Research Paper on Industrialization & Industrial Revolution: Economic Implications

Introduction

In economics, the term industrialization is used to denote a condition marked with the importance of having much industry in the economy. It describes the change from an agricultural society to one based on production. During industrialization, the earnings per person usually increase, and productivity increases. The industrial revolution, on the other hand, is used in economics to denote the replacement of human labor by machines in the industries that are believed to have started in Britain at around 18 century (Hall, 2015). Capitalism is a system that relies on the private sector economy and entrepreneurial teams to come up with businesses and products that benefits the public. However, a capitalist economy can still have jobs provided by the public sector. The paper explores the dilemma that exists among the capitalist in deciding whether to invest in long-term projects or short-term projects to ensure there describe economic growth and industrialization at the same time. The paper also compares Kant's philosophical concepts and Rawl's theory of justice to evaluate the best concept capitalists can use to end their dilemma.

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Dilemma

There has been a dilemma among the capitalists as to whether companies should invest in useful innovations to reduce job opportunities or to invest in market-creating innovations, which generate more job opportunities. The assumption is that focus should be placed on cooperate performance and measured by how effectively capital is spent (Lloyd-Jones & Lewis, 2014). The belief has an impact on investors and managers decisions when accessing opportunities, and it is the leading cause of the dilemma capitalist has.

Managers are known to be investing in three types of innovation. The first area they invest in is performance-improving innovation that involves replacing the old products with new and better models that can help improve the profitability of the business. The second area of investment is efficiency innovation that enables businesses to sell mature, established products or services to the same customer at a lower price. The last area they invest in is the market-creating innovation that helps to transform complicated or costly products very at a fast rate that they end up creating a new market or a different class of consumer.

To understand the existing dilemma, the origin and the assumption that contributes to the difficulty must be taken into account. A fundamental opinion of economics is that some inputs used in the production process are plenty and cheap, for example, sand. Such inputs are usually not accounted for, and for that matter, they are wasted continuously. Others are scares and costly, thus should be used carefully. In the former capital was scares and expensive, and therefore, managers were taught how to maximize revenue and profit made per dollar of the capital deployed.

While it is justifiable that scares resources need proper management so that they are not depleted, the fact that capital is scared is never right. According to the recent analysis, there indeed exist a new world where money is in abundance (Kaminski, 2016). The study by Bain estimates that total financial assets are today ten times the value of the total global output of all goods and services. Bain added that the growth of the economic sectors in new economies would cause the global capital to grow another 50% in the coming years.

In the past, financiers measured profitability in ration form in terms of return on invested capital and internal rate of performance and not as dollars, yen, or Yuan (Kaminski, 2016). The ratios are in fraction form consisting of a denominator and a numerator. However, they gave investors and managers two times the number of levers to pull and improve their performance. To ensure that the return on invested capital and internal rate of return improve, managers must generate more profits to increase numerator (Kaminski, 2016). If that becomes difficult, the managers may consider reducing the denominator, and in, either way, the ration will improve. If they invest only in projects that are paid very fast, only the IRR will go up.

All the mentioned approaches make market-creating innovation to look less attractive compared to investments. Typically, return from investments on projects are realized after five or ten years contrary to efficiency innovation that usually pay off after within a year or two (Sundararajan, 2016). However, efficiency innovation often removes money from the balance sheet instead. Besides, efficiency innovation has less risk compared to market-creating ones since their market already exists. However, in, either way, innovation efficiency always appears the best deal to use. Others may expect that even if the approach of measurement appealed to short-term investors, there would be a countervailing pressure from institutional investors who are always focused on long-term value creation. The venture capitalist may also be expected to look beyond the metrics of ratio-critics because they mainly focus on market-creation. However, the majority prefer investing in companies that are developing performance-improving and efficiency innovations, thus creating the dilemma that exists among the capitalists.

Kant formulated a philosophical concept that applies to the dilemma that exists among capitalists. Kant formulates the categorical imperative, which says, any conscious being occupies a special place in creation, and that morality can be summed up in an imperative or the final commandment of reason. He defined imperative as a preposition that declares an action necessary. The concept applies to people who desire to achieve certain ends. Therefore, to solve the dilemma situation, the categorical imperative concept must be used to decide on whether to adopt the market-crating approach or to stick to efficiency innovation.

