Industrialization
Industrialization
I Economic AspectsJ. R. T. Hughes
II. Social AspectsWilbert E. Moore
I ECONOMIC ASPECTS
Industrialization is the system of production that has arisen from the steady development, study, and use of scientific knowledge. It is based on the division of labor and on specialization and uses mechanical, chemical, and power-driven, as well as organizational and intellectual, aids in production. The primary objective of this method of organizing economic life, which had its genesis in the mideighteenth century, has been to reduce the real cost, per unit, of producing goods and services. The resulting increases in output per manhour have been so large as to stagger the imagination. The average American worker today produces as much in half an hour as his British counterpart did in a whole working day a century ago, and that American worker has ten times as much industrial capital behind him as he would have had a century ago (Slichter 1961).
This revolutionary rise in available output and supply of economic resources has been associated primarily with the development of industrial economies in, for the most part, a limited number of countries (League of Nations …1945; Kuznets 1959; Maizels 1963). By far the larger part of the dramatic rise in man-hour productivity is fairly recent—most of it occuring since the turn of the twentieth century—and apparently is still continuing powerfully in those economically advanced countries where the application of modern science to output continues to develop. Even so, the origins of modern industrialism can be found in the distant past. Industrialization is the outcome of a long and complex historical development, and it obviously has not yet run its full course as a long-range historical phenomenon. Judging from the record of the past, modern industry may be only a crude beginning of what is to come. It is not just the volume of output that measures the general economic impact of industrial development. The phrase “industrial society” has come to encompass a whole way of economic organization in which the social structure, from industrial management to the fine arts, utilizes the economies of standardization and specialization in basic human activities to produce, paradoxically, an ever more varied set of final products. Change in the structure of final output is ceaseless.
The history of economic change in the two hundred-odd years since the classical industrial revolution in England is varied and would have been difficult to predict. The ever-changing tides of technology, and the society that produces technical change, are manifestations of continuing growth of complexity in human specialization in all matters relating to economic life. Hence, by the 1960s two-thirds of the labor force in the United States worked in areas not concerned directly with the production of food and manufactured goods, compared with only 16 per cent of the labor force thus employed in 1820. European and Japanese industrial growth shows the same result in the occupational distribution of the labor force over time. Occupational diversity in nonmanufacturing life seems to be a product of industrialization wherever human society is free to respond to its own potentials as efficiency in economic life permits labor to go beyond direct production. What begins as mastery of basic mechanical technique ends by creating both the demands and the resources for a revolution in mass education and in science—a change in the “quality” of the labor force. Historical support for these general observations may be seen in the development and general characteristics of industrial society.
History
The phrase “industrial revolution” has long been used to identify the period roughly from 1750 to 1825, during which the accelerated application of mechanical principles, including steam power, to manufacturing in Great Britain produced an identifiable change in economic structure and growth. Workers were grouped together in factories using concentrations of capital equipment greater in cost and more efficient in operation than the capital equipment known in Britain earlier. These factories utilized a few mechanical innovations, primarily in textiles and iron manufacturing, which, with the application of the steam engine, made factory-sized scale the most economic size for the production unit. The proximity of others engaged in such manufacturing activities became a further cost-reducing factor of great importance, resulting in “external economies” that encouraged the grouping together of manufacturing enterprises and, hence, the growth of new urban aggregations. [SeeExternal Economies and Diseconomies.] The result was that Britain rapidly became the first urbanized industrial state.
There is now little agreement among scholars about the origins of the industrial revolution in Britain. Recent work even questions the uniqueness of the classical period of the industrial revolution in the long-term evolution of the industrial structure of the British economy (Deane & Cole 1962). The older view that the agricultural improvements of the late seventeenth century and early eighteenth century, together with the rise of foreign trade, made a manufacturing sector with a rapidly increasing population possible in Britain has also been questioned. These ultimate problems of economic historiography concerning the industrial revolution in Britain cannot be resolved here.
The pattern of industrialization in other countries after 1800 has been broadly similar in many respects to that experienced by Britain, although, of course, the permutations were never the same in any two countries (Maizels 1963). “Textiles first” (along with food processing) has been almost the rule in industrialization, followed by transportation development, heavy industry, and more sophisticated enterprises, such as metalworking, chemicals, and electronics. In most cases, substantial advances in agricultural output, or increased foreign trade, or both, have been concomitants of industrial development. These have been essential since, as in eighteenth-century Britain, industrialization has been accompanied by two ubiquitous demographic phenomena: a rapid increase in the size of the total population and its aggregation in urban areas.
There has been some confusion concerning the lessons of this history. Since World War II, certain economists interested in promoting the development of industrially backward nations have urged the adoption of “balanced growth” planning. According to this proposal, the developing economy should supply its own market outlets and production inputs, with all sectors growing “simultaneously” (Lewis 1955, p. 283). The history of successful industrial growth shows no evidence of such growth in the past (Hughes 1958). Instead, industrialization has been the product of certain industries or groups of industries—"leading sectors” and “dominant industries” (Rostow 1952; Hoffmann 1931) —pushing ahead of others as technological breakthroughs occurred and new markets opened. Retardation in the rate of growth and even absolute decline of particular industries have also characterized industrial development, the lag in over-all growth being compensated for by new industrial ventures that come into existence and push toward their maximum growth rates, thus carrying the economy with them (Kuznets [1953] 1954, pp. 253-277; Burns 1934). No given set of industries making up a given industrial structure in any country has been responsible for industrial development, because change has been continuous.
Preconditions
Since industry cannot grow without markets and sources of capital, similarities in the economic “preconditions” for industrial development have been identified. These bases for the development of an industrial sector include an available labor force, markets for finished production, access to raw materials (whether at home or through foreign trade), a source of investment funds (whether from the wealth and savings of the private sector, from the accumulations of the public sector, or from abroad), and, finally, access to technology. The last has in every case necessitated the extensive development of mass education, because access to technology on a large scale means, ultimately, access to science. In the long run, successful industrialization has been achieved in those nations which not only realized the preconditions but also were able to adapt to changes in technology which required extensive organizational flexibility on all levels. Examples of such necessary flexibility are antitrust laws, internal population migrations, and changes in representational balance due to shifts in the franchise.
Although some countries, notably the United Kingdom and the United States, experienced their industrial development under conditions of political and economic freedom that were based upon rational and calculable law, the experiences of Germany, Russia, and Japan in the nineteenth and twentieth centuries indicate that the basic economic preconditions for industrialization are to some extent independent of political framework. The same can be said of commercial policy—successful industrial development has occurred under regimes ranging all the way from free trade to state barter. It is true that the industrial nations with highest income per capita are those which have Western-style political democracy and basically free markets for labor, food, and commodities. But it is also clear that rising per capita income, the sine qua non of economic development, comes primarily from industry, however organized. There are few “poor” nations with extensive industry. There are poor democracies as well as poor dictatorships of all varieties. The question of the political preconditions for industrialization has no clear answer except for the evidence of the past, and even this furnishes no clear “lesson of history,” since, in terms of rates of growth, the communist dictatorships have ranked near the top in recent times.
The spread
The time path of world industrial development is marked by the slow spread of the “industry state” from Britain to the United States, to northwest and central Europe, Russia, and Japan, and then to other parts of the world. There are now industrial complexes in nearly all parts of the world except the polar regions. Counting mining and oil production, industry has spread to deserts and jungle alike, yet until the 1950s there was no significant industrial power, except Japan, which was not a European country or an overseas offshoot of Europe.
In modern times the international permeation of technology stemming initially from the advances of the British industrialization has been a slow and stubborn process, with all countries being borrowers as well as originators of invention. The United States developed a large-scale industry and an extensive internal transportation sector before 1860. Then, in the period extending roughly from 1870 to 1910, the United States experienced an accelerated development of heavy industry and surpassed- all other nations to become, and remain, the leading industrial power. Conditions were favorable for industrialization in Belgium, parts of Germany, parts of France, and to some extent in Scandinavia and Russia by the end of the Napoleonic Wars. For several reasons (about which there has been abundant academic dispute), including lack of resources, an unnecessarily restrictive commercial policy, and inappropriate social organization, industrialization in France was constrained in the nineteenth century. But Frenchmen and French capital participated widely in the industrialization and economic development of other parts of the world (Cameron 1961; Landes 1958). Belgium had an iron industry early in the nineteenth century as a result of available raw materials and English émigrés (Henderson 1954). Although parts of Germany, including the Rhineland, Saxony, and Silesia, had long histories of industry, especially textiles, great industrial development came only after unification in 1871 (Sombart 1903).
