer doubted the capitalist system, rather they demanded improvements. Capitalism’s fault was to have created inequalities. This was the basis of social democracy. Inequalities could be eliminated by state action and taxes.
The nucleus that remained faithful to Marx’s thesis argued that capitalism was the nucleus of exploitation.
Within the Second International, the division between revisionists and orthodoxes ended with the departure of the latter, and the foundation of the communist movement. For the orthodoxes, the state had to be conquered through the revolution to end capitalism.
There were two issues that the labour movement could not overcome: imperialism, and pacifism. They agreed to be anti-imperialists, but the reality was a contradiction, since colonialism carried wealth and job offers in addition to a patriotic pride. They declared themselves pacifists because it was seen that there was an escalation of weaponry in the states.
When World War I arrived, all this jumped, to the point that socialist parties for the first time entered in bourgeois governments.
Women in the old regime society was condemned to a situation of contempt. Judaeo-Christian culture and tradition gave women two types of work (all in one place, the rural home):
The woman in an industrial society was also condemned to a situation of contempt, because of both tradition and the new culture: as she was less paid, she was forced to do non-specialized work, and she was frowned upon by men.
In the city, women did two types of work (separate space):
The road to female emancipation was paved by the ideological contributions of the French Revolution and England. The first wave of feminism, when articulated, denounced:
How were women organized to claim their rights? Through suffrage, the claim to the right to vote, and through the reformist or radical sabotage. Women’s suffrage arose in the late nineteenth and early twentieth centuries.
For the State, the vote of women was unthinkable because it was feared that overcoming the “gender role” (staying at home) would break the dominant culture of men. It didn’t want to “break the family” or “stability.” The patriarchy did not accept it.
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