HISTORIA ECONÓMICA INTERNACIONAL MG. LORENA GISELLE BRANDT. PROFESORA DE INGLÉS. LICENCIADA EN LENGUA INGLESA . MAGISTER EN TESOL (ENSEÑANZA DE INGLÉS COMO LENGUA EXTRANJERA) UNITS 2 AND 3 – INDUSTRIAL REVOLUTION AND ITS EXTENSION • Economic schools of thought SUGGESTED BIBLIOGRAPHY • NEAL, Larry & CAMERON, Rondo. A Concise Economic History of the World: From Paleolithic Times to The Present. New York: Oxford University Press, 2016. chapters 7 and 8. • HARRELD, Donald. An Economic History of the World since 1400 (The Great Courses), 2016. Lectures 10, 11, 12, 13, 15, and 16. • Middle ages: Handmade industry. • Organization through guilds. Artisans of great skill use manual tools. • Putting-out system (XVI-XVIII centuries): It involved employers providing raw materials to households and individuals who would then process them into finished or semifinished goods in their homes. • Trading and commerce. Goods are sold out in foreign markets (mostly textile industry). • The putting-out system expanded to rural areas. Manufacturing took place there but the product was finished in urban areas by artisans. • Monopolies. WHY THE TERM INDUSTRIAL REVOLUTION? • IT DESCRIBES THE PROCESS OF CHANGE FROM AN AGRARIAN AND HANDICRAFT ECONOMY TO ONE FOCUSED ON INDUSTRY AND MACHINE MANUFACTURING • TECHNOLOGICAL CHANGES --> new ways of working and living --> society is TRANSFORMED! • Where? Great Britain • When? 1760 to 1830 • English economic historian Arnold Toynbee (1852–83) coined the word to describe GB's economic development from 1760 to 1840. • Process of economic transformation rather than a period of time in a particular setting. • Factories: production mechanized through use of inanimate energy and wageearning workers under strict discipline. • Machines: workers did not need special skills. More productivity. • Work discipline: strict schedules and machine pace discipline the workforce – Intense and long workdays. Strong repression over workers through fines and layoffs. • Modern industry: England and Scotland in XVIII century • Extensive use of mechanical machinery. • New sources of inanimate energy – From wood and charcoal (vegetal coal) to coal + steam machine. • Observation and experimentation methods (scientific knowledge) were applied. • Increased agricultural productivity in England through innovation and farming/pastures rotation. • Bigger rural properties and increased workforce demand. • Bank of England & private banks --> printing of money TECHNOLOGICAL CHANGES • Use of new basic materials: iron and steel. • Use of new energy sources: coal, steam engine, petroleum, electricity. • Invention of new machines: spinning jenny and power loom. Increased production with less people. • Factory system: increased division of labour. Function specialization. • Important developments in transportation and communication: steam locomotive, steamship, automobile, telegraph, radio. • Increasing application of science to industry. OTHER NEW DEVELOPMENTS • Agricultural improvements: more provision of food for a larger nonagricultural population. • Economic changes: • Wider distribution of wealth • Decline of land as a source of wealth • Increased international trade • Political changes reflecting the shift in economic power • New state policies for the new industrialized society Jean B. Say CLASSICAL ECONOMICS Thomas Malthus Adam Smith & David Ricardo ADAM SMITH (1723-1790) AND DAVID RICARDO (1772-1823) Classic School is founded in 1776. Context: capitalism. New relations in all social institutions. ECONOMIC GROWTH as the main core of the School. Production factors are LAND, WORK and CAPITAL. Relationship between wealth and capital accumulation. Free trade – labor division – specialization. ABSOLUTE ADVANTAGE /COMPARATIVE ADVANTAGE. Each country should focus on manufacturing whatever produce or goods it can make the most efficiently,. • Some ideas from physiocracy (natural order – laissez faire policies) • The value of a product or service can be measured by means of what it has taken to be manufactured or produced. It’s called EXCHANGE VALUE, and it’s distributed by beans of remuneration to the factors that have allowed its production: LAND RENT, WORKER’S WAGES and REVENUE or CAPITAL. • FACTOR PRICE theory: Pricing is supposed to be natural, according to each product. • • • • • • • • • • • • • • • • State shouldn’t intervene in markets or economic decisions. Free trade in order to get one's own benefits and also benefit others. Trading relations should also be free as a result: NATURAL BALANCE. No state intervention and free interaction between suppliers and demanders. LABOUR THEORY OF VALUE: the value (and price) of goods is determined by the amount of labour that went into their production. VALUE IN USE: Usefulness or utility of a commodity (a substance or product that can be traded, bought, or sold. They are generally raw materials) VALUE IN EXCHANGE: The ability of a commodity or object to be exchanged by others, and it's determined by how much labour it has needed for its production. Salaries or wages should be minimal because population kept increasing and land wasn't enough to keep up with its growth. Specialisation and labour division improved production and helped save time. JEAN BAPTISTE SAY (1767-1832) • SAY'S LAW: manufacturers produce more in order to increase revenues, more workers are hired, consumption also goes up because population requires more products and so everybody wins. Production is the source of demand. • Every offer generates its own demand. • Free market is ideal because, as long as the market works well, there will never be any problem. • David Ricardo was a great defender of Say. THOMAS MATHUS (1776-1834) • POPULATION GROWTH THEORY: Population and food don't increase evenly. • Natural population growth would inevitably outpace agricultural output. This would result in famine and other catastrophes. Finally, population would be reduced below a sustainable level. • Humans do not overpopulate to the point of starvation only because people change their behavior in the face of economic incentives. • Economics: not every offer generates its own demand. The demand produced in the market is sometimes insufficient. • With this observation, he wants to prove that the market doesn't always find a balance by itself, and that resources are not always assigned efficiently in the economy of a country. • If demand is insufficient in a market SAY'S LAW is not a law.