Under the tsars, Russia was unable, despite abundant raw materials, to achieve the other preconditions for industrial development on a scale anywhere near its obvious potential, and by 1914 it trailed Britain, Germany, and France as an industrial power but was fourth in the world behind the United States, Britain, and Germany as a textile manufacturer. After the emancipation of the serfs in 1861, great efforts were made by the Russian government to achieve industrial growth, and after the 1880s considerable development occurred, especially in railroad construction. Under the Soviet government after 1917, and especially since the adoption of the first Five-Year Plan in 1928, the Soviet Union has become the leading European industrial power—although still a poor country on the basis of per capita income—and is second only to the United States in many areas of industrial development.
Japan is a remarkable phenomenon in the history of world industrialization. Through the great efforts of the government (Rosovsky 1961) and a cohesive ruling class, Japan went from being a backward, Oriental feudal state to becoming a substantial industrial power in the years between 1859 and 1910, overcoming a lack of raw materials and despite social customs which needed drastic adaptation to meet the needs of industrial growth. In spite of vastly wasteful military efforts in the twentieth century and a catastrophic military defeat, by the 1960s the Japanese had achieved a near-European level of output per head of population and a structure of industry developing along Western patterns, that is, textiles and other light manufacturers being displaced by the growth of engineering and chemical industries (Maizels 1963). Japan is the only non-European country, or country not of European origin, to achieve such a measure of economic growth based upon industrialization up to the midtwentieth century. Other Asian countries, especially India and China, have mounted major long-term industrialization campaigns.
The experience of substantial economicgrowth—rising output per capita—based upon industrial development is still not widespread even in the 1960s, in spite of great efforts to achieve industrial growth among the more economically backward countries. By the mid-twentieth century perhaps two-thirds of mankind had not achieved these fruits of industrialization (Maizels 1963). The industrial economies, on the other hand, being the chief places where productivity has risen, have become the nodal points of economic progress. The rest of mankind has participated in economic progress almost solely through contact with that portion of humanity which has developed industry.
Over the course of industrial development since the industrial revolution, the interaction between the industrially developing economies has been widespread and intense, including not only great advances in trade in commodities but in people and capital as well. Thus, the Atlantic migration of the nineteenth and early twentieth centuries was by far the largest human migration in history. It transferred needed labor power from the surplus area (Europe) to the deficit areas (the United States, Canada, Latin America) and, to a lesser extent, to other areas of overseas European settlement like Australia, New Zealand, and South Africa. Accompanying this migration were capital flows of great magnitude which financed industrial growth throughout the world in advance of the possibilities of local wealth and savings in the receiving countries. In the past, industrialization has in a very real sense been an “international” affair, and it still is. However, in recent years privately financed capital flows have been exceeded by government transfers from the United States, western Europe, the Soviet Union, and even Communist China.
Comparative development
As might be expected, the industrial nations are generally far richer in output per capita than the nonindustrial nations. In fact, at the extremities of the international scale of income distribution the differences are incredible. In 1961 the mean income per capita in the United States was $2,790. In India the figure was $70, less than 3 per cent of the American figure.
Cross-sectional
The extremes indicated for the year 1961 in the cases of the United States and India (China, with a quarter of the world’s population, is apparently slightly better off than India—the UN estimate for 1961 was $85 per capita) largely reflect the general results Kuznets (1959) found in his study of world income distribution for 1956. Scaling incomes of some 58 nations into seven classes by income relatives (Class vII = 100; vI = 200; v = 270; Iv = 400; in = 650; II = 1,000; I= 1,700), Kuznets showed that, with the exception of the richest nations and those in Class iv, the higher the per capita income, the higher the proportion of the total generated by manufacturing industry (and, with no exceptions, the higher the proportion derived from agriculture, the lower the income per capita). These results are shown graphically in Figure 1, to which further reference will be made. All exceptions to the above rule can be covered by rephrasing the statement: In neither of the two richest (aggregated) categories of countries is the proportion of income derived from manufacturing less than 34 per cent of the total, nor is the proportion from agriculture more than 24 per cent. In neither of the two poorest categories is the proportion derived from manufacturing as high as 18 per cent, nor is the proportion derived from agriculture less than 42 per cent. We leave aside for the moment the question of the quality of agriculture and manufacturing in the rich as opposed to the poor countries. In the cases of individual nations there are of course several exceptions, but these scarcely negate the importance of the general results. Yugoslavia, for example, with some 42 per cent of its income in 1961 derived from manufacturing and mining, against 27 per cent derived from agriculture, forestry, and fishing, is one of the poorest (per capita) nations in Europe—although by no means poor compared with most Asian nations or those of Latin America and Africa. Similarly, Japan, with 30 per cent of its income derived from manufacturing in 1960, compared with 15 per cent from agriculture, forestry, and fishing, has a lower income per capita than all but the poorest European nations yet is the richest nation, by this measure, in Asia. In the case of New Zealand, which had the sixth highest level of income per capita in the world in 1961, income derived from agriculture and industry was nearly balanced (it was 22 per cent each in 1954), but it was a scientific agriculture, and New Zealand, with its preferences for food imports from the United Kingdom, is a very special case indeed. In the United States, manufacturing, strictly defined, accounted for only 28 per cent of national income by
1961—some 65 per cent being attributable to commerce, services, and the professions.
Bearing such special cases in mind, the main conclusion holds despite the great differences internationally in agricultural and industrial technique: The proportion of national income derived from manufacturing is a rough indicator of the amount of income generated per head—greater utilization of industry exists in the richer than in the poorer nations. The rule is made more general if the proportion of income derived from industry is related to that proportion derived from agriculture. The anomaly of the richest countries and of those in Class iv disappears, and it is simply the case that the higher this ratio, the higher the income per capita. Thus, dividing the percentage of income derived from manufacturing by the percentage derived from agriculture yields the following: I = 2.89; II = 2.41; III=1.52; IV = 0.81; V = 0.69; vi = 0.42; vii= 0.25.
Historical
The general outcome shown in the cross section of the present-day world economy reflects the level of productive technique employed. Interestingly enough, the world cross section roughly approximates the history of industrialization in this regard. At first, as industrialization progressed, the proportional contribution of manufacturing increased rapidly while that of agriculture fell. But then the proportional contribution of manufacturing grew less rapidly, agriculture continued to decline, and the proportion arising from commerce, services, the professions, etc., rose. British income estimates (Deane & Cole 1962), for example, show that about 45 per cent of income was generated from agriculture in 1770, while 32 per cent was derived from agriculture, forestry, and fishing in 1801; the rate then fell to about 18 per cent by 1861, just over 6 per cent in 1901, and only about 4 per cent in 1961. At first the proportion of income derived from industrial pursuits (unhappily, mining and building are included with the estimate for manufacturing) rose strongly, from 23 per cent of the total in 1801 to 36 per cent fifty years later. In the next fifty years the proportion grew only slowly, from 40 per cent in 1901 to 45 per cent by 1961. The figures for the United States (U.S. Bureau of the Census 1960; Statistical Abstract) show the same pattern, with agriculture declining as a proportion of national income from about 20 per cent in the period 1869-1879 to just over 9 per cent in 1939-1948 and down to 4 per cent by 1961. Income generated in the manufacturing sector rose from about 14 per cent of the total in 1869-1879 to 27 per cent in 1939-1948 and was still about 28 per cent of the total in 1961. (The United States manufacturing sector figure for 1961 comparable with the British figure of 45 per cent, which includes mining and building, was 36 per cent.)
Relative maturity
It is virtually a truism in economic development that, where an agricultural society has previously existed, a massive transfer of labor to industry must be made possible if industry is to grow. In both Britain and the United States industrial development was accompanied by this transfer of labor until the industrial sector reached a certain degree of maturity (a marked slowing down in the rate of increase of industry’s proportion of GNP); then the transfer no longer appeared as a shift to industrial employment but, rather, to trade, services, professions, and the like. The last movement seems to be a characteristic of industrial maturity as we know it thus far in the development of industrial economies (Maizels 1963). It is a logical progression, since the more sophisticated uses of the human brain in science, scholarship, finance, etc., can be widely achieved only after basic needs in food and goods are achieved. In Britain in 1801, 35.9 per cent of the labor force was in agriculture and 29.7 per cent was in manufacturing and mining, leaving 34.4 per cent in all other occupations. The industrial sector had more or less stabilized at 46.3 per cent of the labor force as early as 1901, but with agriculture still declining proportionately and employing only 8.7 per cent of the labor force, some 45 per cent of the labor force was “released” from direct production of goods and food. In 1951, with industry employing 49.1 per cent of the labor force and agriculture a mere 5 per cent, 45.9 per cent of the labor force was thus released for services, professions, etc.
