Economics: The Industrial Era


Figure 1.--These boys photographed by Leis Hine anout 1905 worked in a cannery. Notice the knive. Muckraking photographers like Lewis Hine played aeyrole in securing the passage of Americam child labor laws in the early-20th century. His images are commonly used by historians in history texbooks and rarely do the left-wing editors use them honestly. Commonly they are used to give the impression that the industrial revolution and greedy capitalists createdthe probllem of child labor when the truth is that akmost all childten worked UNTIL the Industrial Revolution. It is only in the modern industrial era that society developed the wealth tht permitted children to be sent to school instead of to work. An it was the creation of yhe modern moddle class by the Industrial Revolution that created the moral climate to help eliminate child labor. It is a rare school text book that ponts out these two unasialble facts.

No development in modern history has affected individuals more than the Industrial Revolution. The manufacture of textiles played a key role in inititing the industrial revolution, but that was only the beginning. The effiencies of mechanization and industrial production left many craft and piece workers unemployed, but it created many new, btter paying jobs and generated enormous wealth so that for the first time the average worker could have a decent life. Iy also set in motion the ability of sciociety to end abuses like child labor and to create public schools that enabled every child to develop his inate gifts and abilities. Industry and technology created the acoutements of modern life which provide luxuries never even avalable to the rich in a previous era. Traditiojnal libeals promoting economic freedom sought to createthe greatest economic opportunity possible to give every individuals the ability to persue his personal interests and in doing so the society as a whole bebefitted. Despite the efficencies of industrial capitalism and the wealth created, the disparities created by providing opportunities for success in failure led to philosphical theories like socialism which led to political restrictions on seconomic development that reduced disparities, but at the same time limited the ability of industry and private enterprise to generate wealth. Socialist are not satisfied or even interested in equality of opporttunity, but rather equality of outcome. The result has been to reduce societal disparities, but also the economic well being of society as a whole. By reducing wealth generation, not only do average people suffer, but the tax revenue needed to address basic societal problems is reduced. The range of topics are covered here, including the industrial revolution, European imperialism, the Opium War, the Irish Potato Famine, market capitalism, child labor, Communism, the Depression, the Soviet Economy, Globelization, free markets.

The Industrial Revolution

No development in modern history has affected individuals more than the Industrial Revolution and the manufacture of textiles played a key role. Historians debate just where and when the Industrail Revolution began. We would set it at about the mid-18th century in the English Midlands. Some authors might take issue with this, but this would be the most widely accepted view. The first industry affected was the textile or clothing industry--one reason that the study of the clothing indusytry is so important. It was at this time that workers instead of weaving piece work at home, began to work in factories. Here cotton manufacture became especially important. Several inventions at this time were responsible, including the spinning jenny, flying shuttle, and a water-powered loom. This was soon followed by the key invention of our time which served as a catalyst for industrial expansion--the steam engine. John Newcomen and James Watt developed the steam engine. Watt between 1769-84 developed an efficient engine. The abundant supplies of coal in Britian combined with the technological advances by British inventors in part explain why Britain led the way in European industrial expansion. The significance was that the steam engine was an efficent source of energy that could be put to work in virtually every industry and because inexpensive energy was available, helped develop new industies. The railroad was essenially a steam engine on wheels. The railroad in turn revolutionalized the world economy. Many bulk goods like grain could not be sold at any significant distance from where it was grown or produced. The railroad allowed bulk goods to be transportd at great distance for limited costs, including ports where goods could be conducted aound the world. At at those ports awaited steam-powered boats, floating steam engines, to effiently move cargos at low cost around the world.

African Slave Trade

The European African slave trade began during the mercantalist era. It continued well into the industrial era. In fact because African slaves played a major role in the industrial revolution in Europe. The ememse profits from West Indian sugar islands helped to finance the industrial revolution. And the raw material for the first real modern industry, cotton textiles, was produced by slaves.

