The World of Capital

I. Advancement of Technology

A. Communications

1. Telegraph--although this was an older technology (it had been around since the late 1830s), the first successful continuous transatlantic cable went into operation in 1866 (an earlier cable began operation in 1858, but it failed fairly quickly). This sped communication between Europe and North America from several week by boat to several minutes by wire.

2. Telephone--provided even faster person-to-person communication.

B. Electrical power--although electricity had been discovered in the 1750s (Ben Franklin), it was not until the 1880s that the 1879 invention of the light bulb paid big dividends.

1. Water power--used to operate early mills (both grain and textile), which is why these early mills were built along swift-flowing rivers like in Manchester, England, and Pawtucket, Rhode Island.

a) The water wheel was used to provide power for the machinery in the mill. The power was conveyed to the machines by a series of shafts and belt, but the further removed from the power source the machine was, the less power it received.

2. Steam power--the conversion to steam power allowed factories to be built anywhere that a boiler could be supplied with a source of heat and a boiler to turn water into steam--so it meant that factories were no longer tied down by geology. These factories still suffered, however, from the belt transfer of power, meaning that machines further removed from the immediate source of power did not perform as efficiently.

3. Electric power--the initial benefit of electric power was to extend the work day via the electric light bulb; work in factories could now be carried on throughout the night. The factory could be operated 24 hours a day.

a) Electric motors--after the turn of the 20th century, individual machines within factories began being supplied with individual electric motors. This meant that each machine tool received the same amount of power, and could be controlled by management at a certain speed.

b) Electric motors and the pace of work--the advent of individual electric motors to run machine tools allowed factory managers to control the pace of work with minimal supervision. While this did not mean the end of foremen or other supervisors, it made the task of supervising greater numbers of workers with fewer foremen easier.

c) Scientific management--the advent of the electric motor made the implementation of theories of “scientific management” easier.

C. Urbanization--the growth of the factory system around the world led to the growth of city populations, as well.

1. Factory size--factories grew larger during this time period, as well, which allowed companies to exercise greater “economies of scale”--producing commodities in greater numbers, which allowed them to further invest in machinery (capital) and to sell these commodities at lower and lower prices.

2. Commodification of Leisure--the growth of urban populations also led to the commodification of leisure.

a) Taverns, pubs, and saloons--many of these establishments were owned by the breweries that produced the product sold there. These establishments also provided meeting places, as well as a place to socialize.



b) Sports teams--many of the early semi-professional sports teams were sponsored by capitalists (Harman’s example of Arsenal, but also the Decatur Staleys--later Chicago Bears--and the Ft. Wayne Zollner Pistons--later Detroit Pistons).

3. Improved Sanitation and Living Standards--as more people moved to cities to take jobs in factories, the rich became aware that the living standards of the poor needed to be raised to provide labor for these factories--and because the diseases that ravaged the poor in these urban areas because of the lack of sanitation also tended to jump to the places that the rich lived, as well.

a) Construction of sewers and safe supplies of potable water--including projects like reversing the flow of the open sewer that had been the Chicago River, which polluted the drinking water of the city in Lake Michigan

b) Park systems--develop in Europe and North America to give city residents “places to breath” and an “appreciation for nature.”

D. Henry Ford and the Five Dollar Day--perhaps Ford’s greatest innovation (even greater than his application of the assembly line). The Five Dollar Day permitted Ford’s workers to buy the products that they made--an unusual occurrence in that day and age.

1. Rationale--the annual labor turnover in the Ford factory before the Five Dollar Day was greater than 350%--meaning that for every job in the Ford factory, the company had to hire and train three and a half employees each year. Despite the simplicity of most of the jobs, this greatly decreased the productivity potential of the other innovations in the factory.



2. Enticement--workers did not like the pace of work, or the fact that their interactions with other worker were restricted because they were tied to their machines, which operated continuously--and they voted with their feet, moving to other, more attractive jobs when they became available. The promise of the Five Dollar Day--twice the going wage rate of the automobile industry, which itself was a relatively high wage industry--was also an attempt to entice workers to stay at Ford’s, because workers only got the money after staying more than a year with the company.



3. Reward

a) Ford garnered an incredible amount of positive publicity for this innovation; it was probably one of the most important factors in creating the legend of Henry Ford

b) Workers were rewarded by a profit-sharing scheme that paid them the equivalent of Five Dollars a Day is they stayed with the company. And met numerous other requirements set forth by the company: that they be married, that no boarders stay in their house, that they stay away from too much alcohol, that they passed the muster when a representative from the Ford Sociological Department showed up to interview them, and that they take English classes if English was not their first language.