This particular structural transformation was much more pronounced in the history of industrialization in the United States. There, both agriculture and manufacturing experienced higher man-hour productivity than in Britain, and, with easier access to general education (elementary and secondary), a more pronounced movement away from the direct output of goods and food was experienced than in Britain. Also, the movement was more dramatic than in Britain because the industrial revolution found the United States more agricultural in terms of labor distribution than was Britain, where a considerable movement into skilled trades, hand manufacturing, and so forth had taken place before the inventions of the classical industrial revolution appeared. In 1820, when 71.8 per cent of American “gainful workers” were employed in agriculture and 12.2 per cent in “manufacturing and trades,” a mere 16 per cent did not produce either food or goods. Agriculture then declined in importance as an employer while the industrial sector expanded. By 1900, 36.8 per cent of gainful workers were in agriculture, 21.8 per cent were in industry, and 41.4 per cent had been freed from direct production for trades and services. By 1940, with 16.9 per cent in agriculture and 22.4 per cent in industry, 60.7 per cent of the gainfully employed did not directly produce goods and food. In 1963, with 5.8 per cent of the “civilian labor force” in agriculture and 28.4 per cent in manufacturing, 65.8 per cent of the labor force had been released for commerce, services, professions, etc.
Obviously, the productivity growth of agriculture and industry in the United States has been very great, and one cannot foresee the limits of the release of labor from direct production of food and goods. The process of developing “sophisticated,” or tertiary, uses of labor resources seems to be characteristic of industrial development. The classical Marxist industrial “proletariat” does not grow apace with industrial development but, rather, its growth in proportion to total employment slows down.
Two paradoxical results of the Kuznets data are illuminated by the foregoing history of structural change in income and labor distribution. As can be seen in Figure 1, those countries with highest income, Class i, derive a slightly smaller proportion of their income from manufacturing than do those in Class II, the next most productive class. This is apparently due to the rising importance of services and professions of all sorts as industrialization so raises productivity as to release men and resources from direct production of food and goods. “Services” in Class i countries occupy 45.3 per cent of the labor force, compared with 41.7 per cent in Class II. Services in Class i countries generate 48.7 per cent of income, compared with 41.2 per cent in Class II countries. The structural impact of industrial development sheds light on another paradox in the Kuz-nets findings depicted in Figure 1. Class i countries, the most productive per head of population and generally the most “advanced” countries industrially, derive a smaller proportion of their incomes from the sum of agriculture and manufacturing than do the poorest and generally least industrialized nations. The sums of percentages of income derived from agriculture and from manufacturing, in descending order of income per head, are as follows: I = 51.3; II = 58.7; III = 48.4; iv = 54.4; v = 59.7; vi = 60.3; vn = 68.3. In the poorest nations, Classes vi and vn, where agriculture forms the greatest part of income-producing activity, one finds the highest proportions of the populations directly engaged in producing goods and services. In the middle ranges, in and iv, there are no apparent uniformities in this regard. The extent of the “liberation” of labor from direct production of goods and services in the richest countries bears witness to the efficiency of their economic activities and underscores the point made by Jacob Viner that “the real problem in poor countries is not agriculture as such, but poverty and backwardness, poor agriculture and poor manufacturing” ([1952] 1953, p. 52).
Role of education. In the most productive nations the possibilities of continuously improving the “quality” of the labor force by education, and thus of creating ever more productive societies, are very great (Maizels 1963) and are apparently proceeding apace. Historical statistics on educational achievement in the United States (U.S. Bureau of the Census 1960) show a tremendous change in the attainment of formal education by the labor force in the twentieth century. As late as 1900 only 6.4 per cent of American youths aged 17 had graduated from high school. By 1956 this number had reached the extraordinary level of 62.3 per cent. In 1900 only 4 per cent of American youths between the ages of 18 and 21 were enrolled in institutions of higher learning; by 1956 the figure was 29.9 per cent, and by 1964 the figure was apparently in the neighborhood of 33 per cent. If American society is prototypical of the world industrial society of the future, one result of industrialization is a vast improvement in the quality of the labor force (so far as that can be effected by formal education) and, hence, of productive potential. [SeeCapital, Human.]
Other characteristics
Urbanization
Another economic consequence of industrial development is urbanization. Cities have existed since antiquity as trade, financial, and administrative centers. But until the industrial revolution urban size was characterized by substantial stability—enough, for example, to make the medieval city wall a practical undertaking. With the industrial revolution the relatively stable relationship between town and country vanished, and the industrial conurbation began to spread. Because of the internal economies of the division of work based upon the prime mover and managerial centralization, the system of factories developed rapidly after the introduction of steam engines as prime movers in the 1780s. Factories based upon water power had existed earlier; but they were necessarily placed near fast-moving water, as was the case with John Lombe’s spinning factory, which was operating as early as 1718. Factories brought people together, and the external economies of proximity brought factories together; it paid to be near a labor force, skilled mechanics, sources of parts for machinery, and so forth. Where transportation could bring raw materials together with markets for the eventual products, new cities and factory districts grew up, changing the demographic maps of each area to which industrial growth came.
In Britain new centers—the Midlands around Birmingham and Wolverhampton, the textile districts from York and Leeds southwestward to Liverpool on the Irish Sea, and Newcastle and Stockton in the northeast—displaced older centers of population like Oxford, Norwich, the old market towns of the south, and the home counties, except, of course, London itself. For this change in the distribution of English population to have occurred in so short a time was itself “revolutionary.” It created social problems and upheaval on a scale unknown in Britain since Tudor times and resulted in fundamental changes in the English constitution.
In American development, there was roughly the same experience. Cincinnati, Pittsburgh, Columbus, Indianapolis; such Great Lake ports as Chicago, Cleveland, and Toledo; and so forth were cities of the American industrial revolution, not products of the earlier trade and finance which underpinned the population centers on the East and the Gulf coasts.
From the north of France across the Rhine estuary, central Europe, Russia, then in Japan (and now China), industrial conurbations grew rapidly in the nineteenth and twentieth centuries as manufacturing techniques spread. In most respects, industrial society became urban society.
A few figures from American data underscore the point. In 1840 nonfarm population in the United States was 10.5 per cent of the total; in 1960 it was 92.6 per cent of the total, of which 69.4 per cent lived in urban areas. In the United States, population classed as “rural” has fallen some since the 1940s, while that classed as “farm” has fallen sharply, from 30.5 million in 1940 to 14.3 million by 1962. The number of farms has also declined sharply. In Britain, on the other hand, the agricultural population declined, but the decline represented more a reduction in the number of hired laborers than any reduction in the number of farmers. In both countries, though, a decline of farm population reflected the growth of cities as the population grew. The experience of other nations in industry has been similar—urban population Rowing while rural population shrinks; in recent times the Soviet Union has provided an additional dramatic example.
Population growth
Until recently it was generally accepted that the great expansion of total population which accompanied the growth of industry and urbanization was a product of industrialization. The effective agent was thought to have been reduction of the death rate, especially infant mortality. The advances in real income, including more varied diets, better sanitation, heating, and housing generally, had contributed to the elimination of plague, to the building of resistance to communicable diseases of all sorts, and, generally, to a more healthful population (a view condemned by those whose argument it is that, until 1848 at least, industrialization impoverished and debilitated the population in spite of the explosive increase in numbers). This plausible view seemed to account satisfactorily enough for the prodigious increases in total population that came to the British Isles in the early nineteenth century, spread across Europe eastward and southward with the proliferation of the techniques and income effects of industrial development, and supplied millions of immigrants to the New World and other areas of overseas European settlement by 1914 while, at the same time, raising European population from 192 million to more than 450 million.
However, this view of population growth, which emphasizes a causal link with industrialization, has recently been questioned to some extent by those scholars who, by studying British records, have discerned an increase in birth rates in the United Kingdom before the industrial revolution took hold (before, say, 1780). The revisionist view (Deane & Cole 1962) holds essentially that the process of industrialization, by contributing to a fall in death rates, helped to accelerate a population growth already in process as a result of rising birth rates. Even more recently the revisionist view itself has been questioned (Tucker 1963). It is noted that alternate estimates of population in the sixteenth century could eliminate much of the forcefulness of the evidence of a dramatic rise in population growth in Britain before the industrial revolution. At present these problems are not resolved. All parties agree, of course, that industrialization and urbanization were associated with a gigantic population increase. The line of causation is, however, not clear.
International trade
Probably no part of the history of industrialization has been subject to more controversy than that relating to international trade. Thanks to customs controls, a vast amount of national information exists, but because of problems of valuation the information has been, and still is, remarkably inconsistent. There is no doubt that industrialization has been a powerful stimulus to the growth of international trade. What has been a subject of considerable controversy is the extent to which the argument is reversible: To what extent has international trade been a stimulus to industrialization?