European Imperialism

European colonialism at it's heighth in the 1late 19th century dominated much of Asia, the Middle East, and Africa. The coloninization of the Americas (16th-17th century) and India (18th century) was followed in the 19th century with creation of colonia enckaves in China, the Scramble foir Africa, and gunboat diplomacy. The actual colonial regimes varied from country to country. Perhaps the most pernicious was the Belgian rule of the Congo. But the desire to exploit the colonies economically and te prevalent doctrines of religious intolerance, social Darwinism, and white superority created situations in which great harm was done to colonial peoples. The colonial regimes were often justified by paternalistic Victoriam morality, but rarely did pious good intentions result in imrovements in regimes benfitting native people. Many third world countries continue to blame imperialism for their current difficulties. Some of these charge are valid, in many other instances they ar used to mask varing levels of corruption, ineptitude, and venile behavior. Despite the exploitative nature of imperialism, the overall impact is more complicated than often depicted. Imperialism did speed the spred of modern technology and medicine to Aia and Africa. As critical as Indians were of the British, the heritage of British law, democracy, and English law are crutical elements of modern India. Another still unsettled question is whether the colonies really returned mote than the military and admistrative cost of maintainung them. Here economists are deeply divided. Some charge is that colonial peoples suffered because the colonial power dumped inferior goods on protectedcolonial markets. This was not the case for the British Empire which except for relatively brief periods (such as the Depression) was a free market empire. One not well understood aspect of European colonial rule was the class structure introduced there.

The Opium War

Wars for the most part are often complicated complexes of social, ethnic, political, economic, religious, and economic factors. The Opium War, at least from the British perspective, seems a war fought almost entirely for economic reasons. The Opium War was a war between the United Kingdom and Imperial China. The British objected to China's attempt to limit British shipments of Indian opium to China. The Chinese were reacting to ikncreasingly levels of addition among the Chinese people. It is notable that as late as 1840 that British traders were having difficulty supplying goods that were of interest to the Chinese in exchange for the many Chinese products (especially porcelin and silks) that were in demand in the West. One of the few British products that was in great demand was Indian opium. The War was the British effort to force the Imperial Government to cease its efforts to prevent opium importation. The War ended in 1842 with the Treaty of Nanking which opened specified Chinese ports to foreign trade and the cession by China of the island of Hong Kong to the British. The Opium War was a critical turning point in Chinese history. In the West it is a conflict virtually unknown except to historians. In China every schoolboy knows about it.

Irish Potato Famine

The Irish Potato Famine began with a blight of the potato crop. The Irish had come to depend on the potato as a mainstay of their diet. No other crop produced so much food per acre of land. The blight was devestating and spread with amazing speed. Within a year a bountiful crop was reduced to rotting fields. Vast expanses of Irish firelds were ruined by black rot. It would have not been as bad if the Irish diet had been more diverse, but the poor Irish peasantry survived on the potato harvest. Potato crops accross Europe failed, but nowhere in Europe was the poopulation so dependant on the potato. Not only was the potato gone, but the crop failure caused the pricev of other food crops to soar, placing substitute foods beyond the purchasing power of the destitute Irish peasantry. The Irish peasantry were tenant farmers who eked out a subsistaence existance with the potato not only found their food stocks roting, but were unable tom pay their rents. Soon their British and Irish Protestant landlords were evicting them from their homes. Some of the Irish peasants out of desperation attempted to eat the rotting potatos. Whole villages were devestated by cholera and typhus. Parish priests desperately tried to tend to their congregtions and feed the starving. Inn some cases the dead went unburried. Many were burried without caskets. English relief efforts were inadequated and even these were abandoned in the midst of the famine. Work houses because of inadequate nutrition and unsanitary conditions were death traps. The Irish famine has been seen by many as the greatest humanitarian disasaster of the 19th centuy. This was in part because so many died and others forced emmigrate. Over 1 million are believed to have actually sucumbed to statvation and disease. But most tragic of all was that it was preventable. Throuhout the Famine, Irish, and English landowners were exporting food. One author points out that a quarter of the peers in the House of Lords owned land in Ireland and failed to act.

