For generation upon generation, dating back thousands of years, mankind has lived within the confines of an agrarian economy. It wasn't until the late eighteenth century that things began to change, as the Industrial Revolution started to take hold and shift the economy from agricultural to industrial. That shift continues today as developing nations industrialize while industrialized nations become more efficient. It's a shift that continues to open up new doors and new problems.
Industrialization is defined as the large-scale introduction of manufacturing into a society. It shifts an underdeveloped agricultural economy focused on human labor to an industrial economy based on machine labor. It's a process whereby individual labor is replaced by mechanized mass production and specialized laborers, which boosts productivity.
The promise of industrialization
Industrialization enables mankind to do more with less. Instead of one man taking days to plow his field with one horse, he can do it in a couple of hours with the help a tractor that has the power of hundreds of horses. That frees up his time to do more work around the farm, and maybe even take a vacation, and it frees up his family so his kids can go to college and work in professions that require less backbreaking work than he had to do.
Because of industrialization in the U.S., only 2% of the population is comprised of farm and ranch families; this is a remarkable difference compared to 1840, when just 10.5% of the population didn't work on a farm. Meanwhile, U.S. farms are doing so much more with less as today's farms produce 262% more food with 2% fewer inputs -- including labor, seeds, feed and fertilizer -- compared to 1950.
Today, industrialization continues in emerging economies, especially in Asia and Africa. In China, for example, 60% of its population farmed in 1960, but now less than 30% of the population is made up of farmers. Despite fewer farmers, food production in the country has tripled since 1978. Moreover, the country now feeds a quarter of the world's population on only 7% of its arable land.
In addition to improved production on farms, industrial output has skyrocketed as people have migrated from the farms to the cities to work in factories. This is seen in the stunning rise in China's GDP over the past few decades.
This boost in GDP has increased the standard of living of Chinese citizens and the profits of is businesses.
The pitfalls of industrialization
While industrialization has many benefits, it has its pitfalls as well. One of the big pitfalls is the rise in pollution. An industrialized economy requires lots of energy, and that energy is typically provided by fossil fuels, which, when burned, add greenhouse gases to the atmosphere that are thought to be contributing to climate change.
We can see a picture of this rise in greenhouse gasses by taking a look at the dramatic jump in China's carbon emissions as it has industrialized.
On top of the increase in greenhouse gas emissions, industrial pollution from factories has led to contaminated drinking water, toxins being released into the air, and damage to the soil from spills.
In addition to the environmental issues, industrialization also breeds a number of social issues, Urbanization can become a problem as people move away from family farms into the cities to find work in factories. That leads to cities becoming crowded and littered with problems including pollution, sanitation issues, and crime. Meanwhile, many workers went from working long hours on the farm to even longer hours in factories. Further, early working conditions as countries industrialize are often unsafe, and the wages were low, with businesses blamed for exploiting their workforce for profit.
Many of these issues of industrialization can be addressed as society adjusts. For example, regulations can be put in place to halt the growth of pollution and to protect the environment. Further, working conditions can be improved as workers and management teams work together to improve the situations on the factory floor. While these changes take time, meaningful improvements can be found to the pitfalls of industrialization.
When we add up the promise of industrialization, it far outweighs its pitfalls. That's because farms can now produce so much more food with fewer inputs that it has freed up the population to pursue other business opportunities. These opportunities have increased the standard of living and the life expectancy of the population, enabling so many to enjoy years of retirement instead of working on a farm until they expire.
Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.