Since rising productivity creates markets, and rising productivity has been the hallmark of world industrialization, the connection between the great increase in world trade which followed the industrial revolution (and the Napoleonic Wars) and the rise of industry has never been doubted. The industrial nations not only became great importers of raw materials, thus drawing the nonindustrial nations into the vortex of the international economy, but they also became, by virtue of their high incomes, the primary importers of manufactured goods. In 1959 the industrial countries accounted for 55 per cent of world imports of manufactured goods, most of the world’s imports of primary commodities, and most of the growth of total world imports since World War II (Maizels 1963). In every industrial country, however, the pattern of exports and imports has changed considerably over time in continuous reaction to domestic technological change, thus creating difficulties for primary producers whose product flexibility is more narrowly limited.
Widening markets are a stimulus to industrial investment, but since exports of manufactures are usually less than domestic sales, it is not at all clear to what extent exports have been a necessary (although no doubt a helpful) ingredient of industrial growth. Those extractive industries in the primary producing countries which have no important domestic markets—for example, Saudi Arabian oil —are an exception. Indeed, it is believed by some economists that no important manufacturing specialty in international trade can be developed where a successful domestic market has not been achieved. (This is a matter of practical economics, not of theoretical necessity.) In this qualitative sense, trade in manufactured goods has been viewed as a product of industrial development, but the argument is not reversible.
In the cases where foreign investment has been complementary to exports, international trade has been viewed by some as partly inimical to domestic industrial growth. Great Britain at the beginning of the twentieth century is the major example; it is held by some that Britain’s backwardness in industrial technique by 1913 was due to the lure of foreign investment. In the previous half century foreign investment had grown more rapidly than domestic investment. Indeed, by 1913 British foreign investment apparently was half as large as domestic investment, and by far the greater part of new issues in the London capital market were for foreign accounts (Cairncross 1953). On the other hand, it has also been argued that foreign investment, by stimulating growth of export industries which led the way in domestic economic expansions, acted as a fillip to the growth of income generally at home and abroad (Thomas 1954). Both views have been extensively developed, at least since the work of John Hobson and Lenin, and the differences in conclusions cannot be reconciled here.
By 1914 a remarkable system of world trade and payments, centering on the industrial nations, provided for total currency convertibility—the gold standard. The system had developed apace with the spread of industrialization, and it was adopted by country after country as multilateralism in payments displaced various bilateral and triangular trading systems. By 1900, when the United States adopted the gold standard, that system reached its apex. The world’s payment system was still centered on London as late as the 1870s, but as international financial power spread with industrial growth and the convertibility of currencies, many centers of financial settlement appeared. By 1914 the now almost legendary gold standard was the accepted system of trade and payments among the commercial nations.
By 1914 a large part of multilateral trade was based, not upon this series of disconnected patterns mainly centered around Britain …but upon a complex network of activity embracing whole continents or subcontinents, derived from a new world-wide division of economic functions…. The rapidly industrializing countries of Europe and North America expanded their purchases of raw materials and foodstuffs from the primary producers, and all, with the significant exception of Britain, ran up heavy deficits in their balances with those countries. (Saul 1960, pp. 44-45)
The connection that developed between industrialization and trade was striking. By 1913 the United States produced 35.8 per cent of the world’s manufactured goods, and the United States, Germany (15.7 percent), the United Kingdom (14 percent), France (6.4 per cent), and Russia (5.5 per cent) between them produced 77.4 per cent of the world’s total manufactures and occupied the center of world trade. By 1936-1938 the same five nations still carried on 75.1 per cent of world manufacturing and, with Japan, Sweden, Belgium, and a handful of other nations, accounted for some 89 per cent of world imports and exports. Only 11 per cent of world trade originated between the two-thirds of mankind that was bereft of industry. By 1959 the underdeveloped nations of Latin America, Africa, and Asia produced only 10 per cent of world manufactures (excluding the Soviet bloc). By 1926-1929 two-thirds of the earth’s population had a supply of manufactured goods equal to $7 per head, a third of mankind averaged $104 per head, the United States averaged $254 per head, and the United Kingdom averaged $112 per head. Like the income statistics noted earlier for the 1960s, manufacturing supplies were most unevenly available to mankind by the time industrialization had reached fruition in the (primarily Western) countries of its origin. By 1959 the major industrial countries, containing 28 per cent of mankind, consumed 82 per cent of the world’s manufactures. [SeeInternational Trade, article onPatterns of Trade.]
World War II and its aftermath of course added further disruptions to world industrial development. The international flow of capital, so much a feature of the old gold standard and choked off by the 1929 financial debacle, has only begun to make a comeback since the mid-1950s. Currency convertibility was still incomplete by the early 1960s, after nearly two decades of international cooperation in that area, and the world’s trade was badly split by the cold war and by the inability of the underdeveloped nations to earn foreign exchange. In 1961, for example, three-fourths of the known supply of world monetary gold ($41,000 million) was held by the usual industrial nations: the United States, the members of the European Economic Community, the United Kingdom, and Switzerland (a country which attracts foreign exchange by unique inducements—security from taxes, wars, confiscations, etc.). The wide inequalities of income resulting from success and failure in industrial growth show no signs of being reduced. There are no logical reasons why these inequalities would be reduced by international trade alone. Indeed, some economists have argued that trade has a tendency to make matters worse in this regard-to result in the rich countries’ exploitation of the poor—a view which has not been accepted on the basis of its formal merits (United Nations …1950; Prebisch 1959; Flanders 1964).
International migration
In addition to present-day problems of trade and capital flows, which many believe to be barriers to a wider dissemination of industrial development, the flow of persons in international economic life has been constrained. In the theory of international trade, factor price equalization is held to be, under highly restrictive conditions, a consequence of trade in commodities alone. Equalization of incomes is not implied by that logic because of unequal “factor endowments” (a phrase which includes, of course, the quality of “human capital”). But the international flow of persons and capital before 1914 assuaged to some extent the impact of differing rates of productivity growth and of unequal natural endowments. The poor could at least migrate to higher-income countries. All of the industrial nations benefited from the migration of skilled persons, and the so-called countries of European overseas settlement received a massive direct input of labor in the great nineteenth-century migration. The United States alone received 35 million immigrants between 1820 and 1914. Such labor contributions were accompanied by large-scale capital transfers. At least for those who left low-income countries to go to high-income countries, migration brought some “equalization” of the growing income resulting from industrial development and foreign trade. The migrations themselves were subject to the rhythms of long-term economic growth. [SeeMigration, article onEconomic Aspects; see alsoThomas 1954.]
Because of the nationalistic restrictions placed on immigration in modern times, especially since the 1920s, and because of the cold war, migration of persons is not a possible solution to international income inequalities (apart from particular situations such as that existing between the United States and Canada or between members of the EEC); neither the permanent migration on a large scale of skilled persons nor the movement of mass labor to areas of highest marginal returns is feasible. Migration, in any case, does nothing for income per capita in the low-income countries unless the migrants are the unemployed and other nonproductive persons who are charges on national income. To solve these problems, foreign aid schemes and the temporary loan of thousands of technicians by the advanced and industrialized countries on both sides of the iron curtain have been tried. However, these measures have not been notably successful thus far in spreading industrial development. [SeeForeign aid, article onEconomic Aspects; Technical Assistance.]
Theoretical generalizations
Finally, we might ask: Are there any observable “laws” in the economics of industrial development? As national economies have changed in their internal structures and in their economic relations with each other under the impact of industrial change, some apparent uniformities in their histories have given rise to attempts to generalize the “process” of industrial development on the basis of observed facts. The intractability of the facts has hindered those interested in so-called theories of economic development, and those facing the known facts have found more success in classification than in explanation. The “stage” systems, in which industrialization is cut into chronological segments, are the results of inductive methods, and however weak they may be as examples of theoretical virtuosity, they are useful in viewing a world of factual information which has rarely yielded to rigorous testing of theories of economic growth.
The attempt to establish stages is a natural course of thought when economic logic is confronted with a mass of facts representing primarily economic change. The American data on income and employment structure presented earlier fall easily into three stages: the present is greatly changed from the earliest days, and somewhere in-between is demonstrably different from early times or the present. The characteristics of Stage i are most prominent in the data around I860, when a growing industrial sector was still overshadowed by agriculture and foreign trade was characterized by sale of raw materials and food to the world in return for manufactures. These characteristics faded into those of Stage n. In Stage n, with its high point somewhere between the two world wars, manufacturing industry dominated income and employment, agriculture was overshadowed, imports consisted mostly of food and raw materials (the apparent outcome of the whole history of American industrialization), and exports consisted mainly of manufactures. In Stage in, the period since 1945, the sum of income and labor in manufacturing is less than that in employment not directly concerned with the creation of food and goods, and imports of finished manufactures are rising as a proportion of the total (thus reversing the apparent outcome of American industrial development), representing more diversified consumer tastes and larger consumer incomes. The most rapidly growing sectors are not in industry but in finance, professions, commerce, services, and the like.