The categorical imperative is an unconditional requirement that must be respected at all times and is justified as the end itself. When capitalists apply the concept and decide to adopt the efficiency innovation, then they will be obligated to apply it in all circumstances to end the dilemma that exists. Kant also argued that hypothetical moral systems could not be used to persuade moral actions or even be used to make a moral judgment against others since their imperatives too rely on some subjective considerations.

The nature of Kant's concept indicates that the capacity that is used to decide what is moral is known as a purely practical reason that comes from a clear idea which means the ability to know something without necessarily being shown. The hypothetical imperatives guide us on the way to follow to achieve the end, but do not tell us the end that should be chosen. The typical division that exists in selecting terms is between selecting periods that are right and ends that are good. Right ends are known to benefit others, while good periods are known to enrich oneself. Kant considered the right to be superior and argued that good was morally irrelevant. According to Kant, a person cannot decide whether an action is right or moral using the imperial means and insisted, such decisions must be supported by practical reasons. When determining ethical questions, the reference should not be on the subject that is posing them since morality questions are determined purely based on rational justifications rather than particular empirical or sensuous factors. Therefore, when deciding whether to invest on long-term projects that take long to give returns or spend on short-term projects that will take a shorter period to mature, practical concepts must be considered to determine the decision that is morally right in an economy. When the decision is made based on imperial considerations, the end that will be chosen will be one that is not justified.

To end the capitalists' dilemma that has existed for many years, it is also vital to consider Johns theory of justice. It provides a different view different from Kant's philosophy in making the right decision. The approaches utilize the ideas from Kant's philosophy and seek to update them. However, Rawl's plan is a purely political theory of justice and is different from other forms of justice discussed in other disciplines. The method suggests that the society should be structured in a way that individual members are given the maximum liberty and that the freedom can only be limited by the notion that personal freedom should not infringe other peoples' freedom. Secondly, the theory was against inequality, whether economic or social, and insisted on equal distribution. Lastly, the theory suggested that in case there is such beneficial inequality, the disparity should not block other people without resources from rising and taking positions of power.

Rawls argued that in a society, no one knows his place or class position and future concerning the distribution of natural resources. According to Rawls, when such details about oneself are ignored, a principle that is fair to all will be realized. If an individual does not know his or her fate in the society, he is not going to privilege any one class of individuals but instead develops come up with a scheme that will treat every person fairly. Rawls in his theory suggests that each member in the society has an equal claim on the goods of the community, and insist that natural features should not affect that claim and therefore the fundamental rights of individuals should be taken into account and should be to an equal share of the society material wealth. Rawls argues that inequality should only be allowed if it supports the less privileged in the society.

Rawls theory of justice is based on two principles; the first principle states that each person must have an equal right to the most extensive total fundamental liberties that are in agreement with the similar system of the freedom for everyone. The second principle states that the social and economic inequality should be arranged in the form that they are both to the most significant benefit to the list privileged in the society and tied to offices and positions open to all under the condition of equality to all regardless of the status in the community. The principle indicates that any individual should be allowed to hold an office or a leadership position without considering his social class. Rawls insists that, if offices and locations are distributed based on merits, every individual should be allowed to acquire skills in respect to the basis on which benefits are assessed to ensure that there is equality to everyone.

Rawl's theory of justice stress more on equality to all and that no one should be disregarded because of his or her social class. The theory suggests that resources should be distributed equally, and everyone should have an equal chance in society. The approach is beneficial to the capitalists, especially when deciding whether to invest in long-term projects that take a more extended period to mature or spend in the short-term projects that bring return within a short period. The theory requires that when making such decisions, there should be equal consideration of every member in society. Every member should be treated equally by the decision made.

However, when making such economic decisions, Kant's philosophy provides the right steps to take. The Kants philosophical concepts look more appealing compared to Rawl's theory of justice since it emphasizes the importance of using practical reasons when making a decision. Kant's concept ensures that moral standards are maintained at all cost when building in a decision; therefore, it is the best method to be applied by the capitalists to end their dilemma. There has been a debate on the solution to the resource allocation processes that are biased to the...