Key Innovations and Economic Shifts of the Industrial Age

Rail and Steamer Transportation

At its inception, the railroad was primarily used in mines. The first major innovation was a new system of iron rails and flanged wheels that prevented derailment. The most significant development was Stephenson's locomotive (1829), which utilized a steam engine to power the railroad. The first passenger line connected the cities of Manchester and Liverpool (1830).

Subsequently, steamboats replaced sailing vessels. Steamboat operations began in the United States between 1807 and 1847.

The Expansion of Trade and Market Economy

The Industrial Revolution gave way to a market economy in which sales occurred on an increasingly larger scale. Improved transportation systems allowed for a significant increase in internal trade. Foreign trade also increased considerably by the mid-nineteenth century.

Theories of free trade argued that unrestricted commerce between countries would promote economic growth. However, many states that were beginning their industrialization imposed protectionism to safeguard domestic industries.

Defining Capitalism

Capitalism is an economic system based on social capital and fundamental production relationships. In capitalism, private individuals and companies employ workers to carry out the production and exchange of goods or services, aiming to produce and accumulate earnings or other benefits driven by self-interest.

New Energy Sources and Industrial Sectors

Electricity and oil began to supplant coal as primary energy sources.

Key Energy Innovations:

• The invention of the dynamo (1869) allowed for the production of electricity, often from hydropower.
• The alternator and the transformer made the long-distance transfer of electrical power possible.

Oil began to be mined in the United States by the mid-nineteenth century. The invention of the combustion engine allowed oil to be used as fuel for automobiles, a key transportation method of the 20th century.

Aviation was another major innovation made possible by oil: the first airplane flight was carried out by the Wright brothers in 1903.

In the field of industry, metallurgy gained great momentum due to the production of new metals. The automotive industry, spearheaded by innovations like those of Henry Ford, experienced massive expansion in the United States.

Modern Industrial Organization and Business Structures

A new working method, known as Taylorism (or the manufacturing chain), involved the division of the production process into very specific tasks using precision machines. In this system, each worker performs only a specific part of the overall process. This production system originated in America, and the Ford automobile factory was among the first to implement it.

Agreements between companies led to the birth of several new organizational structures:

• Cartel: Agreements between different companies to control prices or markets.
• Trust: Mergers of several companies under a single management.
• Holding Company: A financial group that owns the majority of shares in a group of companies and banks.
• Monopoly: The exclusive right of a single company to market a product or service.