This simple stage-system corresponds roughly in time periods to a more formal one developed by Sumner Slichter on the basis of data relating to productivity (1961). In Slichter’s Stage i, from earliest times until 1880-1900, there was a rise in capital-output ratios, since capital grew faster than income as the nation built its basic industrial plant. In Stage n, from 1880-1900 to 1929, the “sensational” increase in the uses of energy in electrical and internal-combustion engines caused income to grow faster than the stock of capital. The basic industrial plant was being rationalized and refined through technological progress. Since 1929 or so, Stage in, the technological revolution in managerial practices and industrial research, has raised productivity more through brain power than through applications of more capital and more powerful physical energy units. Thus, productivity has risen while the capital-output ratio has fallen.
Obviously, any industrial system with a considerable history is subject to such analysis. The two stage-schemes outlined above are based upon changes in given statistical evidence over time for the United States only. Of particular interest are two stage-systems which purport to be of more general applicability, those of W. W. Rostow and Walther Hoffmann. Rostow’s system (1960) faintly resembles the so-called classical stage-system, wherein any economy develops from agriculture and mining through industrialization, with an increasing part of the labor force employed in secondary and tertiary activities. In Rostow’s five-part system, development begins in a traditional economy, which gradually finds resources for investment until a critical proportion is reached wherein growth of income per capita accelerates, providing for self-sustained growth. This is the “take-off.” After that, the society moves forward toward maturity and high mass consumption. A further stage is suggested in which the marginal utility of real income diminishes. The problem in such a stage would obviously be to make leisure creative in some nonmaterial sense. According to Rostow, most industrial nations are now in Stage v, high mass consumption, and the Soviet Union is rapidly approaching it. Other societies are trailing on this time map all the way back to primitive traditionalism.
An interesting system adapted from formal theorizing about economic development is that developed by Walther Hoffmann (1931). The relevant theory comes from the work of the Austrian economist Eugen von Bohm-Bawerk, who held that “capital” in an economy is the indirectness or “degree of round-aboutness” in production [seebohm-bawerk]. It follows that the more developed an economy is, the greater that part of its industrial production devoted to the creation of producers’, as opposed to consumers’, goods. Measuring the world’s industrial activity against Bohm-Bawerk’s propositions, Hoffmann developed a four-stage system into which the major industrial economies are fitted historically. At first the highest proportion of industrial output is in consumers’ goods. As a nation becomes more advanced, the ratios of output of goods and inputs of labor in consumers’ goods industries fall relative to producers’ goods industries. Hoffmann’s system is much more narrowly defined than Rostow’s, since it embraces only the manufacturing sector of the economy. Also, the logical extension of Bohm-Bawerk’s theory is that the degree of round-aboutness would find expression in “human capital” as science became more sophisticated. But since Hoffmann does not extend his analysis beyond the manufacturing data, he does not detect the phenomenon noted earlier, namely, that the more advanced an industrial country becomes, the greater the proportion of its labor force liberated from the production of goods and food—once a critical level of industrial development is reached.
Other stage systems might be mentioned, for example, Lewis Mumford’s gigantic system based upon technological development or Douglass North’s special system for the analysis of regional growth. All of these are methods for simplifying the massive and nearly chaotic evidence relating to industrial development. Their usefulness is to some extent mitigated by a millenarian tendency which characterizes too much thinking about the worldwide industrial development that followed the industrial revolution. A survey of the history and modern characteristics of industrialism and its economic effects ought to be sufficient to deter the wise from making predictions, except, perhaps, to note that economic change has come relentlessly on the heels of technological change.
J. R. T. Hughes
[See alsoEconomic Growth; Economy, Dual.]
BIBLIOGRAPHY
Ashton, Thomas S. (1948) 1964 The Industrial Revolution: 1760-1830. Rev. ed. Oxford Univ. Press.
Burns, Arthur F. 1934 Production Trends in the United States Since 1870. New York: National Bureau of Economic Research.
Cairncross, Alexander K. 1953 Home and Foreign Investment: 1870-1913. Cambridge Univ. Press.
Cameron, Rondo 1961 France and the Economic Development of Europe, 1800-1914: Conquests of Peace and Seeds of War. Princeton Univ. Press.
Deane, Phyllis; and Cole, W. A. 1962 British Economic Growth, 1688—1959: Trends and Structure. Cambridge Univ. Press.
Flanders, M. June 1964 Prebisch on Protectionism: An Evaluation. Economic Journal 74:305-326.
Habakkuk, H. J. 1953 English Population in the Eighteenth Century. Economic History Review Second Series 6:117-133.
Henderson, W. O. 1954 Britain and Industrial Europe, 1750—1870: Studies in British Influence on the Industrial Revolution in Western Europe. Liverpool Univ. Press.
Hoffmann, W alther G. (1931) 1958 The Growth of Industrial Economies. Rev. & enl. Manchester Univ. Press. ? First published as Stadien und Typen der Industrialisierung.
Hughes, J. R. T. 1958 Foreign Trade and Balanced Growth: The Historical Framework. American Economic Review 49, no. 2:330-337.
Kindleberger, C. P. 1961 Foreign Trade and Economic Growth: Lessons From Britain and France, 1850 to 1913. Economic History Review Second Series 14:289-305.
Krause, J. T. 1958 Changes in English Fertility and Mortality: 1781-1850. Economic History Review Second Series 11:52-70.
Kuznets, Simon S. (1953) 1954 Economic Change: Selected Essays in Business Cycles, National Income, and Economic Growth. London: Heinemann.
Kuznets, Simon S. (1959) 1961 Six Lectures on Economic Growth. New York: Free Press.
Landes, David S. 1958 Bankers and Pashas: International Finance and Economic Imperialism in Egypt. Cambridge, Mass.: Harvard Univ. Press.
League of Nations, Secretariat, Financial Section AND Economic Intelligence Service 1942 The Network of World Trade. Geneva: The League.
League of Nations, Secretariat, Financial Section AND Economic Intelligence Service 1945 Industrialization and Foreign Trade. Geneva: The League.
Lewis, W. Arthur 1955 The Theory of Economic Growth. Homewood, III.: Irwin.
Maizels, Alfred 1963 Industrial Growth and World Trade: An Empirical Study of Trends. Cambridge Univ. Press.
Mantoux, Paul (1906) 1962 The Industrial Revolution in the Eighteenth Century. London: Cape. ? First published in French. A paperback edition was published in 1965 by Harper.
Nurkse, Ragnar (1953) 1962 Problems of Capital Formation in Under-developed Countries. New York: Oxford Univ. Press.
Prebisch, RaÚl 1959 Commercial Policy in the Underdeveloped Countries. American Economic Review 49, no. 2:251-273.
Rosovsky, henry 1961 Capital Formation in Japan, 1868-1940. New York: Free Press.
Rostow, Walt W. (1952) 1960 The Process of Economic Growth. Rev. ed. New York: Norton.
Rostow, Walt W. (1960) 1963 The Stages of Economic Growth: A Non-Communist Manifesto. Cambridge Univ. Press.
Saul, S. B. 1960 Studies in British Overseas Trade, 1870-1914. Liverpool Univ. Press.
Slichter, Sumner H. 1961 Economic Growth in the United States: Its History, Problems and Prospects. Baton Rouge: Louisiana State Univ. Press.
Sombart, Werner (1903) 1927 Die deutsche Volks-wirtschaft im neunzehnten Jahrhundert und im An-fang des 20. Jahrhunderts: Eine Einfiihrung in die Nationalokonomie. 7th ed. Berlin: Bondi.
Thomas, Brinley 1954 Migration and Economic Growth: A Study of Great Britain and the Atlantic Economy. National Institute of Economic and Social Research, Economic and Social Studies, No. 12. Cambridge Univ. Press.
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United Nations, Economic Commission For Latin America 1950 The Economic Development of Latin America and Its Principal Problems. Lake Success, N.Y.: United Nations, Department of Economic Affairs.
U.S. Bureau of The census 1960 Historical Statistics of the United States; Colonial Times to 1957: A Statistical Abstract Supplement. Washington: Government Printing Office.
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Vtner, Jacob (1921-1951) 1958 The Long View and the Short: Studies in Economic Theory and Policy. Glencoe, III.: Free Press. ? See especially pages 277-305, “Power Versus Plenty as Objectives of Foreign Policy in the Seventeenth and Eighteenth Centuries.”
Viner, Jacob (1952) 1953 International Trade and Economic Development: Lectures at the National University of Brazil. Oxford: Clarendon.
II. SOCIAL ASPECTS
Industrialization, in the strict sense of the term, entails the extensive use of inanimate sources of power in the production of economic goods and services. Even so restrictive a definition does not limit the concept solely to manufacturing, as agriculture is also subject to mechanization (as well as other modes of technical rationalization), and so are services such as transportation and communication. It is true, of course, that manufacturing is an essential ingredient, as the machines and instruments used in the production of raw materials or services are likely to be factory-produced.