Market Capitalism

European mercantilism evolved into what we now call capitalism. Capitalism is founded on the same ecoinomic impulse as mercantilism the drive for profit. Both the mercantilist and the capitalist seeks to acquiring desirable goods for lower prices than they can be sold. The difference between the two is profit. And profit is at the heart of the system. Socialists have criticised the profit motive. And it is a cold, dark unemotianal heart. The only problem for socialists is that it generates wealth. And socialism with empathy and humanitarian social concerns does not. Adam Smith in the Wealth of Nations describes the mechanism that drives capitalism. The profit motive was essentially a hidden hand directing the system. Smith postulated that society as a whole benefitted by allowing each individual from seeking his own individual interests. Individuals pursuing their own personal interests will guarantee the interests of society as a whole. There are major differences between mercantilism and capitalism. Capitalism involves the rational or efficent use of the means of production. Labor becomes specialized workers in the form of wage labor. The managers or capitalist manipulate capital, raw materials, terchnology, and oher fsactors so as to maximize profit or wealth. There is the potential for capitalist to cause social problems by reducing wages to poverty levels, cvhild labor, casusing pollution, producing unsafe problems, unfair competition, etc. Here it is up to the Government to regulate the system to prevet these undesirable consequences. Labor unions can also unballance the system through raqeteerng, unsustaninable wage demands, etc. And thus must be regulated. Here there is a fine line. Inadequate regulation can threaten te system by resulting in a socially unacceptable concentration of wealth. Oppressive regulation can destroy the profitability of the system. The individual and his desire for a profit is at the hear of the capitalist system. It was the Dutch who first invented capitalism. It ws quickly adopted by the English and in the American colonies. It was the efficiecies and wealth generating capabilities of capitalism that enabled the Dutch and English to survive and prosper in conflicts with much larger countries. Other European countries also embrsaced capitalism, but none more throughly than the Anglo-American powers. This proved to be the central force in the 20th century when Britain and America faced a series of conflicts with powerful adversaries challeging not only capitalism, but ln\beral democracy which developoed as an adjunct.

Socialism

The central themne of socialism is that the goods produced in society should be held in common and distrubuted equally. It was not until after the Napoleonic Wars that the term "socialism" appeared and the mocement began to develop as a political force. A primary factor here was the Industrial Revolution which began in Britain during the mid-18th century and spread to Europe after the Napoleonic Wars. From the beginning, Siocialism was closely associated with European liberalism. The term Socialism first appeared in France and was quickly adopted by English social reformers (1820s). While the Socialist mobement was an outgrowth of social disparities resulting from the industrial Revolution, early Socialist leaders were wealthy men who expoused utopian concepts, esoecially the idea that men did not meed to be motivated by material rewards and that society could be orgamized around cooperative socities in which workers produced for the benefit of the community as a whole and the produce was distributed equitably. Some of the prominent Socilist utopins were Robert Owen, Claude-Henri de Saint-Simon, Charles Fourier, Pierre-Joseph Proudhon, Alexander Herzen and Ferdinand Lassalle. The New Lanark community was one of the early Socialist utopinn communities. The English reformers were more concerned with reordering society than un seizng political power. Liberals in Germany set out to seize power and created a unig=fied, democratic Germany in the Revolutions of 1848. They almost suceeded, but in the end failed. This defeat generated a new train of Socialist thought premised on the ideq of workers seizing political power. Karl Rodbertus-Jagetzow was one of the early theoreticians. Karl Marx and Friedrich Engels wrote the "Manifesto of the Communist Party" (1848). Marx and Engels developed the foundation for what became known as scientific socialism and which has become referred to as Marxism. Mark developed his ideas in great detail in Das Kapital (1867). The book The book is the Socialist analysis of capitalism. Marx saw socialism as the stage of history and class structure following the inevitable revolution in which the urban proletariat would seize power. After this the state would "wither away" as an unecessary institution. Splits developed in the Socialist movement. The main thread in Western Europe were democratic socialists who believed that power could be achieved democratically through elections. Another group believed tht capatlists would never turn over power and believed that a violent worker uprising was necessary. They became known as Communists. And even more radical offshoot was Anarchism. Socialism did not begin to have a major political impact even after the Revolution of 1848, although liberals wre umportant in some countries. The First International (International Working Men's Association--IWA) was founded in London. Marx addressed the conference. The groups that attemded the conference had little real influence, but serious organizing began--especially in France and Germany. The working class of Paris actually seized power in the city as the Paris Commune after the Franco-Prussian War (1871), althoiugh they were quickly suppressed by the mew French Republic. Cracks began to appear in the First International. Bakunin's IWA was expelled at the Hague Congress (1872) which resulted in the Jura federation. The Marxists eventually abandoned the IWA to the Anarchists, and founded the Second or Socialist International in Paris (1893). Socialist parties by this time were active in most European countries and were beginning to achieve some importance in some countries, especially those in which free elections were held. These were the most modern industrial countries (Britain, Denmark, France, Germany, Italy, and Sweden). The one country in which Scocialist countries had no political success was the United States. Anarchists achieved some success within the trade union movement in some countries (France, Italy, and Spain).

