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Origins of the Market Revolution and its Impacts on American Economy

What do you see as the origins of the Market Revolution and what impacts did it have on the American Economy?

The Market Revolution is the underlying philosophy of American economic growth and development. It includes the rise of a market economy and its supporting institutions, such as free-enterprise, liberalism, and individualism. This paper will look at the economic activities leading up to and following the American Revolution. It will discuss how America’s economy advanced under the influence of these ideals.

It will examine the causes of the Revolution such as social movements, government policy, and climate change. I will also cover some of the major players in this growth process like Thomas Edison, Andrew Carnegie, James J. Hill, Henry Ford, John D. Rockefeller and Andrew Mellon.

The Market Revolution was the dominant philosophy in American economics until the Great Depression and World War II. The market economy had great impacts on the development of America’s financial structure, commercial activities, production and consumption patterns. As a result, consumption and production rose sharply while prices fell. This increase in productivity led to significant increases in per-capita income (Granovetter, 2018).

Major economic progress during this period occurred because American citizens possessed an enterprising, optimistic attitude towards their work. This attitude allowed them to invest in business opportunities and new technology, thus significantly increasing productivity (Granovetter, 2018). The increase in productivity resulted in increased purchasing power and an abundance of food, clothing, and housing.

As a result of the revolution, large corporations became more prominent throughout the economy. The dominance of large corporations resulted in greater competition for labor and other resources. However, the large corporations did not fully exploit their workers. They created the foundation for unions and collective bargaining, thus increasing the wages of their employees (Granovetter, 2018). At the same time, there was an increase in union membership and communist parties spread like wildfire throughout the country. This period saw significant labor disputes that threatened to disrupt business operations all across America.

This period also witnessed several technological advancements such as the telegraph, telephone and electric lighting which increased productivity by days or weeks rather than months till years. These improvements helped spur further economic growth. The Business Cycle played an important role in the Market Revolution. The market economy endured many significant recessions, depressions and panics (Clark, 2017). Many of these events were triggered by changes in the money supply, credit market and government policies. These events had significant effects on the economy but did not prevent the market from growing. Citizens dealt with these events using their enterprising spirit, hard work and optimism to recover from each crisis. This ability to rebound from economic downturns helped fuel further growth for the country. It is important to note that the market economy grew because of its ability to withstand economic downturns.

The Market Revolution developed out of the environment of religious and social change following the American Revolution. Religious revivalism touched almost every area of life, including commerce, education and politics. The individuals who found success in business often credited their success to their salvation through Jesus Christ or God’s assistance in all they did. This belief in religious salvation, together with the ethics of individualism, opened the doors for a strong market economy (Clark, 2017).

During this period, America’s economic system was strongly influenced by the Industrial Revolution. The Industrial Revolution led to an increase in production and consumption of goods and services. Growing demand for goods such as clothing and food, caused prices to rise in these markets. Likewise, new production techniques were developed to produce more goods at lower prices. American manufacturers used these techniques to produce goods cheaper than their European counterparts creating an advantage in domestic market (Clark, 2017). As a result, American industries gradually began to take over European markets. Towards the middle of the nineteenth century, America’s economy became more market oriented and more dependent on foreign markets.

The starting point of the Market Revolution was the Enlightenment; a period of intellectual and moral progress throughout Europe during the seventeenth and eighteenth centuries. The ideas of Rousseau’s Social Contract, Locke’s Second Treatise on Government and Montesquieu’s Spirit of Division have great influence in shaping America’s key institutions including economics. The Enlightenment emphasized the idea of a social contract between the government and its citizens. This contract became the basis of governmental authority in America. It also led to increased prosperity because of economic growth and stability (Clark, 2017).

Also, the ideas of individualism, popularized in Locke’s Second Treatise on Government, became an important characteristic for the formation of a market economy. Individualism was a belief that the individual is an independent entity and possess full rights to pursue happiness as long as he or she does not infringe on another’s rights. This belief encouraged Americas citizens to become more enterprising and confident in their work (Clark, 2017). These characteristics have been the driving force of America’s economic growth throughout the nineteenth century.