The use of an initially technological criterion of industrialization does not imply a kind of technological determinism. On the contrary, there are clearly institutional and organizational preconditions and counterparts of large-scale and efficient utilization of power. Extensive industrialization (in the strict sense) is quite unlikely in the absence of a highly specialized and coordinated labor force, monetary exchange and rationalized accounting systems, the technology of precise measurement and production control, and so on. Furthermore, technology itself is properly viewed not as a kind of inanimate force but rather as a body of practical knowledge and skills; it is a social product having social consequences.
The term “industrialization” is often used in a broader sense as equivalent to any form of economic modernization. There is some justification for this looser usage, since there is no example of sustained economic growth (measured, say, by real income per head) without the extensive practice of manufacturing or the use of its products. Making industrialization equivalent to economic development runs some risks, however, particularly for somewhat fine-grained analysis of the components of economic growth. The risk is comparable to that displayed in Marxist theory, which attaches structural and dynamic primacy to “the economic factor” but then includes “dependent” variables in the independent one, so that the determination is by definition, or, worse, includes several elements and components that are independently variable, so that these variations are suppressed or defined away. Even if the structural integration of economic systems were greater than can be empirically confirmed, the order and rate of change of one or another component in a wide range of “economic factors” would still have significant consequences. The risk is minimized by its recognition, however, and industrialization will be used here in its broader sense except where finer distinctions are necessary and appropriate.
Theoretical and methodological issues
The conceptual models of complex social systems, including societies, used by most social scientists involve assumptions about structural de-terminateness and congruity that need careful scrutiny. In extreme form, these models assume such a close interdependence of elements in social systems that a substantial autonomous (or, more likely, exogenous) change in one component would lead to definite and congruent changes in others. This would be particularly true of such a crucial aspect of social organization as the system of economic production. If this degree of integration could be used with predictive reliability, the “system requirements” of industrialism could be worked out theoretically and checked against a single established case for empirical confirmation. The actual situation is more complex, however, as the variety in extant industrial societies makes evident. A theoretical approach involving a “system” concept is empirically warranted, but must focus on the degree of determination of the structural correlates and the consequences of economic transformation and continuing change.
The appropriate cautions in interpretation may be made explicit. First, structural congruities may apply between classes and ranges of structural forms rather than between specific features. For example, a strictly hereditary mode of occupational placement is clearly inconsistent with the recruitment of an industrial labor force in the broad sense, if for no other reason than the changing proportions of occupational categories and the appearance and disappearance of occupations from the “market mix.” Second, incongruities are probable. Persistent ones—for example, as’ between labor mobility and employer identification—may be kept within tolerable limits by various tension-management devices, but perfect solutions are unlikely and may be impossible. The low probability of absolutely synchronic change implies incongruities arising from leads and lags. Third, even empirical uniformity is not conclusive proof of theoretical necessity; structural alternatives simply may not have been tried. For example, the bureaucratic form of authoritative coordination of specialized workers in large productive units seems almost, if not completely, universal as the standard form of industrial organization. However, from direct and indirect evidence at hand, it cannot be determined whether this is a structural necessity, and if so, within what limits of variation, and if not, what are equally or more viable alternatives. The replication of a standard form of organization may derive from mere imitation, abetted by an untested theory of functional necessity, rather than from successive independent developments based upon experimentation with alternatives. These cautions do not imply chaos or random variability of social and economic structures; however, they do bespeak a stance of skeptical inquiry with respect to the theory and the available evidence.
Correlational and sequential analysis
In addition to doubts about the determinateness of functional or structural necessities, an important problem of time presents itself. When are these structural changes associated with industrialization to appear—immediately or in the “long run"? Can anything be said about the order of their appearance? These are questions that the integration models of society are plainly unsuited to answer. It is distressing to note how often this kind of analysis fails to make explicit the “change model” on which it relies. But even when the model is made explicit, it is clearly unacceptable. Although it has been characterized as a three-stage model, only the middle, transitional stage of it has been seriously studied; its preindustrial and postindus-trial stages are usually assumed to be static and “integrated” (for these and other criticisms see Feldman & Moore 1962). Change in preindustrial societies may be relatively slow or infrequent, but this assumption of stasis runs counter to evidence that all societies are subject to change from intrinsic sources and to the clear historic fact that most of the “newly developing” areas have had political, economic, and often religious contact with the Western world for periods ranging from decades to centuries. The assumption of postindustrial stability could only be an implication of scholarly neglect, for it is absurd when made explicit.
The extensive, empirically based generalizations about the social aspects of industrialization are, paradoxically, mainly consistent with this contrary-to-fact change model and with an exaggerated equilibrium or integration model as applied to the stages not directly examined. The fact is that, within limits, common origins and common destinations can be assumed. However, the errors of the theoretical structure appear when more detail is sought concerning routes and trajectories of change and the varieties of (temporary) destinations, or when attention is turned to the continuing dynamics of industrial societies.
Before-and-after comparisons abound in the descriptive and analytical literature. They gain their validity from the reality of structural constraints on social organization imposed by any of the variant forms of an industrial economy. What is clearly missing in the current state of knowledge, however, is any precision in the sequence and timing of structural changes. Moreover, since these factors are no more likely to be invariant than the antecedent conditions or the character of industrial societies, a change-model typology is also missing. The notion that each case is unique, though obviously true in some details, would defeat both generalization and prediction, and it is a prematurely pessimistic position. Generalization is indeed possible, as will be indicated in this article, but the day of “easy” generalizations is past.
Of course, cross-sectional data are still needed for establishing the range of conditions and the correlates of various forms and degrees of industrialization. There is an even more critical need for repeated observations through time, including quantitative trends. As social statistics become more widely available, at least through decennial censuses, the recent course of change in newly developing areas may be compared with the older
historic record, which also awaits systematic quantitative analysis. It may be confidently expected that since trends in one or another measurable aspect of economic and social structure are not truly autonomous, somewhat complex “stochastic” models will be needed for analysis of temporal patterns.
Conditions for industrialization
A review of the circumstances under which industrialization and broader economic development can take place may appropriately start with those most clearly economic in character. It should be noted at once, however, that the distinction between the economic and noneconomic components of social systems is not as sharp as is often assumed for analytic convenience. Industrialization involves, for example, extensive remobilization of the “factors of production,” including new supplies of capital, new power sources, “embodied technology” in capital goods and equipment, and workers with skills that are different from those required in the preindustrial economy. But lying just behind these economic inputs (or comprising the same requirements in different semantic guise) are the organization of capital markets or the investment decisions of the state, a network of relationships between suppliers and manufacturers, an external or internal training system for workers, and so on.
Just how much formal education is a requisite “capital investment” for economic growth is a matter of some conjecture and scholarly dispute. Moreover, given limited investment resources and urgently competing demands on them, there is also uncertainty as between an “elitist” policy, which concentrates attention on training professional, technical, and managerial personnel, and a kind of “populist” policy, which emphasizes the economic as well as social values of widespread education as a mechanism of attitudinal development along with cognitive learning. The historic record of the industrialized countries is poorly known and barely analyzed, and in any event it might or might not yield precise and applicable answers for countries with largely illiterate populations and extremely short historical backgrounds in the cultivation of the professions and other intellectual occupations.
It is a truism that underdeveloped areas suffer from a shortage of capital and, generally, a surplus of labor. Domestic capital resources may exist to some degree, however, and the problem becomes one of tapping unproductive savings, providing means and motives for diversion of capital from traditional to novel investments, or perhaps establishing a system of “forced saving” through the taxation system and fiscal policies of the state. Labor supplies are likely to represent underemployment in agriculture, but the actual diversion of labor to industrial employment is likely to require a reorganization of agriculture. Improved efficiency of labor in agriculture and some actual increase in farm output are needed to supply the needs for food and fiber of those who will not be engaged in primary production. The supplies of workers for industry, although numerically ample, are quite unlikely to have the necessary skills—to say nothing of attitudes and habits—for industrial work (Moore 1951). Thus some investment in training will be a requisite for new productive systems.
The historic cases of successful industrialization have involved countries that were either rich in territory and resources or else engaged in extensive international trade in capital, raw materials, and products. In contrast, many of the new nations are both poor and small, and they are not likely to be economically viable without the formation of international trading organizations or actual economic unification across political boundaries.