Emmigration

A concomitant of European imperialism was European emmigration in the 19th century. Small numbers of Europeans left for new homes in the 17th and 18th cebntury, but in the 19th century emmigration increased markedly, beginning with the Irish Potato Famine of the 1840s. The United States was the principal destination, but other countries were also involved, including Argentina and Brazil. There was also emmigration to British colonies like Australia and New Zealand. There was not only European emmigration. Chinese and Jaanese emmigrants reached America's Pacific coast.

Child Labor

Much of HBC deals with middle class and affluent children and the often stylish clothes they wore. These styles are the ones that often reflected the tempor of the times. HBC would be remiss, however without addressing the clothes worn by the children even in the early 20th century which had to work on the farm and in mills, mines and factories in often dreadful conditions. The styles of clothes were very simple and changed relatively little, but any assessment of boyhood clothes has to address these gutsy children who marched off to work because their families could not afford to feed them and send them to school. The photographic record here played an important role in addressing the pattern of exploitation to which these children were subjected.

Labor Movement

Labor in the ancient world had no real satus, im part because much of it was performed by slaves or peasants with few rights. With the fall of Rome in the west the Feudal system evolved where the peasantry became serfs tied to the land. Artisans in the cities organized guilds when helped to raise their status. The position of skilled labor, however, was udermined by the industrial revolution and the mechamization of industry. The labor movement developed differently in various countries. The general pattern was that industrialits refused to recognize unions and attempted to break unions that organized strikes, often with violence. Governments often intervened to support the industrialists. The labor movement itself was split. Some radical unions were organized like the International Workers of the world (IWW). The IWW was not concered with collective barganing, but rather with radical social change. There were also divisions between trade unions and industrial unions. And union leaders had a range of social attitudes. Some union leaders especially in America beliece in free enterprise, but just wanted a reaonable share of the earnings in wages. European labor unions had more politiocal orientations ranging from Socialist to Communist. Generally speaking the Communist political leaders were more radical and had a more radical politcal agenda. After the Communist Revolution in Russia, Communist labor leaders came under the control of the Soviet inteligence services. Gradually after World War I, labor unions in most Western European countries and America won collective bargaining rights. In America this was one of the achievements of Franklin Roosevelt's New Deal.

