European Expansion: Europeanization of the International Economy and Industrial Revolution Europe in World Economy 2017 •International trade • •Opportunities beyond limits of domestic market and agricultural productivity – international division of labor •A. Smith: DoL limited by the extent of the M; • •IT – most dynamic element of early modern European economy; •i.e. Holland – shift towards livestock and diary, fishing, urban expansion; •Shift of basic agriculture into Eastern Europe (intensifying feudal methods of exploitation there); – •Initially little to do with free markets (FM) – governments trying to force competing nations out of markets; •Mercantilism: nations‘ wealth grows by achieving favorable balance of trade; exclusion of foreign competitors rather than attempt to gain competitive strength; •Primary economic aim of merchants and conquerors was to create protected niche in world market without competition from other Europeans (Estado da India, EIC, VOC); • D:\23120\Desktop\EEveGE2012\Obrázky\Konvoi_Haringvloot.jpg http://pirateshold.buccaneersoft.com/images/ships/dutch_flute.jpg http://upload.wikimedia.org/wikipedia/commons/d/d0/A_Castro,_Lorenzo_-_A_Dutch_East-Indiaman_off_Ho orn_-_Google_Art_Project.jpg https://upload.wikimedia.org/wikipedia/commons/7/74/Colonisation_1660.png https://upload.wikimedia.org/wikipedia/commons/3/3b/Muscade.jpg https://upload.wikimedia.org/wikipedia/commons/thumb/6/63/Nutmeg_fruit_seed_and_aril.jpg/1920px-Nut meg_fruit_seed_and_aril.jpg https://upload.wikimedia.org/wikipedia/commons/thumb/3/35/The_flowers_of_clove_tree_in_Pemba_island .JPG/1280px-The_flowers_of_clove_tree_in_Pemba_island.JPG https://upload.wikimedia.org/wikipedia/commons/4/4b/ClovesDried.jpg https://upload.wikimedia.org/wikipedia/commons/thumb/f/f1/Baton_de_cannelle.jpg/1280px-Baton_de_can nelle.jpg https://upload.wikimedia.org/wikipedia/commons/thumb/f/f6/4_color_mix_of_peppercorns.jpg/1280px-4_c olor_mix_of_peppercorns.jpg https://upload.wikimedia.org/wikipedia/commons/thumb/3/31/Black_Pepper_%28Piper_nigrum%29_fruits.jp g/800px-Black_Pepper_%28Piper_nigrum%29_fruits.jpg https://upload.wikimedia.org/wikipedia/commons/thumb/a/a3/Nutmeg_on_Tree.jpg/1280px-Nutmeg_on_Tree. jpg http://3.bp.blogspot.com/-ilKQHtxEDfM/USvbS-94r0I/AAAAAAAABFo/-tcolhts4fk/s1600/encomienda.jpg http://staff.fcps.net/jwalker/Africa3.jpg https://upload.wikimedia.org/wikipedia/commons/thumb/8/82/Brown_sugar_examples.JPG/1920px-Brown_sug ar_examples.JPG https://upload.wikimedia.org/wikipedia/commons/thumb/d/d1/Cukrov%C3%A1_homole_001.jpg/800px-Cukrov% C3%A1_homole_001.jpg http://charlestonfavorites.ethemedhosting.com/wp-content/uploads/2013/05/cane-Syrup-10-057.jpg D:\23120\Desktop\EEveGE2012\ObrázkyII\Slave trade.jpg D:\23120\Desktop\EEveGE2012\ObrázkyII\large.jpg https://upload.wikimedia.org/wikipedia/commons/2/2b/Colonisation_1800.png • • •18th cent. series of inventions transformed the British cotton manufacture: new mode of production – the factory system; • •Principles: (Landes) –The substitution of machines (rapid, regular, precise, tireless) for human skill and effort (converting heat into work); –Use of new and more abundant raw materials (substitution of coal for wood and animal); • •In past – better living standards had always been followed by a rise in population-> eventually consumed the gains (Malthusian trap) (Clark); • •IR: for the first time in history – both the economy and knowledge were growing fast enough to generate a continuing flow of improvements -> considerably rising standard of living; • • Industrial Revolution http://media.web.britannica.com/eb-media/08/166108-050-4073A0EC.jpg • •(Landes) •14th Italy –water powered silk spinning– industry prospered for centuries; • •England built a large water powered mill employing hundreds workers; –comparable to the cotton mills of later era (late 18th century); –more than enough to accommodate England’s demand for silk yarn – costly material, small clientele; –No industrial revolution of silk; – – •Wool much more important in Europe - role of cotton accident; –Wool industry protected by prohibition of imports of Indian calicoes (British capital and labor would be hurt); –Factory (power machinery) industry production: raw cotton -> cotton yarn (fustian, flax)… British capital and labor is promoted); –Deindustrialization of Asia; • • • •System of rural manufactures (dispersion of activity - costs of distribution and collection); –Idea of large workshops where spinners and weavers under supervision; – •Manufacturers had to pay to persuade people out of cottages and into mills – –So long as the equipment in the mill was the same as in the cottage, mill production cost more; • •It took power machinery to make the factory competitive –In spite higher wages mills still seemed a prison; –Where to get labor force? Children, often conscripted from the poorhouses and woman, especially unmarried; • •Wool fibers troublesome - cotton docile, investor turned attention; • •Steam power (Landes; Cameron, Neal) –Vacuum pump (Savery 1698); –First steam engine Newcomen (1705); –Watt (1768) engine with separated condenser (profitable away from the mines); –15 years to adapt for rotary motions; –High pressure engines more compact and used to drive ships and land vehicles (another 25 years); –Parsons (1884) replacing the piston with a steam turbine; •Darby (1709) coke smelt of iron; •Cast iron –> pots and pans, pipes; moving parts - require resilience and