The Industrial Revolution began the modern era, which brought about a new capitalist system and a new world economy. New technology and scientific innovations sparked worldwide exchanges of national and cultural resources. Globalization provided nations and individuals the opportunity to grow rich creating monopolies and economic superpowers. Not everyone was able to capitalize at the start of this new era. Nations and individuals that did not have the resources or could not discover a method to get wealthy were stuck, not able to flourish.
In these most recent economic times, it is easy to see that the gap between the extremely rich and the extremely poor is growing, with those in the middle being pushed to one extreme or the other. Economic superpowers, whether they are nations or corporations, have established themselves and dominate their respective industries. These economic superpowers have controlled the world because without them production, distribution, and the worlds globalized economy would grind to a stop. While these wealthy nations and wealthy individuals flourish, the poor nations and individuals suffer.
Poor nations and individuals have no way of helping themselves and are thrown farther and farther into poverty each day. There are many factors that influenced this gap between the rich and poor, each reason having a different effect on the world economy. The increase in human population from roughly 375 million in 1400 to about 1 billion in the early nineteenth century created the need for more energy and resources (Strayer, 568). The Industrial Revolution was a response to the needs of humans. With the transition to new manufacturing methods humans were now able to produce products more efficiently and at a faster rate.
This transition included going from hand production methods to machines, new chemical manufacturing, new iron production processes, improved efficiency of waterpower, the increasing use of steam power and development of machine tools. The transition also included the change to fossil fuels such as coal, oil, and natural gas that replaced the earlier dependency on wind, water, wood and the muscle power of humans and animals. The Industrial Revolution marked a major turning point in history with almost every aspect of daily life being influenced in some way.The Industrial Revolution erupted rather quickly beginning in Britain and within a few decades spread to Western Europe and the United States, later diffusion around the globe. When looking at it, the question of “why did industrialization begin Europe? ” can be asked. European nations internal competiveness insured that economic and technological stagnation would not be an issue (Strayer, 571).
With European nation fighting for supremacy, European governments actively encouraging commerce and innovation. Stayer writes, “States granted charters and monopolies to private trading companies and governments founded scientific societies and offered prizes to promote innovation” (Stayer, 572).This competition between nations along with a new capitalist society, formed because of it allowed European nations to get a head start into the industrial age. Capitalism allows economic individualism’s, where a person has the right to decide where to invest what to produce or sell, and what prices to charge. There is no natural limit to the range of their powers in terms of possessions, transactions, and profits; or the number of customers, employees, and investors; or whether they operate in local, national, or international markets.The basic idea is that an individual has the right of self-interest and the right to own private property.
This new capitalist society led to the formation of major corporations. As capitalism spread major corporations arose and began to dominate their respected industry because governments had a laissez-faire approach. Capitalism is a major reason why the wealth of the world is divided so unevenly. George Soros once said “the global capitalist system has produced a very uneven playing field” (Strayer, 790) With a free market individuals were able to create corporations that controlled a market.With control of a particular market these corporations were able to grow exponentially to the point where they cannot be stopped because they have too much importance. Take the American car industry for example.
When they were on the brink of closing, due to bankruptcy, the American Government had to bail them out because with the loss of these companies thousands of Americans would be out of a job and the American market would have suffered greatly. Capitalism is a major reason why there is such a big gap between the wealthy and poor in today’s world.Industrialization split nations citizens into two distinct classes, the bourgeois, the corporation owners, and the proletariat, the working class. Industrialization also caused major urbanization; workers flocked to cities to find work because many farming jobs were replaced with machines. These urban areas were growing exponentially and with little room to grow outwards they grew upwards. The cities over crowded and dirty were a breading ground for infection and disease.
The proletariat class making just enough to get by would live in the slums of these cities.How the Other Half Lives by Jacob Reis was a book documenting the unsanitary slums of New York City. Pictures depicted images of children starving and filthy living on the streets with nothing but dirt and garbage surrounding them. This was all happening while “the other half” the bourgeois was living an extravagant life style in houses and upscale apartments.