Communism

The social and state systems of Russia, Yugoslavia, and other Eastern European countries need to be considered by HBC, both the impact of the Communists when they seized power and the aftermath of the fall of Communist regimes. Communism as a social force was founded by Karl Marx in his land mark work Das Kapital. The first Communist state was of course the Soviet Union. The Revolution was a reaction to the privations of World War I (1914-18), in which the Russian people, suffered greviously. The Bolshevicks emerged victorious against a democratic Provisional Government (1917). This led led to a distructive Civil war between Reds and Whites (1918-22). The Bolshevivks proceeded found not only a socialist economy, but a repressive police state under Lenin and more importantly Stalin. It is now recognized by most authors that Stalin's ruthless policies including engineering a famine in the Ukraine resulted in more deaths that even Hitler's Holocaust and other genocidal policies. Stalin at the outbreak of World War II at first entered a partnership with Hitler, but then was invaded (1941). The Great Patriotic War waged by the Russian people was the key factor in the defeat of the German Army (1945). It also left Stalin in control of the countries of Eastern Europe. The result was the Cold War with American and the European democracies. The internal contridictions and efficencies of the Communist system and the desire of natuonal groups for indepence led to the unraveling of the Stalin's Soviet empire, first in Poland (198?) and finally the Soviet Union itself (1991). The Communists without a maket economy are of course not noted for their fashion sence and fashion industry. There were some ideological constraints on fashion. Often clothing manufacturers just copied Western styles, but there were clothing industries in these countries and fashion developments. Some countries had specialized school fashions and uniforms and the Young Pioners were forme with uniforms.

The Depression (1929-39)

The Great Depression of the 1930s was the worst economic slump ever to affect the United States. It was not just a national economic crisis, but one which spread to virtually every country. The greatest calamity to befall Americans in the 20th century was the Great Depression--a worse calamity than even two world wars. The Depression began with the Wall Street stock market crash in October 1929. Soon business were going under and Americans were losing their jobs. All Americans were affected. Eventually about one-third of all wage earners were unemployed and many who kept their jobs saw their earmings fall. President Hoover who had engineered a humanitarian miracle in Europe during World War was unable to break away from the mindset that the Government should not intervene in the economy. President Roosevelt was elected by a landslide in 1932. He brought emergy and new ideas to Washington and the Federal Government initiated programs that would have been rejected out of hand only a few years ago. Roosevelt was willing to use the Government to solve economic and social problems besetting Americans. The people loved him, electing him to an unprecedented third and fourt term. The propertied class or "economic royalists" as he called them, hated him. Roosevelt's program was called the New Deal and the many programs initaited help change the face of the United States: Social Security, the Tennessee Valley Authority, rural electrification, the Works Progress Administration (WPA), protection for union organizers, and many others. The conservative-dominated Federal Courts struck down WPA, but many New Deal programs endure to this day. The great novel to emerge from the Depression was John Steinbeck's The Grapes of Wrath which addressed to problems of rural Americans and the dust bowl. Urban Americans of course also suffered. While the New Deal brought relief to many desperate Americans, the Depression lingered until orders for war material from Europe began to flood into America in the late 1930s. The rest of the world was also affected by the Depression. Britain and France also struggled with the economic down turn. The response in Germany and Japan was totlalitarianism, militarism, and finally war.

World War II

Economics played a central role in World War II. Hitler's rearament program was bankrupting NAZI Germany. It is questionable how long Hitler could have continued his rearament program if he had not taken Germany to war in September 1939. Germany proceeded to loot the national banks of the conquered nations. The persecuution of the Jews and the Holcaust was also used in part to finance the War. The NAZIs very effectively integrated the economiy of Czecheslovakia into the German arms industry. Germany did not go to a full war footing until late in the War. Not did Germany effectively cooperate in war prodyction with its Axis allies. Germany also did not effectively used the economies and industries of the captive nations, especially the countries occupied in Western Europe. The Germans did use the conquered countries as a source od slave labor. German ineffiency in coordinating with Allies stands in sharp contrast to the close copperation between Britain and America. President Roosevelt began mobilizing the Arsenal of democracy, the vast American economy well before America went to war. Very extensive cooperation in weapons development and production also began between Britain and American before American ntered the War. Hitler avoided putting Germany on a full war footing, because he thought the War had been won and he did not want shortages and rationing to deminish domestic support for the War. Only after the setbacks in Russia, especially Stalingrad, did Hitler turn to Speer and give him the authority to fully convert the German economy for war. Fortunally for the world, by then it was to late to stop the expanding force of the Soviet Union in the East and the Western allies in the West.

