| THE UNITED STATES IN THE 19TH CENTURY WORLD SYSTEM The US was a �settler colony� displacing the native populations (Native Americans), as opposed to an occupied colony like India where the native population is dominated and exploited. Between the 1770�s & 1830s all settler colonies of the Americas gained independence (this mostly resulted from policies established by the British empire because it was too expensive to control settler colonies). Once US gained independence. began industrialization following European capitalist model (the US was never "peripheralized" like occupied colonies were). (Note: Most of South and Cebtral America + US South were peripheralized, and did not industrialize). Within 50 years 1/3 work force industrial, and by 1870�s major WSYS competitor of faltering British empire. During first third of 1900�s, both US and Germany passed England in industrial prod and led world economy. England and US shares of world 1870 1914 1930 industrial production England 32% 14% 9% US 23% 38% 42% CHANGES IN US WORK FORCE 1800 1850 1900 1925 1950 1975 2000 Agri % 93 56 40 26 16 4 2 Indus % 3 32 44 53 36 30 23 Service % 4 12 16 21 48 66 75 ADAM SMITH�S THEORY OF MARKETS/CAPITALISM 2 basic ingredients: 1. Pursuit of personal gain - self interest. 2. Market competition - free exchange between owners of property (implies no/minimum government intervention - intervention disrupts market operation). Competition between �producers� (capitalists) ensures best products for consumers at lowest prices through operation of the �law of supply and demand.� Capitalists compete with each other ? less efficient go out of business ? survivors are more efficient (sort of process of natural selection, like Darwin). Result over time: best products, lowest prices. Best products at lowest prices = lowest cost of production. How do capitalists compete/lower cost of production? Cheaper raw materials? Cut profit margins? Pay lower wages to workers? Make workers work more for same wages? All caps can do all of these! Make labor more productive? Use division of labor, specialization, larger operations to win competition! Larger, more productive capitalists put smaller less efficient capitalists out of business -- over time businesses grow larger, more productive, owned by fewer capitalists, employ more workers. WORKERS: workers also free to pursue self interest in the market -- sell labor power for WAGES. Natural/free market level of wages: as low as possible!! Just another product responding to supply/demand! (almost always a surplus of workers - agricultural productivity, pop growth, immigration) So, while the capitalist class grows smaller and richer, the working class grows larger and poorer. Wages are kept (by the market) at subsistence level. Eventually machines begin to replace workers, increase productivity. Workers try to get higher wages but there are obstacles to this: almost always a large surplus of workers, worker organizations are immoral/illegal, wealthy capitalists have recourse to force if necessary. What did Adam Smith think about all of this? Capitalists were superior, workers were inferior, natural order! MARX�S THEORY OF CAP DEVELOPMENT -- What happens in the long run as capitalism develops? As the whole economy grows larger and more productive, the capitalist class grows smaller and richer and the working class grows larger and poorer. Wages stay at minimal level and workers are displaced by machinery. KEY QUESTION: WHO ARE THE CONSUMERS WHO BUY THE PRODUCTS?? Farmers decreasing, capitalist class shrinking, other countries either less productive (and thus too poor to buy goods) or are in a similar situation (who buys their goods). Increasingly, wage workers are main consumers! But remember those low wages?! What do they buy with?? IN THE LONG RUN - CAPITALIST CRISIS: Overall productivity increasing + overall wages at subsistence level Production eventually exceeds capacity of consumers (mostly badly paid workers) to buy - smaller, less efficient businesses start to go broke, workers unemployed - overall production continues to increase as overall wages decrease (now low wages + unemployment) - more businesses go under - production and unemployment increase, etc. SYSTEM CYCLING OUT OF CONTROL AS CRISIS DEEPENS Result of crisis is collapse of the whole system, brought about by free market forces (with no market way out) DEPRESSION � two basic conditions: overproduction (surplus goods) + unemployment (surplus people). Franklin D. Roosevelt�s programs in 1930�s didn�t end the Depression -- improved early 1930�s, then worse. (tax base too small to support programs). What did end the Depression? World War II (first in Europe, then US entry in late 1941). WW II -- overproduction - war production unemployment - soldiers, war production Note: war requires high tax levels to pay for war production and soldiers. What happens when war over?? (no war production, fewer soldiers, etc.). New worse depression? |