The increase in trade and the resultant greater demand for goods necessitated changes in the system of production. Greater volume of trade meant that more goods had to be produced in a shorter period of time. The ‘domestic system’, under which the village artisans collected raw materials for the merchants, made goods at home with the help of simple tools and then supplied the finished goods back to the merchants, could not meet the growing demands of the market.
Hence, in the eighteenth century AD, the ‘factory system’ developed. Rich merchants set up factories, installed newly invented machines, bought the raw material and employed workers on fixed wages to make goods on machines. This development, that is, the production of goods in factories with the help of machines is known as the Industrial Revolution.
The Industrial Revolution started from England and soon spread throughout Europe. The textile industry was the first to be mechanized. Inventions such as the spinning jenny, flying-shuttle, water-frame, power-loom and cotton-gin greatly increased cloth production. In course of time, all major industries were affected by this revolution.
As industries grew, the industrialized nations of Europe were faced with two crucial concerns. The first was the need for raw materials which were to be used in manufacturing industries. The second was to find markets for the surplus goods they produced. Political domination of less developed countries solved these two problems. This was the main reason for the establishment of colonies n Asia, Africa and Americas by the European countries.
Rise of Capitalism
Industrialization led to the decline of feudalism in Europe. A new system of society called Capitalism arose in its place. It was an economic system in which the means of production and distribution were privately owned and operated for profit. This system gave rise to two new social classes one was that of the factory owners who owned the factories and employed and paid wages to factory workers.
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They also controlled the sale of goods and their main aim was to make maximum profits. They controlled the sale of goods and their main aim was to make maximum profits. They controlled the ‘capital’ or the money and, hence, were called capitalists. They were a prosperous group of people and led luxurious lives. The other class comprised of workers who worked in factories. They lived in great hardship and were exploited by the factory owners.