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American Industrial Revolution: Economic Ideas Essay

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Updated: Sep 27th, 2021

Introduction

At the second half of the 19th century, industrial revolution started to spawn in the American West. Before that, it was only land that functioned as the source of wealth. However, the industrial revolution changed all that. It required that certain individuals and institutions to give substantial risks in order to finance new inventions, machinery, and business enterprises. Eventually, bankers, industrialists, and other holders of large sums of money replaced landowners as the most powerful economic force. These people invested their funds in the hope of realizing even greater profits and thereby became owners of property and business firms. The transition to private ownership of business was accompanied by the emergence of the capitalist economic system. Thus, capitalism became an economic system in which the means of production are held largely in private hands, and the main incentive for economic activity is the accumulation of profits.

History

In this regard, laissez-faire became one type of capitalism that operated during those times. Coming from the French word that means “to let act” or “let them do”, British economist Adam Smith (1723–1790) first used the term to indicate how people could compete freely, with minimal government intervention in the economy. Laissez-faire is essentially “an economic doctrine that holds that the economic activity of self-interested individuals in a competitive marketplace maximizes national wealth and social welfare” (Calhoun, 2002). In this concept, there is “a minimal role for the government and for centralized decision making. Intervention by the state in matters of economic and (for some advocates) social policy reduces growth by misdirecting resources” and “an ideal laissez-faire government is limited to creating a proper legal framework for safeguarding property rights, providing for national defense, and maintaining competitive markets by combating noncompetitive and monopolistic practices”.

Together with the term “laissez-faire”, social Darwinism also evolved in the second half of the 19th century. British philosopher Herbert Spencer was the first and most important proponent of this theory. Society, he argued, benefited from the elimination of the unfit and the survival of the strong and talented. Social Darwinists “believed that that natural selection entails the elimination of weak societies, or people, by strong ones” (Halliday and McLean, 2003). Spencer’s counterpart in America was William Graham Sumner, who supported the fact that “distinctions of wealth and status among men were the direct result of inherently different capacities” and “that this stratifying tendency worked to the good of society by eliminating weaker and encouraging stronger strains”, related to how Charles Darwin applied his concept on plants and animals (Schultz, 1999). Thus, we can also relate the belief that social Darwinists are defenders of the concept of laissez-faire because of their support in hedging “the free play of economic forces and personal abilities”.

Another term that emerged during the industrial revolution was “Horatio Alger myth”. This term arose from the famous writer named Horatio Alger whose stories featured Raggedy Dick. From this story, tales about “rags to riches” came into the picture as his story goes that “Dick is living on the street, selling newspapers and shining shoes” and eventually became rich through honest means (Garcia and Hendler, 2004). Alger placed great emphasis on the moral qualities of his heroes and he made sure that their success was a reward for their virtue. But many of his readers ignored the moral message and clung simply to the image of sudden and dramatic success. After Alger’s death, his publishers responded to that yearning by abridging many of Alger’s works to eliminate the parts of his stories where the heroes do good deeds. Instead, they emphasized the success of Alger’s heroes in rising in the world. This is why when businessmen argued about laissez-faire, they often refer to the Horatio Alger myth, where they attained wealth as self-made men.

Ultimately, laissez-faire, social Darwinism and the Horatio Alger myth are some of the concepts that we can connect to the rise of industrial revolution in the late 19th century. During these times, America’s economy, and along with it the nation’s society and culture, were being profoundly transformed because of a new economic trend that was happening. Industrialists did their part to create a rationale for their power and to persuade the public that everyone had something to gain from it. But, many Americans remained skeptical of modern capitalism. The conflicts that was created by the rise capitalism during the industrial revolution later on defined what happened to America’s economy as what it is at present.

Works Cited

Calhoun, Craig (Ed.). “Laissez faire”. Dictionary of the Social Sciences. UK: Oxford University Press, 2002.

Garcia, Angela M. and Hendler, Glenn. “Alger, Horatio”, The Oxford Encyclopedia of American Literature. UK: Oxford University Press, 2004.

Halliday, John and McLean, Iain. “Social Darwinism”, The Concise Oxford Dictionary of Politics. UK: Oxford University Press, 2003.

Schultz, Stanley K. American History 102: Civil War to the Present. 2008. Web.

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