Institutional structures
As to the requisite organizational and institutional structure, we may note some further normative conditions for industrialization. Property rights must be transferable if land, raw materials, and other material factors of production are to be converted to new uses and passed, say, from supplier to manufacturer to consumer. Nominal ownership by the state changes this condition only in detail, as transfers of power over and responsibility for the materials of production are still necessary. Labor, too, must be transferable; short of reliance on the police power of a totalitarian state, this normally means the establishment of a “labor market” and a system of financial and other rewards to induce workers to move from one economic sector to another, one employer to another, one skill level to another, and so on. At the very least, fixed hereditary assignment of economic roles must somehow be broken down. Eventually, a whole new structure of social placement and relative status must be established; however, this structure may be viewed as a consequence rather than a condition of economic modernization.
Even exchange relationships, though nominally contractual and perhaps predicated on individual self-interest, are necessarily based on norms of propriety and fair dealing, compliance with promises for future performance, and restraints on competitive strategies that would destroy the system. The classic formulation by Durkheim (1893) of the “non-contractual elements in contracts” is in point here. The actual organization of monetary exchange relationships must be established where it does not exist. Industry, in particular, commonly involves assembling the factors of production over considerable distances (often crossing political boundaries) and over considerable periods of time. Systems of credit, stabilization of currency and its rates of exchange, and state fiscal policies of some reliability are thus necessary.
Since rules are not always self-enforcing or organizational arrangements self-policing, a modicum of stable political power is essential. The noninterference of the state in the development of “laissez-faire capitalism” was systematically and hypocritically exaggerated by ideologists for private businesses that generally benefited from direct and indirect governmental assistance. In the contemporary world of the newly developing areas, the state is likely to play a prominent, overt, and often dominant part in developmental policies and their concrete implementation. This comes about in part because only the state can muster the necessary capital from domestic and foreign sources and make the other necessary changes in social organization and the legal embodiment of normative codes.
Motives and values
It is also true that industrialization and other measures of economic development have become instruments of national policy in virtually the entire world; this fact brings us to questions of motives and values. Classical economic analysis operated with a very simple set of motivational assumptions: that individuals would act rationally in ways designed to maximize their own material self-interests. Just what those interests were, beyond health, food, clothing, and shelter, was left vague, or the question was simply neglected. Yet, despite this neglect, these motivational assumptions appear sounder than the rather exaggerated “value relativism” advanced by anthropological and sociological critics of economic theory. Once some knowledge of the possibility of economic betterment became fairly widespread, discontent with poverty also became widespread. At this level, the motivational requisites appear to be satisfied. But as usual the problem is somewhat more complex. New employments and styles of life are not always better than old ones, and they are never unmixed blessings. A simple quest for improvement does not automatically yield the means for its achievement.
Economists have long identified the functions of “entrepreneurship” as requisites for the development of the capital investment and extensive organizational and technical innovations that are necessary for economic modernization. Their faith was often a little magical and somewhat restricted to a free-market economy. Hagen (1962) has restated and broadened the case for the importance of creative or innovative personality types. Yet, in any case, leadership is not independent of the motives of those who are led. To balance this exclusive emphasis on the innovators or managers, other scholars have argued for the importance of labor commitment—not only performance but also acceptance of the relevant norms—and for the importance of some participation in decisions and actions for the appearance of commitment (Moore & Feldman 1960).
The motives of the ordinary individual participant in economic activities are not necessarily the same as the values espoused by national planners and their spokesmen. Short of terroristic totalitarianism, the two presumably have some congruence, but it need not be perfect. Industrialization and other developmental measures are always instrumental goals—but for which more ultimate values are they instrumental? Mere widespread improvement of present economic conditions would presumably best satisfy the aspirations of most participants. But maximizing present returns is likely to be at the cost of sustained future growth, which requires substantial savings and capital accumulation. The long-term view is likely to have little appeal to those who are faring least well in their present situations. The older solution to this problem, in terms of profits available for reinvestment, rested on the institutionalization of a particular property system; and, as for all forms of socially legitimized power, the foundations of that power were values and thus nonrational. In societies now just beginning to foster rapid economic development, the proprietary solution has been generally mixed with or superseded by an appeal to national interest and power. Those values are also non-rational, but they provide an ideological rationale for present sacrifice or forbearance and an appeal to collective rather than purely selfish interests.
It is perhaps premature to list nationalism as a precondition for industrialization, but for the reasons just given it would have a high priority among the values preceding major economic change. Nationalism serves another, correlative function, in providing a sense of identity and meaning for populations that are physically and socially uprooted. For the economic rewards, even if paid, have social costs, and those too merit attention.
Concomitants and consequences
The array of necessary and probable effects of economic modernization is extensive. It seems appropriate to start with the structural features of society that are primarily economic in form or function, then to proceed to the demographic and ecological characteristics of populations rearranged by economic development, and finally to attend to certain outstanding features of social organization.
A monetary basis of exchange is essentially a prior condition for any substantial industrialization; even remote, small, and isolated manufacturing establishments must either pay wages to their workers or set up a commissary. The extension of “custodial” arrangements has early limits, including the problem of finding external sources of supply. As economic modernization continues, the “economic calculus” tends to grow in importance. The variety of producers’ and consumers’ goods makes money the necessary medium for their acquisition and transfer. Perhaps even more significant for the transformation of traditional social forms is the movement of both new and old services and reciprocities through the market. Mutual aid among family members and neighbors either gives way to more specialized, hired services or, if it persists, tends to be given a market evaluation. The ubiquity of financial transactions and market evaluation becomes almost total: it affects clubs, religious orders, families, and welfare associations, as well as governments, banks, and retail shops.
Change in occupational structures
One of the more ridiculous conventions of traditional economic analysis was to treat labor as an aggregate of interchangeable units, its availability being governed over the short run by a market price translated into a wage rate. Even in the earliest stages of industrialization, a quotient of more skilled manpower is necessary, and this demand for differentiated services increases with time. Several interrelated and continuing processes of change in occupational structures can be traced to industrialization.
The first is that of “sectoral relocation”: the transfer of producers out of agriculture and other preindustrial pursuits into industrial and commercial employments. In a limited sense this process is true by definition, but the process is a continuing and probably an accelerating one. It is in fact often a mixture of two analytically separable changes: first, the formation of a labor force in the technical sense, by setting monetary values on productive performance, and second, the relocation of constructive effort from less productive to more productive economic sectors.
Specialization is a second characteristic process of occupational change. A few traditional positions are successively subdivided as larger units provide the organizational mechanism for division of labor. At least equally important is the creation of demand for new skills associated with changes in the technology of products and processes and the steady expansion of services that are ancillary to the productive process or provide information and technique for the problems and aspirations of increasingly sophisticated consumers.
The subdivision of traditional craft skills and the partial substitution of mechanical for human effort in production have given rise to the criticism that industrialization is essentially degrading to the workmen. Ample evidence for this effect can be found historically, and there is little doubt that it will happen again and again. Yet, the initial effect of industrialization is to create demands for a new range of skills, and those new demands tend to require steadily higher levels of education and experience. On balance, and without denying the human costs and wastage involved, the long-term consequence of industrialization is an upgrading of occupational structures.
A final process of occupational change is that of bureaucratization: that is, the employment of specialized workers in large administrative organizations, which provide coordination by means of hierarchical authority rather than through the medium of contractual exchange in a market. Whether this rather authoritarian ordering of the work force is a necessary consequence of industrialization has not been fully examined, as noted above. It appears probable, for example, that the steady upgrading of the labor force reduces both the necessity and the efficacy of bureaucratic organization, which assumes the superior wisdom (and commitment) of the managers as compared with those managed. The loosening and decentralization of administrative controls may gradually supersede the rigidly hierarchical coordination of specialized producers.
Demographic and ecological effects
By very indirect and largely unintentional means, industrialization tends to create part of its own labor supply. This comes about by mortality reductions deriving from the whole range of public health, medical, and food-producing technologies. Birth rates, however, are not so immediately affected; they may in fact increase slightly, owing to better health and nutrition. The historic record indicates that after a variable period of rapid transitional growth, fertility also gradually comes under a measure of rational control. The interpretations of declining fertility vary and remain in dispute. That lower birth rates result from deliberate family limitation can scarcely be doubted, but the explanation of the attitudinal and behavioral change is by no means settled. In any event, the immediate effect of rapid population growth may be dampening to rates of economic growth, though not in any simple way, since rapid growth also produces an expanding labor force and, given other favorable conditions, expanded consumer demand. It seems highly probable that fertility declines will eventually happen in newly developing areas; and the combination of official concern and new contraceptive techniques may speed the process, as compared with past experience, just as death rates can now be reduced more rapidly than was historically true [seeFertility].
