Second Industrial Revolution: Capitalism, Growth, and Innovation

The Second Industrial Revolution and Global Impact

The expansion of industrialization across Europe led to the emergence of new industrial powers. This period saw the development and consolidation of the capitalist system, with significant economic growth resulting from the Second Industrial Revolution, which in turn fueled imperialism.

Development and Consolidation of the Capitalist System

Capitalism became increasingly globalized due to the internationalization of trade. Production, facilitated by a worldwide transport revolution, was exported globally. This system is characterized by alternating cycles of expansion and crisis, with the ever-growing engine of internationalization driving both.

Understanding Capitalist System Operation

In this system, producers often end up producing more than consumers can absorb, leading to overproduction. When supply exceeds demand, prices are forced down. As prices descend, profits decrease. Lower profits can lead to increased unemployment.

Consequences of Overproduction: The Great Depression

Overproduction significantly impacted the economy, particularly agriculture, leading to falling prices and widespread unemployment, a key characteristic of periods like the Great Depression.

Direct Economic Consequences

The economic pressures led to several direct consequences:

• Increased competition among firms, driving efforts to reduce production costs.
• Incentive for technological innovations and changes in work organization.
• Increased rivalry between industrial powers to control resources and markets.

Economic Growth: The Engine of Innovation (1870-1914)

Between 1870 and 1914, a profound process of technological innovation emerged, introducing new sources of energy and raw materials.

New Energy Sources

• Oil: Initially used primarily for lighting, it later became a crucial fuel source.
• Electricity: Revolutionized communications and powered new industries.

Key Raw Materials

• Steel: Despite iron being widely used, new innovations in steel production emerged. Previously, steel production was more expensive and limited. With new techniques, steel could be produced at a lower price, significantly increasing and diversifying its applications.
• Aluminum and Nickel
• Copper: Essential for the burgeoning electrical industry.
• Zinc: Used in alloys with iron to prevent oxidation.

The Chemical Industry Boom

The chemical industry experienced unprecedented development, providing solutions that aided all fields of production and multiplying output of various products, including:

• Soda
• Chemical fertilizers
• Drugs
• Plastic materials

Growth of the Machinery Industry

The machinery industry significantly increased its production, making goods more accessible for consumption by the general population.

Forms of Industrial Concentration

To manage competition and maximize profits, several forms of industrial concentration emerged:

• Cartel: An agreement among several companies to fix prices, eliminate competition, and allocate customers.
• Trust: A merger of several companies under a single management or board.
• Holding: A financial company that invests in and controls other companies.