Summary
Highlights
The Industrial Revolution saw a significant shift from state-driven mercantilist economics to market-driven free market economics. Adam Smith's 'The Wealth of Nations' was instrumental in criticizing mercantilism and advocating for laissez-faire policies, suggesting that an 'invisible hand' of supply and demand would lead to better wealth distribution and prosperity.
Despite its increasing adoption, free market capitalism faced criticism. Critics like Jeremy Bentham argued for government legislation to address social problems caused by the impoverished working class. Friedrich List viewed global free-market principles as a British tactic for economic domination, leading to initiatives like the Zollverein in Germany to protect nascent industries with tariffs.
The global nature of trade led to the proliferation of transnational corporations like the Hong Kong and Shanghai Banking Corporation (established to manage British Imperial ventures and wealth from opium trade) and the Unilever Corporation (a British-Dutch company manufacturing household goods with factories worldwide and raw materials from colonies).
Funding these massive corporations required new financial practices. The rise of stock markets allowed companies to raise capital by selling ownership shares, and the expansion of limited liability corporations protected investors by limiting their potential losses to the amount invested.
Despite economic crises, Western industrialized nations became significantly wealthier by 1900. This led to a rising standard of living, the emergence of a broad middle class, and greater access to mass-produced consumer goods. Advances in manufacturing made these goods cheaper, and mechanized farming led to abundant food, contributing to longer lifespans.