The Industrial Revolution is the substitution of competition for the mediaeval regulations which had previously controlled the production and distribution of wealth. It led to the growth of two systems of thought: Economic science and 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: Wealth of Nations(1776, Adam Smith), Essay on Population (1798, Malthus), Principles of Political Economy and Taxation (1817, Ricardo),Principles of Political Economy (1848, John Stuart Mill).
The Industrial Revolution led to a rapid growth of population and a decline in the agricultural population, caused by the destruction of the common-field system of cultivation, replaced by enclosures, and the consolidation of small farms into large.
As these changes bore upon the rural population, they wrought, without doubt, distinct improvement from an agricultural point of view: the breed of cattle was improved, rotation of crops was generally introduced, the steam-plough was invented and agricultural societies were instituted. The growth of industry was caused by: mechanical inventions in textile industry (spinning- jenny, water-frame, Crompton’s mule, self-acting mule, steam engine, power-loom), mechanical revolution in iron industry (steam engine for blast furnaces, smelting by pit-coal) and improved means of communication (canal system, roads, railroad).
The consequence of the mechanical discoveries of the time is the substitution of the factory for the domestic system and improved means of communication caused an extraordinary increase in commerce. A direct consequence of this expansion of trade was the regular recurrence of periods of over-production and of depression, a phenomenon quite unknown under the old system, and due to this new form of production on a large scale for a distant market.
These 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.
Much of this rise, doubtless, 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 during the French war. Whatever may have been its causes, however, it 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.
In consequence, their character completely changed; they ceased to work and live with their labourers, and became a distinct class.
Exactly analogous phenomena appeared in the manufacturing world. The new class of great capitalist employers made enormous fortunes, they took little or no part personally in the work of their factories, their hundreds of workmen were individually unknown to them; and as a consequence, the old relations between masters and men disappeared. The workmen began a fight against capitalists (class conflict).
The misery which came upon large sections of the working people was often due to the fall in wages, terrible conditions of labour and the rise of prices, especially from the high price of bread before the repeal of the corn-laws.
In conclusion the Industrial Revolution proves that free competition may produce wealth without producing well-being.