The Ideas That Conquered The World by Michael Mandelbaum

Author:Michael Mandelbaum [Michael Mandelbaum]
Language: eng
Format: epub

ECONOMIC GROWTH AND POLITICAL LEGITIMACY

THE DEFINING FEATURE of the industrial revolution is economic growth. Beginning in the last decades of the eighteenth century and continuing to the beginning of the twenty-first, it yielded a steadily expanding volume of products for human use. Growth has three sources: increases in capital from investment; increases in labor through population increase, immigration, or the inclusion of a greater proportion of the society in the workforce; and increases in the output that a particular amount of inputs—capital and labor—can produce, an increase in what is known as productivity. At different points in the industrial revolution the way that these three ingredients have combined has varied.

The initial stage was made possible by the invention of the first significant machines driven by inanimate power: the steam engine, the spinning jenny, the early techniques for mining coal and smelting iron. Once these were available two developments enabled Great Britain, the pioneer in the industrial revolution, and then other Western countries, to take advantage of them. One was the accumulation of capital. Britain had, in the eighteenth and nineteenth centuries, the most sophisticated and powerful financial system in the world. The other was the movement of people in large numbers from the village to the city and from farms to factories, where they could operate the new machines. This counted as an increase in productivity as labor was transferred from a less to a more productive economic sector.

The first phase of the industrial revolution made traditional society obsolete because it was incompatible with the basic requirements of an industrial economy. Among these requirements was the commercialization of agriculture. Land had to be treated as a commodity that could be bought and sold in order to produce enough food to feed a growing urban population and to make some rural labor redundant so that people would move to the cities to work in the new factories. Traditional societies varied widely across the globe but everywhere they were based on the land and nowhere was land simply a commodity. It was, instead, the basis of a complicated network of obligations and privileges, a social structure binding owner to field worker, lord to peasant. It was these traditional institutions, these social worlds, that the industrial revolution threatened and that it ultimately swept away. ¹⁹

Unlike the world of tradition, for this first phase the Communist system proved adequate. Indeed, for a time it seemed optimal.²⁰ The command economy could not have produced the machines on which the first stage of the industrial revolution depended.²¹ Once they had been invented, however, and the initial pattern of industrialization established, the command system proved serviceable. The enormous power of the state gave the government the means to squeeze savings out of the agrarian sector and to direct it to industry on a large scale. Communist countries typically had higher rates of investment than countries with market economies,²² and the governments of Third World countries attempting state-led industrialization also devoted themselves to mobilizing and directing investment. Communist governments could also compel rural laborers to move to cities and work in factories.

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