To population growth as a consequence of industrialization must be added a major spatial redistribution. The historic association between industrialization and urbanization was close but not perfect; large commercial and political centers antedated the industrial era, and, here and there, manufacturing establishments can be operated without large urban agglomerations. Even now, the rate of urbanization in newly developing areas commonly exceeds the rate of industrialization, as measured by employment in manufacturing. The urbanization rate displays attitudinal dissatisfaction with present conditions in conspicuous and troublesome ways; the “flight from the land” is an unmistakable “vote with the feet” for better opportunities. The cities of the world, even if not important manufacturing centers, are not “independent” of industrialization. The metropolitan complex vends the products of manufacturing and depends upon industrial products for communication, transportation, water, sewerage, public health measures, and public and private construction. The rate of urbanization is probably increasing everywhere, and it is likely to continue wherever there remain substantial residues of marginal agricultural producers [seePopulation, article onDistribution].
Social structural changes
The consequences of industrialization are also evident in the principal features of social structure. Most conspicuous and far-reaching, perhaps, is the impact of industry on kinship and the family, for in many nondustrial societies the constellation of kinsmen constitutes the major source of social position and personal identification. The required geographical and social mobility of an industrialized economy clearly weakens or breaks up the multigenerational and laterally extended “corporate” kin group. The destruction is unlikely to be total, however, which is contrary to certain interpretations that saw the functional utility of the “nuclear” family in an industrial society but did not comprehend the importance of the close bonds between generations and among siblings even in the small-family system. Intergenerational tensions are in fact likely to be sharpest in the very early stages of industrialization, as youths are the likeliest recruits to new occupations and styles of life. After a few generations, intergenerational disparities are less distinct, since they are within the “modernized” social system, rather than between radically different systems.
At the very time that traditional kinship ties are weakened or broken, the network of other essentially informal relationships is also likely to disappear for the urban industrial recruit. Village or tribal identities may be transferred to the cities temporarily, but they rarely survive in important measure among the first urban-born generation. For many of those displaced, there is little social framework between the immediate family and the (possibly remote) state. If either of these links to society fails, and especially if both do, apathy, alienation, and amoral or criminal conduct are likely to ensue. This is a persistent problem of industrial societies, despite the gradual growth or deliberate creation of new formal associations and forms of political participation.
The institutionalization of rationality—that is, an emphasis on problem-solving and impersonal relationships—often leads to a kind of “instrumental-ism” and lack of fundamental value orientations. The family retains its importance in these circumstances as an affectional and personal set of relationships, permitting legitimate individuality and emotionality. On the larger scale, nationalism and religion compete, uneasily, for nonrational adherence. Both are threatened by secularization; in response to skeptical questioning of received doctrine, each attempts to provide answers to the intrinsic doubts and uncertainties of human existence. Nationalism rarely offers a sufficiently personal meaning to death and misfortune to supersede entirely the richer theology of traditional religions.
For social differentiation and stratification, the consequences of industrialization are, to say the least, complex. The invariant and probably inevitable initial effect of industrialization is a polarization of social status within the modernized sector. The managers and the managed, the innovators and the reluctant followers, are likely to represent radical differences in education, income, and power. This polarization may lead to apathy and discontent on the part of the lower orders, but only rarely to revolutionary disturbances. By the time the modernized sector has incorporated a substantial portion of the population, its status system has become far more complex. Multiple status gradations, including a disproportionate expansion of “middle positions,” are further complicated by multiple criteria of differential valuation and relative position—a “lateral” extension of differentiation.
Marx correctly observed the polarities in early industrialization and almost correctly predicted (with some exaggeration) the disappearance of preindustrial strata. Although Marx was categorically wrong in his expectation of increasing polarization in Western societies, his theory does possess a certain validity in predicting the characteristics of early industrialization in the areas that are now beginning the process of economic modernization. The disparity between the great speed of “ideological” incorporation of impoverished populations into the common aspirations of the modern world and the slower pace of actual structural transformations may well increase the revolutionary potential in newly developing areas.
It is quite clear by now that rapid industrialization is consistent with a rather wide range of political regimes, although not all. Political centralization and substantial stability are clearly requisite for continuing growth, but democracy is not. In fact, in the contemporary world the state more nearly shapes the industrial structure than conversely; moreover, various alternative forms of the state, as well as various unprecedented combinations of technology and economic strategies, may be constructed eclectically from a world-wide pool of precedents. Any modern state is likely to hit upon forms of popular political participation as a mode of tension management under conditions of strain and rapid change. However, manipulative and essentially totalitarian management of such participation appears to be a viable alternative to genuine democracy. Though the ministries of political administration are likely to look pretty much alike in one capital or another, their ultimate accountabilities are likely to differ widely.
Continuities
The variability of political structures associated with industrialization highlights a weakness in the assumption that industrialization leads to a common social destination. The structural congruities are real enough, but they fall short of indicating structural determinism. Some persistent differences will be matters of detail and not very consequential at a generalized level of analysis. Others cannot be dismissed so lightly; they bear witness to a measure of systemic “openness.”
Industrial societies of course have no stable, final destination, and this is part of the problem in predicting the exact consequences of industrialization in areas now beginning the process. Some underlying processes, such as continuous specialization and functional differentiation, are likely to provide sounder bases of generalization than the finer features of social structure at any particular time. Similarly, the substitution of machines for men is likely to be ubiquitous and continuous, with correlative positive consequences for occupational upgrading, ambiguous implications for the use of leisure, and negative consequences for those displaced or for those unable to fit such standardized selective mechanisms as the school.
Predicting the future of industrial societies has excited remarkably little scholarly, as opposed to literary, attention. That enterprise cannot seriously engage us here, except for one additional point. Paradoxically, and despite political diversity and exceptionally dangerous international tensions, there is a lesson of theoretical importance in worldwide industrialization. The contemporary form of industrialization is not autonomous and “autarchic,” country by country, and indeed it never was. But now the new arrivals benefit from accumulated technological and organizational experience. The resulting “eclecticism” has at least two theoretical implications: novel combinations of structural elements may be expected, some of them viable; and, in many instances, the society (approximately equated with the national state) will no longer be the most useful comprehensive system for analytic purposes. In other words, in seeking to understand present and future large-scale, dynamic processes, we will have to view the world as a single system.
Wilbert E. Moore
[Directly related are the entriesEconomic growth; Economy and society; Modernization. Other relevant material may be found in Automation; Entrepreneurship; Labor force, article on definitions and measurement; Workers; and in the biographies of Marx and Weber, Max.]
BIBLIOGRAPHY
Braibanti, Ralph; and Spengler, Joseph j. (editors) 1961 Tradition, Values, and Socio-economic Development. Durham, N.C.: Duke Univ. Press.
Wilbert E. Moore
De vries, egbert; and medina echavarria, jose (editors) 1963 Social Aspects of Economic Development in Latin America. 2 vols. Paris: UNESCO.
Durkheim, Émile (1893) 1960 The Division of Labor in Society. Glencoe, III.: Free Press. ? First published as De la division du travail social.
Economic Development and Cultural Change. ? Published since 1952. Especially valuable for theoretical and empirical studies of industrialization.
Feldman, Arnold S.; and Moore, Wilbert E. 1962 Industrialization and Industrialism: Convergence and Differentiation. Volume 2, pages 151-169 in World Congress of Sociology, Fifth, Transactions. London: International Sociological Association.
Hagen, Everett E. 1962 On the Theory of Social Change. Homewood, III.: Dorsey.
International Social Science Council 1958 Social, Economic, and Technological Change: A Theoretical Approach. Paris: The Council.
International Social Science Council 1962- Social Implications of Technological Change. Paris: The Council.
Marx, Karl (1867-1879) 1925-1926 Capital: A Critique of Political Economy. 3 vols. Chicago: Kerr.
Moore, Wilbert E. 1951 Industrialization and Labor: Social Aspects of Economic Development. Ithaca, N.Y.: Cornell Univ. Press.
Moore, Wilbert E. 1963 Social Change. Englewood Cliffs, N.J.: Prentice-Hall. ? See especially pages 89-112 on “Modernization.”
Moore, Wilbert E. 1965 The Impact of Industry. Englewood Cliffs, N.J.: Prentice-Hall.
Moore, Wilbert E.; and Feldman, Arnold S. (editors) 1960 Labor Commitment and Social Change in Developing Areas. New York: Social Science Research Council.
North American Conference on The Social Implications of Industrialization and Technological Change, Chicago,1960 1963 Industrialization and Society: Proceedings. Edited by Bert F. Hoselitz and Wilbert E. Moore. Paris: UNESCO.
Weber, Max (1904-1905) 1930 The Protestant Ethic and the Spirit of Capitalism. Translated by Talcott Parsons, with a foreword by R. H. Tawney. London: Allen & Unwin; New York: Scribner. ? First published in German. The 1930 edition has been reprinted frequently.
Weber, Max (1922) 1957 The Theory of Social and Economic Organization. Edited by Talcott Parsons. Glencoe, III.: Free Press. ? First published as Part 1 of Wirtscfiaft und Gesellschaft.