Introduction
The market economy created a new system of production that not only increased the efficiency with which people created goods, but also heightened their quantity. It improved the quality of life of the general population because people could access conveniences that were inconceivable before the 19th Century. Groups of people that participated in forced labor in the South could now exchange production for wages. Critics claim that this system created a new aristocracy but it was less dangerous than the aristocracy before the free-market system. The market economy increased the degree to which workmen in the South and North participated in the nation’s prosperity by furnishing them with enormous conveniences and comforts, allowing them to exchange labor for paid work, increasing the efficiency of commerce, and creating a less-threatening aristocracy than before.
How the market economy shaped people’s lives
The market economy may have limited some workers’ ability to progress but it was still an improvement on their former lives. Tocqueville (2) believes that the free market economy stifles creativity and human intellectual development. It leads to a situation in which laborers concentrate on one aspect of production; that is the division of labor. This not only impairs one’s ability to engage the mental faculties, but it also demeans a person’s value. “The workman becomes more weak, narrow-minded and more dependent” (Tocqueville 1). Therefore, Tocqueville despises the free market economy because it restricts people’s ability to grow intellectually. They can find little meaning in work if they stick to the same skill set for over two decades. If one wants to examine the validity of this argument, one must consider the characteristics of such workers. Within the industrial system, the workers that Tocqueville refers to in his critic are unskilled laborers.
In Metropolitan areas, like New York, this group consisted of migrants from the South or other parts of the country, as well as immigrants from Germany, Britain and Ireland. Wilentz (119) explains that “destitute immigrants would work for whatever price they could get”. They were looking for a second chance in this industrial hub. Low-wage laborers in 19th Century factories were worse off before the industrial revolution than before it. Indentured servants in the South or displaced Native Americans may have earned relatively lower wages than their middle-class counterparts, but this was a better situation than their previous lives before the market economy.
One might claim that rising inequalities offset minor improvements in the quality of life of the working class but this argument would disregard the reduced threat of the new aristocracy in the free market economy. Prior to the industrial revolution, aristocracies still existed in different parts of the country. These consisted of wealthy merchants who controlled credit, imports and exports, transportation of supplies, provision of insurance, and many other aspects of production (Foner 26). Since they controlled a large portion of production, they created a new upper class that engaged in indulgences and looked down on other classes. This category of people alienated itself from the rest of the population; it epitomized the values of indulgence and excess (Foner 23). Many of them controlled political life and passed laws that favored them.
However, after the advent of the industrial system and the growth of a free-market economy, a new aristocracy emerged. This one did not consist of wealthy merchants who controlled different aspects of production; manufacturers were the new elite. Manufacturers were distinctly different from wealthy merchants before them because they had no common traditions or bonds. They did not form associations that would cement their interests or perpetuate their wealth. Conversely, wealthy merchants formed political associations that could exert control over the people. Manufacturers did not have a real association with their workers (Tocqueville 3).
Laborers needed them to get paid for their work but were not under any obligation to work for one manufacturer. It was only common interests that held these two parties together. Once the interests disappeared then their relationship ends. Even the degree of permanency of the manufacturing elite is questionable. A rich individual in the free market could become poor, yet this was not applicable prior to the industrial revolution. Therefore, the impermanence, disunity, and lack of political will of the manufacturing class made them less threatening than previous nobility classes. This implies that the free market economy improved people’s lives by eliminating a class of domineering people whose status was solid and immovable.
The free market economy created a high demand for commodities that increased the quantity and quality of goods produced thus making life more convenient for all workers across the divide. This economic system placed a lot of pressure on producers to establish efficient ways of production in order to meet rising demand. As such, manufacturers came up with the division of labor. The latter method transformed production by increasing efficiency and quantity. Smith (1) asserts that “the greatest improvement in the productive powers of labor have been the effects of the division of labor.” Specialization increased skill levels among workers because they concentrated on one operation. Pre-industrial artisans were less efficient than industrial laborers because they had too many tasks to perform. Additionally, the free market economy encouraged better time usage and hence greater efficiency. Artisans often wasted time when changing from one job to another as “it is impossible to pass very quickly from one kind of work to another” (Smith 8).
Furthermore, their commitment to new tasks was quite low immediately after switching to a new operation. Paine (37) explains that the work habits of Philadelphian artisans were too dependent on their level of discipline. No external measures existed to ensure that they made thorough use of their time. The process of changing tools wasted plenty of time and made this group quite inefficient. It was not even possible to devise better ways of performing tasks, through the use of machinery, because of this unfocused approach (Smith 11). The industrial system thus forced individuals to make careful use of their time, which increased production. Goods and services that emanated from improvements in production were available to all members of the population. The free market was the platform that allowed other categories of workers to access material comforts, and division of labor facilitated these results.
Conditions of trade prior to the 19th Century were hostile; the free market economy created a new system of trade that was better and more efficient for artisans and merchants. Prior to the industrial era, most merchants lacked market information. Forner (26) says “many economic relations were based on subsistence, barter or personal ties.” They often sold their goods at a loss in international markets because they did not know about prevailing prices. Additionally, artisans were too susceptible to market fluctuations. They operated in hostile environments that lacked central currencies and had high-interest rates. The system of indentured servants also created expensive labor and this increased their operational costs (Clark et. al. 456).
Artisans could not access credit easily as loans were dependent on a weak financial system. The free market changed this perception owing to a centralization of the financial system as well as the development of sound banking structures. Commercial activities were no longer the high-risk activity that many perceived of them before. Additionally, since markets had expanded, artisans did not just have to rely on the elite as their only consumers. Prior to the market economy, Foner (33) states that “wealthy merchants were the main consumers of the products of many craftsmen”. Competition from British imports also became inconsequential as local goods were cheaper and easily available. This implied that it was now possible to save money and people could keep aside enough currency to protect themselves from external risks. In essence, the free market economy ensured that persons engaging in trade had secure ways of accessing and circulating money. This increased the level of prosperity in the nation.
Conclusion
The free market economy necessitated the division of labor which provided for the employment of unskilled labor. Most people in this category of labor were much worse off in the pre-industrial era than in the free market economy. They were indentured slaves or desolate immigrants who appreciated such an employment opportunity. Additionally, the new economic system created an aristocracy that was less harmful than the past nobility. Members of the new elite lacked political will and unity; therefore, they were better for society than the past regime. The free market economy also increased the efficiency of production through the division of labor. This created comforts and conveniences that cut across all sections of society. Finally, the free market also enhanced trading conditions by expanding markets and improving financial conditions. This reduced risks in trade and benefited middle-class traders. The free market economy made the quality of life for all workers better than before. It increased the degree to which they could participate in the economy.
Works Cited
Clark, Christopher et. al. Who Built America? Working People and the Nation’s History. Volume One: To 1877. New York: Bedford St. Martin’s, 2008. Print.
De Tocqueville, Alexis. How an Aristocracy May be Created by Manufactures. N.d. Web.
Foner, Eric. Tom Paine and Revolutionary America. New York: Oxford Press, 2004. Print.
Smith, Adam. The Wealth of Nation. n.d. Web.
Wilentz, Sean. Chants Democratic: New York City and the rise of the American working calss, 1780-1850. NY: OUP. Print.