elasticity - steel; •Cheap steel – Bessemer 1856; –transformed industry and transportation (arms, razors vs. rails and ships); • •Powered machinery –Device to move a tool – to do the work of the hand; –Enhance speed and force (printing press, drill, spinning wheel); –Battery of tools – multiply the work performed by a single motion; • •Next step – simplifying by dividing, breaking up the task into a succession of repeatable processes; • http://upload.wikimedia.org/wikipedia/commons/b/b2/Stott_Park_Bobbin_Mill_Steam_Engine.jpg http://upload.wikimedia.org/wikipedia/commons/f/f0/Steam_engine_in_action.gif http://upload.wikimedia.org/wikipedia/commons/6/61/Bessemer_converter.jpg http://upload.wikimedia.org/wikipedia/commons/thumb/2/22/A_scene_in_a_steel_mill%2C_Republic_Steel% 2C_Youngstown%2C_Ohio.jpg/800px-A_scene_in_a_steel_mill%2C_Republic_Steel%2C_Youngstown%2C_Ohio.jpg http://upload.wikimedia.org/wikipedia/commons/thumb/3/3f/First_passenger_railway_1830.jpg/1280px-Fi rst_passenger_railway_1830.jpg http://upload.wikimedia.org/wikipedia/commons/6/6a/HMS_Dreadnought_1906_H63596.jpg •Great Britain – early being nation • •Purchasing power of the lower classes –> ability to buy beyond necessities –great English middle class – merchants, shopkeepers, manufacturers, bankers, men of law; • •Mechanization -> higher productivity -> higher wages -> increased demand (for manufactures) -> larger market and specialization… –English have grown rich by consuming – ran against the folk wisdom – thrift and abstemiousness („habit of French peasants“, Aldcroft); (Calicoes, Corn Laws); – •Result: aimed at a large national and international market and focused on standardized (manu) goods of moderate prices – the kind that lent themselves to machine production; • • •France – strongest on the continent… –1815 lost sugar colonies (Caribbean), prosperity of Atlantic ports undermined; –Markets for cheap machine produced goods dominated by GB; –Large peasant class, rooted to land; –New industries: lacked coal; transportation underdeveloped; –Slow to adopt the new cost-reducing technology or expand into new product markets; – –Alternative explanation (Aldcroft) - Different route; •Less necessary to sell goods abroad to feed population; •GB preempted overseas markets for cheap mass production – France did well to concentrate on quality goods (skills, taste, designs – edge); •Much slower population growth; •Industrial labor more productive than in GB: high-quality production; low productivity agriculture kept down overall figures; – –Quality engineering, construction and architecture, road system and canal network; –Railway building on large scale since 1840s (1850: 2,5k km, 1870: 17,5 k) – helped develop iron and engineering industries, investment banking skills –Outside Europe very minor role compared to GB; •Germany –Soon to grow into leading industrial power – until 1870 collection of independent states (Custom Union); –Overseas trade through NED; –GER territories in terms of modern industrial sector overtaking France 1850-1870 (2x coal, iron 1,1; steel 1,8x); large scale state intervention; –Railway building: leading sector – outperformed FRA (1851-1869 10-20% of total investment) – creating engineering industry out of nothing; –Despite expanding mercantile fleet, foreign trade played a lesser part (92% exports to Europe); –Major source of overseas emigration from 1840 onwards; • •Belgium –Resembled GB most closely: tradition in metallurgy and textile, plenty of coal, iron, easy international transport (+ early rail), GB example, neighboring FRA and GER – government inclined to favor business; –First install coke smelting, paper, glass, output coal, iron, machinery… –Railway network closest to GB level; export per head even higher; • •Switzerland • -No coal, no iron ore, no access to the sea, surrounded by large protectionist countries; -Assets: skilled educated labor force, some capital accumulations, plenty of water power, trading tradition (could not feed itself in grain; city belt); -Cotton spindles (10x 1814-1870), machine building and engineering next; -Conquered foreign markets with high quality products (cotton, embroidered goods, lace, silk, watches); -High degree of division of labor (decentralized production) - instead of a factory; • -Unique – concentration on overseas markets (neighbors unstable and protectionist); 1845 64% went overseas (US main market), only 36% to Europe; -Free trade drive in Europe since 1860 (still 37% extra Europe); -Per head export greatly exceeded GB, BEL; •United States • –Starting as a colonial type economy -> expanding primary exports at a fast rate -> 1870 major industrial power; – –1870 – still essentially agrarian state, but shrinking employment and output -> manufacturing; – –Leading industry: Cotton textile (value added 16k USD in 1805 -> 930k in 1820 -> 48,4mil in 1860), coal, iron mining; •Using GB technology first – innovations, different form of factory organization; – –US technology leading in wood-working machinery, high-pressure steam engines, •American system of manufacture – the mass production of composite articles using interchangeable parts; – –By 1870 US 23% of world industrial output (despite civil war); – –Rich in land and other NR as well as in capital – but short of labor: •Tend to go for innovations - saving labor, capital (physical, human) intensive economy; –Europe main market for US primary product exports, creating ELG in critical period; •