In the slums families would be packed into apartments with only one room and bathrooms that would be shared between families and sometimes floors. The wealthy had apartments that had multiple bathrooms, bedrooms and a kitchen.Industrialization lead to the expansion of the “great gap” between wealthy and the poor individuals. The massive output of industrial technology and Europe’s growing wealth created the need for extensive raw materials and agricultural products. With little resources at home European nations set out to find solutions abroad. European leaders set up colonies in Africa, Asia, and the Americas.
Racism being a major driving force for these nations. With a Eurocentric Belief, European countries thought they were helping these poor nations by colonizing them.These colonies radically changed the economic and social life in these colonized territories. King Leopold of Belgium noticed other European counties prospering from colonies and sought out to do the same. Humanitarianism was a major front for many imperial leaders.
They clamed to be doing good, saving the natives lives by giving them purpose, but where only exploiting they and using them and their land for their economic gain. With Henry Morton Stanley constructing a base and controlling a military, he was able to acquire treaties from neighboring chefs/ leaders and set up a monopoly of exchange for King Leopold.He was vicious and cruel, using slave labor as a primary work force. He used military strength to control ivory trade in the Congo, natives were not allowed to sell it to anyone except Leopold and the army set out across the land hunting, trading, and confiscating ivory (Hochschild, ch1-7).
Just like King Leopold other nations created colonies in foreign nations. By the early 1900’s a great deal of land in Asia was under colonial control of Britain, the Netherlands, France, the United States, or Japan.Africa was also under colonial control as a result of the “scramble for Africa” (Strayer, 611). China was also largely influenced by industrial powers of the day and was divided into spears of influence each controlled by a different industrial nation. While these nations were getting rich by exploiting their colonies, the nations under imperial control were loosing resources and gaining nothing.
As time continued, imperial influences slowly died in these nations. India now growing industrially, is behind the game, and is struggling to grow.Industrial nations that flourished early had an upper hand on those who were industrially handicap. This is why countries like America, Britain, and France are superpowers that control a large amount of wealth and areas like the Congo are struggling. Nationalism was the driving force for many colonized nations to break their imperial ties.
India had two prominent nationalist leaders Jawaharlal Nehru, the first Prime Minister of India and Mahatma Gandhi, a well-known leader of Indian nationalism in British-ruled India (Nationalism Paper).Nehru emerged as the major leader of the Indian Independence Movement and ruled India from its establishment as a self-governing nation in 1947 until his death in office in 1964. Nehru is considered to be the designer of the modern Indian nation-state, a sovereign, socialist, secular, and democratic republic. Gandhi, using a non-violent civil disobedience approach, steered India to independence and encouraged movements for non-violence, civil rights and freedom across the world. They agreed that India needed to get away from the colonization from England.
Gandhi saw the answer for India’s troubles was tradition and Nehru saw socialism as the answer. While Gandhi praised manual labor and hard work Nehru wanted India to become a strong industrial nation. Gandhi was more liberal and fought his battles trough non-violence protesting and speaking out for what he believes in. Nehru more socialist, wanted the people of India to chose things for themselves and believed democracy was the answer to India’s governmental and economical problems (Nationalist Paper). Nationalism caused nations to close the gap between wealthy and poor nations.With these newly free nations growing in power, an economic shift occurs, balancing out the world’s wealth.
Various forms of socialism, an economic system in which the state uses significant control over wealth distribution, attempt to diminish the unequal distribution of wealth and the conflicts that arise from it. Communism arose as a reaction to a distribution of wealth in which a few lived in luxury while the masses lived in extreme poverty. Modern communism found its political and philosophical roots in 19th century European socialism, inspired by the teachings of Karl Marx (Strayer, 714).Communism, an economic system that consists of state ownership of assets and industry and the equal distribution of resources among the population, can be seen as an attempt to eradicate wealth inequality through government policy.
