Industrial Era Economics: Protectionism, Corporations, and Worker Rights

Key Economic Concepts and Business Structures

Protectionism and Free Trade

Protectionism: A policy designed to defend a country's domestic products from foreign competition, typically through the application of tariffs.

Free Trade (Economic Liberalism): An economic doctrine that favors the free flow of goods between countries, promoting trade freedom.

Corporations and Shares

Corporations are societies with diverse capital contributed by partners. The capital is divided into parts or shares of equal value. Shares can be purchased in large or small quantities, allowing small savers to participate in the company's ownership.

• Shareholders: Every holder of shares, regardless of the quantity, is a part-owner of the company, representing a percentage of the total capital.
• Dividends: If the company profits, the earnings are divided equally per share. The benefit obtained by the possession of shares is called a dividend.
• Limited Liability: In the event of bankruptcy, a shareholder is only responsible for the money invested in the share. They are not required to respond to losses using personal assets.

Methods of Business Consolidation

Large firms often employ strategies to consolidate power and control markets:

• Trust: The result of the merger of several companies to create a new entity. This new entity comes to own the majority of the shares of the others, thereby gaining domain and control over production.
• Cartels: Agreements established between firms to split or divide the product market.
• Holdings (Holding Companies): Consist of one company purchasing the majority of the shares of other companies to control their management and decisions.

The Rise of the Labor Movement

Working Conditions and Insecurity

Workers' lives were characterized by extreme insecurity. Working hours and salaries were subjected to the swings of the market and the needs of the profit margin. This meant the working class was highly insecure:

• They did not know how much money they would bring home at the end of the week.
• They ignored how long their current work would last or how they would secure another job if they were laid off.
• There was no social security or safety net available.

Origins of Worker Organization

The liberal state initially ignored social problems. In the second decade of the nineteenth century, the working class began focusing attention on these issues and pressed for solutions through various forms of organization.

Early associations of workers were born during the Industrial Revolution, evolving from the ancient guilds. The first major demand (or vindication) of workers was the right of association.

Britain was the first country to recognize this right in 1824. Once achieved, associations targeted the collective defense of wages and working conditions within a specific trade. The strike was usually the main instrument of pressure.

Key Early Movements

Luddites

An organization focused on destroying steam-powered machines. Workers often sent threatening statements against traders and businessmen before acting against the machinery itself.

Chartism

This movement was born in Britain from the London Working Men's Association. Chartists fought primarily for the democratization of the political system.