Foundations of Modern Industry and Economic Principles

Industrial Transformation and Early Innovations

The chemical industry underwent significant transformation to meet the demands of textile dyeing and the production of vast amounts of bleach. A notable development was the invention of the Roebuck lead chamber process by 1746, crucial for sulfuric acid production. The momentum for metal manufacturing, particularly machinery, originated from the needs of the textile industry. However, gradually spreading mechanization consolidated this new industry, dedicated to manufacturing machines. Another rapidly growing sector during this period was construction.

Economic Liberalism and Classical Thought

Economic liberalism emerged in the eighteenth century, championed by the Classical School of economists. Key figures included:

• Adam Smith
• David Ricardo
• Thomas Malthus
• John Stuart Mill

Smith famously defended the supremacy of the individual against estates or organized groups. He believed that the pursuit of self-interest by each individual ultimately results in goods being produced in the quantity demanded. Market interests, he argued, are balanced through the "invisible hand" that adjusts supply and demand. Smith advocated for minimal state intervention in the economy, urging the removal of barriers like protectionism and monopolies, which he saw as obstacles to economic growth.

David Ricardo argued that labor is a commodity like any other, and wages would not rise significantly above the minimum required for subsistence. Thomas Malthus, in turn, highlighted that population growth would inevitably unbalance its relationship with existing resources, potentially worsening the living standards of many people.

Capitalism and the Labor Market

Capitalism is an economic system where the instruments of production and the goods produced are privately owned. This ownership is concentrated in the hands of a segment of the population, the bourgeoisie. Employees, on the other hand, possess only their labor, which they sell for wages. It is a free enterprise system, largely unplanned, aimed at the individual pursuit of maximum profit.

Owners of the means of production (capitalists) seek to maximize profit from their property, while employees (the proletariat) pursue higher salaries. Mismatches between supply and demand cause periodic economic crises, which are typically corrected by adjusting wages or supply. While subsistence crises largely disappeared, economic crises persisted. In this competitive environment, only businesses with more resources or those with lower costs survive.

Protectionism Versus Free Trade

Great Britain was a strong proponent of free trade, advocating for non-state intervention in international commerce and allowing goods to be traded freely between different states. The breakthrough of British products in the international market, often due to higher quality or lower price, significantly affected the rest of Europe.

Conversely, advocates of protectionism proposed imposing tariffs on foreign goods to make their importation unprofitable. The defense of free trade ultimately favored those nations most competitive and best placed in the industrialization process.