Transformation: The First Global Economy, 1750–1914

Abstract

In 1750, most of the world’s population lived in conditions that were little changed from time immemorial. In the absence of mechanical cloth production, most people only owned one or two sets of clothes. The cost of all forms of land transport meant that the bulk of production was geared towards local markets. By 1914, however, a totally new world had been created. Across the globe, steam-powered ships and railroad locomotives brought people and goods from near and far. As a global market emerged, competition increased inexorably. In the final analysis, the new global economy was both the creation of new systems of management and the creator of modern management. Initially confined to textile production, a revolution in both technology and management cascaded through the economy. As competition increased, management became more attuned to costs. Managers also sought after increased productivity so as to maximize outputs from a minimum of inputs. Increases in production also led to a spike in real wages. Wage gains, however, were incapable to quelling a rising tide of labor unrest, revealing the “human problem” to be management’s major unresolved difficulty.