PART 1: Chapter Three The Industrial Revolution: Problems and Perspective

1. PART 1: Chapter ThreeThe Industrial Revolution: Problems and Perspective

2. How was work done before the steam engine?

3. Milling Wheat into Flour • A human turning a millstone can covert one-half bushel of wheat into flour in one hour. • Three bushels can be ground in one hour with a horse-driven mill. • A steam driven mill can do 10 bushels per hour. Steam Engine at British Science Museum

4. The Industrial Revolution created a new cultural environment and new management problems.

5. The Industrial Revolution in Great Britain • James Watt perfected the Steam Engine making it a reliable source of power for factories and transportation. • It became more economical to bring people to the work (factory) rather than taking the work home (domestic system). • As factories grew, management/leadership became more important.

6. Entrepreneur • Richard Cantillon, currency speculator • Wrote Essay on the Nature of Commerce • First to use the term entrepreneur in an economic sense • “Entrepreneur” applied to anyone who bought or made a product at a certain cost to sell at an uncertain price • Influenced Francois Quesnay, leader of the Physiocrats

7. The Fourth Factor of Production • Management joins land, labor and capital as a recognized factor of production. • J.B. Say provided a more definitive explanation of the role of entrepreneur • The entrepreneur became a manager for others and assumed an additional risk in combining the factors of land, labor, and capital Jean-Baptiste Say The Warren J. Samuels Portrait Collection at Duke University

8. Management Problems in the Early Factories • Labor: • Recruiting workers • Training (most were illiterate) • Discipline/Motivation • Wage incentives (the “carrot”) • Punishment or fines (the “stick”) • Use of religious morals and values to create the proper work attitudes and behaviors (the “factory ethos”) • Finding qualified managers • The Luddite movement – machine breaking

9. Developing Managers • No body of management knowledge existed. • The general view of leadership depended on character of the leader and personal traits. • James Montgomery – first management texts of managerial advice: • How to discern quality & quantity of work • How to adjust & repair machinery • How to keep costs down • How to “avoid unnecessary severity” in disciplining subordinates

10. Management Functions in the Early Factory • Planning operations • Planning against worker organization and Luddites • Planning of power sources and connections • Planning flow of work • Controlling performance

11. Cultural Consequences of the Industrial Revolution • Condition of the Worker • Economists Thomas Malthus and David Ricardo view worker condition as dismal and inevitable. • Robert Owen, Karl Marx, and Friedrich Engels saw people as powerless in their environment. • Rise of capitalism released people from drudgery. • Incentive plans, steady employment and regular hours improved worker well-being. • Workers’ real wages and conditions improved.

12. Cultural Consequences of the Industrial Revolution • Child and Female Labor • Primarily found in the textile industry. • Entrepreneurs ranged from exploiters to good employers such as Josiah Wedgwood, Matthew Bolton, James Watt and Robert Owen. • Contradictory evidence, religious and moral concerns affect understanding of the true situation. • Over time, legislation and capitalism made it uneconomical to employ children. • Industrial capitalism created a method to gain leverage for a better life.

13. Cultural Consequences of the Industrial Revolution • Industrial Revolution inherited worker poverty. • Industrial efficiency reduced prices of goods and raised real wages. • Child and female labor existed long before factories began. • Victorian values of keeping women at home created the atmosphere for critics of the factory system like Charles Dickens.