2.1.3 The emergence of industrial capitalism

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Unit 2 Contents

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The developments I have traced led, in the sphere of technology, to what we call the Industrial Revolution.  Basically this refers to the effects of applying the new mechanistic world-view and experimental science to the manufacture of things that could be used by people: railways and other means of transport, textiles, weapons of war, etc. Once a mechanism for producing such things quickly was discovered, it could be used on a large scale.  Whereas most earlier production of goods had been very small-scale and often based in the home, the new mechanized methods led to the building of factories in which many people worked, each of them carrying out just one part in the manufacturing process.  This was called ‘the division of labour’.  In this way of understanding the world, human beings themselves came to be seen as just part of the overall mechanism.  So it fitted with this for them to be regarded as instruments in a mechanized process, each with a particular function.

But the Industrial Revolution was accompanied by a development of equally great significance in the economic sphere.  The writers who founded what became modern economics – such as is still studied in economics courses in universities today – saw human beings in fundamentally mechanistic terms. They thought we are essentially pleasure-seeking and pain-avoiding mechanisms.  Given this, they also thought that the best possible life for us is one in which pleasure is maximized and pain is minimized – and that the best way to maximize pleasure is to maximize how much money we can use to buy things that will give us pleasure.  They used the word ‘utility’ to describe the amount of pleasure-gain and pain-avoidance that we get out of any particular activity.  They held, therefore, that the aim we each have in life is simply to maximize our individual ‘utility’.

They also stressed the human capacity for reason or rationality, but they saw this as primarily an instrument which we use to work out how to maximize utility.  This was a new emphasis in how human rationality is understood.  It displaced the main earlier view that the primary role of reason is to enable us to know the truth about things, about God and God’s ways for us in the world, and indeed to contemplate their order and beauty.

Granted this way of seeing human beings, the early economists held that we need a system which produces as much as possible of all the things from which people get ‘utility’. The most influential of them, Adam Smith – whose portrait is on the UK’s £20 note – argued that the best way to do this is through competition among people who buy and sell in market places, each of them seeking the best deal to get what will give him or her satisfaction.  He said that if each individual seeks their own maximum ‘utility’ in trading freely with others in markets, the result will be the best overall for the whole society.  Smith used a famous metaphor to refer to this.  He said that the overall beneficial result comes from an ‘invisible hand’ which enables each individual’s self-interested acts to combine to benefit society.

This approach to economics became combined with the large-scale mechanistic production to which the Industrial Revolution had led.  People who had wealth to invest, which is called capital, used it to run mechanized factories in order to maximize the profit gained from the investment – the return to their capital.  This aim meant the industrialists sought to keep their costs as low as possible, including the wages they paid to factory workers.  They believed this was acceptable because of Adam Smith’s economic theory: both they and the workers were participating freely in the market place and acting for their own self-interest.  This economic system, in which people with capital sought to maximize financial return by use of new mechanised production methods, is called ‘industrial capitalism’.  The word ‘capitalism’ is apt, because the essential aim was to serve capital.

Capitalism in this form emerged in England in the decades before and after 1800, and across much of Europe by the end of the nineteenth century.  As part of this, many people moved away from the countryside to where the factories were in towns and cities, which grew hugely.  This is known as ‘urbanization’.  As a result of these changes, very large numbers of industrial labourers worked in appalling physical conditions, receiving very low pay, merely ‘subsistence wages’ – just enough for them to carry on working.  According to the ideology of capitalism, such workers were only instruments in a process, one of the so-called ‘factors of production’, together with land and the factories themselves.

Given the terrible conditions which many industrial workers had to endure, this kind of capitalism soon had many critics.  One very prominent English critic was the novelist, Charles Dickens.  Hard Times, his shortest novel, portrays very vividly a fictional town dominated by factories.  It was based on Preston in Lancashire and he called it Coketown.

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Reading (2pp)

Read the first half-dozen paragraphs of Charles Dickens,

Hard Times, Chapter V

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In 1891, Pope Leo XIII published a document which contributed to the great debate that had emerged about industrial capitalism.  This was Rerum Novarum, and it is this document which is generally regarded as the first major contribution to modern Catholic Social Teaching.  Rerum Novarum is the starting point for what is studied in this module.

But before we look at Rerum Novarum, it will be best to say two more things about the context in which it was published.  These relate to the two main views that had emerged during the nineteenth century about industrial capitalism – one for it, one against it.

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End of 2.1.3

Go to 2.1.4 Arguments for and against liberal capitalism

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