Another important factor that shaped the Market Revolution was religion. Protestants in particular were committed to their work and believed that God would provide all they needed so long as they were diligent and honest in their work. This belief led to greater confidence and optimism amongst businessmen who led to a shift away from mercantilism (Stearns, 2020). The rise of revivalism or evangelical Protestantism also helped fuel business growth during this period. These principles of hard work and religious salvation encouraged a more materialistic culture in the country.

The Market Revolution was also influenced by the Agricultural Revolution. During this period, many Americans turned to farming as an alternative to factory work. The Agricultural Revolution provided Americans with new technologies, such as mechanical reapers, that could increase agricultural productivity and provide more food for the growing population. These improvements led to an abundance of farm products and allowed Americans to export large amounts of these products on foreign markets (Stearns, 2020). Moreover, the Agricultural Revolution encouraged mechanization which led to greater efficiency in agriculture.

The Market Revolution was also influenced by the Industrial Revolution. During this period, new inventions played an important role in boosting productivity and helping businesses grow. The development of the steam engine had a significant impact on American industry. For example, steam power was used for transportation giving entrepreneurs like Cornelius Vanderbilt a competitive advantage in the transportation industry. Steam power was also used to power factory equipment resulting in increased production capacity and lower production costs. This resulted in an increase in the demand for goods and services, which led to a rise in prices. Lastly, the development of the locomotive played a crucial role in expanding trade between America’s cities and their port towns (Stearns, 2020).

The Market Revolution was also preceded by another important economic development, known as mercantilism. This system was based on the idea that exporting goods and controlling the money supply would produce prosperity for a country. Mercantilism is described as “a policy of managing commerce through government regulation of trade (Stearns, 2020). It was a system based on the concept that it is in the best interests of a nation to grow its own national wealth by maintaining a favorable balance of trade with other nations.” This means that America’s growth depended on having a favorable balance of trade with other nations.

Mercantilism also required an increase in production. American manufacturers aspired to put as many factories and mills in America as possible because they believed they could produce goods cheaper than European manufacturers and therefore sell these products at lower prices. This led to several social and economic problems including inflation, the lack of good quality goods, the unemployment of men and women who could not find jobs in the factories and mills, and a shortage of money.

In addition to these economic problems caused by mercantilism, American farmers began to suffer because they could not compete with cheaper British imports which were typically sold at lower prices than American products. Under mercantilism, America’s economic fortunes were contingent on its ability to export more goods than it imports from other countries. This meant that America’s money supply would need to be controlled by a central bank which would increase the amount of American currency (Stearns, 2020). This led to an increase in inflation and the rise in prices. Moreover, America’s economy is also dependent on import from other countries so when these imports decline, America suffers as well. This is why the Market Revolution began when it did because during this period American industries were growing and needed more foreign markets for their products.

In conclusion, the Market Revolution of the nineteenth century led to rapid economic growth and tremendous prosperity for Americans. During this period, Americans experienced immense social and cultural changes. Many of the developments that have contributed to the 19th Century’s prosperity continue to influence American economy and culture today. In this paper we have discussed many of these ideas including mercantilism, individualism, religious revivalism, and the Agricultural Revolution. All of these factors played a critical role in shaping America’s economy throughout the nineteenth century.

References:

Granovetter, M. (2018). The impact of social structure on economic outcomes. In The Sociology of Economic Life (pp. 46-61). Routledge. https://www.taylorfrancis.com/chapters/edit/10.4324/9780429494338-4/impact-social-structure-economic-outcomes-mark-granovetter

Clark, C. (2017). Class, the Market Revolution, and Urbanization. In The Routledge History of Nineteenth-Century America (pp. 33-46). Routledge. https://www.taylorfrancis.com/chapters/edit/10.4324/9781315768120-3/class-market-revolution-urbanization-christopher-clark

Stearns, P. N. (2020). The industrial revolution in world history. Routledge. https://www.taylorfrancis.com/books/mono/10.4324/9781003050186/industrial-revolution-world-history-peter-stearns

Last Updated on November 21, 2022

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