The Industrial Revolution is a long – term process and it is a change from an agrarian to an industrialized        (factory based) economy.  It led to the growth of two systems of thought: Economic Science and its antithesis, Socialism.

The development  of Economic Science in England has four chief landmarks, each connected with the name of one of the four great English economists.  The first is Adam Smith who wrote “Wealth of Nations” in 1776 in which he investigated the causes of wealth and aimed  at the substitution of industrial freedom  for a system of restriction;

a second stage in the growth of science is marked by Malthus’ “Essay on Population”, he directed his inquiries not to the causes of wealth but to the causes of poverty. 

In addition Ricardo published “ Principles of Political Economy and Taxation in which Ricardo sought to ascertain the laws of distribution of wealth.

The fourth stage is represented by John Stuart Mill’s “ Principle of Political Economy” in which he showed what was and what was not inevitable under a system of free competition.

Coming now to the facts of the Industrial Revolution, the first thing that strikes the attention is the far greater rapidity which marks  the growth of population and the relative and positive decline in the agricultural population caused by the destruction of the common-field system of cultivation;  by the enclosure, on a large scale of common and waste lands, and by the consolidation of small farms into large ones  which reduced the number of farmers.

An agrarian revolution plays as large part in the great industrial change of the end of the eighteenth century as does the revolution in manufacturing industries. The period was one of great agricultural advance; the breed of cattle was improved; rotation of crops was generally introduced, the steam-plough was invented and  agricultural societies were instituted.

Passing to manufactures, the most important innovations which brought the passage from an agrarian economy to an industrialized one are indeed the four great inventions altered the character of the cotton manufacture; the spinning-jenny, the water-frame, Crompton’s mule and the self-acting mule. But, to tell the truth, none of them themselves revolutionised industry if in  1769 James Watt had not taken out his patent for the steam-engine and sixteen years later the same was applied to the cotton manufacture.

However, the most famous invention of all, and the most fatal to the domestic industry was the power-loom. Meanwhile the iron industry had been equally revolutionised by the invention of smelting by pit-coal and by the application of the steam-engine to blast furnaces.

In this period the canal system was being rapidly developed throughout the country and some year afterwards  roads were greatly improved under Telford and Macadam  and the year  1830 saw the opening of the first railroad.

The improved means of communication caused an extraordinary increase in commerce, and secured a sufficient supply of goods. It became the interest of the merchants to collect weavers around them in great numbers to get looms together in a work-shop.  An additional consequence of the expansion of trade was the regular alternation of periods of over-production and depression.

The altered conditions in the production of wealth necessarily involved an equal revolution in its distribution. In agriculture the prominent fact is an enormous rise in rents. Most of the rise was due to money invested in improvements but it was far more largely the effect of the enclosure system, of the consolidation of farms, and of the high price of corn.

All that represented a great social revolution, a change in the balance of political power and in the relative position of classes. The farmers shared in the prosperity of the landlords; for many of them held their farms under beneficial leases, and made large profits by them. It follows that their character completely changed; they ceased to work and live with their labourers and became a distinct class.

The new class of great capitalist employers made enormous fortunes, they took little or no part personally in the work of their factories. The so far illustrated  situation brought class conflict and the foundation of the Trades-Union. The  working class was very poor and it suffered likewise from the conditions of labour under the factory system, from the rise of prices,  the high price of bread before the repeal of corn laws in particular.

The effects of the Industrial Revolution prove that free competition may produce wealth without producing well-being.