The Welfare State

Western European countries began creating welfare states in the 19th century. One of the first major steps toward this was Bismarck's success in creating a German social security ststem. The Scandinavian countries led the way in the 19th and early 20th century. The Anglo-Saxon countries have been among the last Europen countries to create a welfare state. Britain did not begin to create its welfare state until the victory of the Labour Party in the 1945 General elections. America has been even more reluctant. President Roosevelt did suceed in establishing a social security system during the New Deal (1935), but America still does not have a national health care sytem--tghe only Westerb democracy that does not have one. In America the Conservative have convinced the majority of Americans that the welfare state is if not an actual evil, a limitation on freedom and a drag on individual sucess. It is noit clear why the conservatives have succeeded with this contention, but it is likely that the racial politics is a major reason. Economists today debate the future of tge welfare state.

European Integration

For more than two millenium, the central issue in European affairs was the conflict between the Germans and Romanized Europe. In modern times this evolved essentially into a conflict betweem the French and Germans. World War II was only the latest installment in that stuggle. It was movement toward European integration after the War that finally ended the conflict. At first Germany and France with four other countries (Italy and Benalux) formed the Europeam Common Market. The fenomenal post-war success of the Common Market jhas evolved into the inclusion of virtually all of Western Europe, including Britain, into the European Union (EU) which mow extends into Eastern Europe. The European Union is far more than an economic community, but the question the EU now faces is the extent to which people with such diverse cultures and languages can move beyond economic integration to political integration.

The Cold War


Green Revolution

After World War II, populations in many developing countries began to grow at extremrly fast rates. These high rates were in part the results of historical trends. A major factor was also improvements in health care made possible by health care programs financed by Europe and America. Economists by the 1950s began to talk about a wirld-wide Malthusian faminr because population growth would outrun the food supply. Agromists had been increasing crop yield by using mpre and more nitrogen fertilizer. This was possible because German scientists before World War I had figured out a chemical process for fixing nitrogen. This had made possible increased food production. By the 1950s, however, farmers had reached limits on the ise of nitrogen. They found that seed heads were growing so heavy that stalks would collapse. An American agricultural scientist, Norman Borlaug, began working for the Rockefeller Foundation and began working on a project to help Mexico conquer hunger. Borlaug found a strain of wheat with a stubby stalk that could support a heavy seed head. He then transferred the gene to tropical weat and produced a strain that could support large sead heads. Bourlaug's work resulted in a wheat strain that could produce yields four times per acre than what was previously possible. This was just the first step in the Green Revolution that eliminated famine in much of the Third World. The number of lives he saved are virtually impossible to calculate. About half the world now eats grains descended from Borlaug's work. Bourlaug was awarded the Nobel Peace Prize (1970).

The Soviet Economy


American Empire

A common term in left-wing circles is the "American Empire". Soviet propaganda during the Cold War charged that the United States was an imperial power bent on colonizing oher countries. The Soviets made these charges at the same time that they created an oldfashioned political znd economic empire in Eastern Europe. The term was picked up on by left-ing circles in Europe and the Third World which after World War II was stringly influenced by Socialist thiking. Many Third World countries emerging rom European colonialism were influenced by Socialist ideas, in part becuse Socialist in Europe led the campaign against imperialism. Many Third World leaders for ideological reasons were convinced that the Soviet modelwas a more meanigful model for rapid economic devdelopment than the free enterprise economies of Europe and America. This of course prove to be a costly effor and the most successful Third World countries have moved toward liberalizing their economic systems. Even so the change of American imperialism continued. The Soviet Union impploded, but the term has continued to be used. As the Uninted Sttes, unlike the Soviet Union, did not seize political control of other countries, left-wing authors have been forced to adjust their argument and thus came up with the term "economic-imperialism". The question thus becomes if this term is justified. Is there an American empire? We will look a the great empiresof history and assess if America is an empire or if the term "economic empire" is justtified. here is no doubt that America has played an important role in after World War II creating the modern economic-system. The basic question, becomes, "Does the world economic ststem that the United Sttes helped fashion act to only benefit America or do other countries able to develop and benefit by participating in the system?