Marxism, an idea taken from Karl Marx’s Communist Manifesto, is that wealth should be distributed as according to the rules of, "From each according to his ability, to each according to his need" (Strayer, 715-716) Communism eradicates the gap between the wealthy and poor because wealth is distributed evenly.This concept goes against human nature because no one would strive to be the best when everything is dispensed evenly. While states such as the Soviet Union and China have implemented communist systems to varying degrees, Marxism has never been realized in its ideal form, and no country has had a totally equal distribution of wealth. In 1944 at the Bretton Woods Conference, held in New Hampshire, The World Bank and International Monetary Fund (IMF) were created to finance projects such as roads, power plants and schools in developing countries.The World Bank and International Monetary Fund also make loans to restructure a country's economic system by funding structural adjustment programs (SAPs) (Strayer, 784). Structural adjustment is the term used by the IMF and World Bank to describe the loan conditions it imposes on indebted countries.
These conditions include not only trade liberalization, but also deregulation of industry and privatization of state-owned industries and services.Neoliberalism, favoring free trade, privatization, minimal government intervention in business, and reduced public expenditure on social services was imposed on many poor countries if they wanted to qualify for much needed loans (Strayer, 785). This only widens the gap between the poor and wealthy because it gives, corporations and wealthy individuals free economic reign in poor, developing countries. The World Bank and International Monetary Fund only help to widen the gap between the wealthy and poor. Societies of today are a result of the economic gap between the wealthy and poor.In the United States thing are not nearly as bad as they are in other countries where the gap in wealth is so clearly seen.
America has “safety nets” in place to protect the extremely poor. Thing like unemployment and food stamps allow those who cannot provide for themselves some economic help. These social insurance policies were instituted during the Great Depression under Franklin D. Roosevelt’s New Deal.
The New Deal created a Well-Fair State that protected the extremely poor and those who struggled to provide for themselves. In countries without these “safety nets” the poor struggle without the help of their government.“Despite repeated promises of poverty reduction made over the last decade of the 20th century, the actual number of people living in poverty has actually increased by 100 million,” Chief Economist of the World Bank, Joseph Stiglitz, quoted by Ellwood (Ellwood, 123). The poor are only getting poorer as corporations dominate the world economy.
Of the world's 100 largest economic entities, 51 are corporations and 49 are countries. With control of the economic word, corporations have a major influence on the nations government. With political control these corporations only grow financially increasing the gap between the wealthy and poor.Wealth distribution in the United States is disturbing with the wealthiest citizens controlling a majority of the nations wealth. The top one percent of Americans controls 40 percent of the nations wealth, while the bottom 80 percent only controls seven percent between them (Wealth Inequality, YouTube). The wealthy only grow wealthier, in 1976 the top one percent took in nine percent of the nations income, but today take in almost three time that amount.
The top one percent also owns 50 percent of Americas stocks, bonds, and mutual funds.The bottom 50 percent of Americans owns only half a percent of these investments (Wealth Inequality, YouTube). The distribution of wealth in America is not what Americans think it is. The difference between our perception of inequality and the actual numbers is substantial.
The reality is often not what we think it is and Americans have to start realizing that. The world’s rich are getting richer and as they do they force the poor farther into poverty. Since the Industrial Revolution took hold in the early nineteenth century, a new division appeared within the economic world between the rich and everyone else.In 1820, the ration between the income of the top and bottom 20 percent of the world’s population was three to one and by 1991 it was eighty-six to one. As the East/ West separation of capitalism and communism ended, differences between the rich nations of the global north and the developing nations of the global south assumed greater importance in the world matters (Strayer, 790).
Economic globalization has contributed to inequalities not only at the global level but also within individual nations, among the rich and poor. Only time will tell if the gap between the wealthy and poor will grow or shrink.