Globelizaton

An emense debate has arisen over the globelization of the world economy. Some arge that large corporations are taking advantage of workers by shifing jobs to developing nations wherelabor has no protection. Numerous press accounts describe abusive working conditions in plants. Other accounts describe bribery and the sale of rights to exploit resources at low cost and without environmental safeguards. Other reports maintain that workers at these foreign plnts are often some of the best paid in the country. In most countries themost prosperous regions are those most affected by international trade and freign investment. Another question concerning globelization is the American conviction that democracty is inexplicaly linked to democracy. Americans also tend to believe that expanding trade and commerce tends to spread international good will. Of course it is quite possible that these increased interactions may be creaingillwill and resentment. One author points out that ethnic minorities dominated economies in many areas and the potential exists for long festering group hatreds to explode into civil disorder and mass killings and that this is being exacerbated by Western policies, political and economic. [Chua]

Children and Mass Marketing


Free Markets

The influence of free markets is today an intensely debated issue. Some expousing the liberal theory of history believe that over time, countries with economic free markets with move politically toward liberal democracy. This isnot seen as an imperative, but many see it as the general pattern. The logic is that individuals who become used to making economic decissions will over time want to also participate in making political decissions. [Mandelbum] This is epecially true of course because political decissions affct economics. Also countries with free markets will develop an important middle class and it is the middle class that is the great bulwark of political democracy. The test of this theory is of course Russia nand China, epecially China.

Oil

As coal fueld the industrial revolution, oil came to power the modern world economy. The economies of all the modern industrial powers are dependeant to a high degree of abundant supplies of moderately priced oil. Something like 40 percent of world energy needes are me by oil and a much higher percentage of transportation fuels. Factories and electrical generating plants ran on coal and oil. The first imortant oil industry developed in the United States and olayed an important role in America's industrial expansion and world War II. After the war, important new fiel were feveloped in developing countries, especially the Middle East. and these countries forming the Organization of Petroleum Exporting Countries (OPEC) began to play an important role in the world economy. Theoetecially the oil income should have enabled the countries involved to develop modern economies. In reality just the opposite occurred. we see this in most of the major oil producers: including the Arabs, Iran, Nigeria, Russia, and Venezuela. There is great interest in renewable energy sources, but except for nuclear they are still of limited importance and costly. Products are transported and people get to work with oil, as large numbers of students get to school. Consumer shopping is largely based on trips fueld by oil. Many products such as plastic are made with petrochemicals. Any interuption of supply for an extended period would force huge life style changes. Oil is a natural resource and at some point world production will peak. Experts vary widely as to just when that peak will come. Most expers believe in the early-22sth century that peak oil had already been reached or that we were very close to it. The importance of the Middle East in world economic affairs comes from the fact that the largest and cheapest to explout high-grade oil resources ares located there. Most experts believed that the non-Middle east oil producers will peak before the Middle Eastern producers peak. This meant that the importance of the Middle East would increase in the coming years. [Roberts] Industrial Goverments countries especially the United States had done little to prepare for the inevitable decline in world oil production. This all changed when American energy companies developed inovative new techniques for extracting oil and h=gas such as fracking and horizontl drilling. The resulting production has changed all estimates of peak oil. It also broke OPEC and the hold that Middle eastern countries had on Westen economies. The issue is further complicated by the impact on global waring of continued burning of fosil fuels a subject of considerable debate among scientists.

Sources

Chua, Amy. World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability.

Mandelbaum, Michael. The Ideas that Conquered the World: Peace, Democracy, and Free Markets in the 21st Century.

Roberts, Paul. The End of Oil: On the Edge of a Perilous New World (Houghton Mifflin: 2004), 389p. Robert's book is thought provoking and he raises many important questions. He is, however, prone to presenting some controversial issues such as the Bush Administratioin's war in Iraq was about oil and the relation between oil and global warning as proven facts without any accompanying actual supporting evidence. We understand many agree with these and other assertions, but that does not mean that the author does not need to substantiate his assertions.









CIH







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Created: February 9, 2003
Last updated: 7:00 AM 3/7/2016