How did the Industrial Revolution influence modern capitalism?

The Industrial Revolution significantly influenced modern capitalism by laying the groundwork through the establishment of factory systems. This period marked a fundamental shift from agrarian economies to industrialized ones, leading to the mass production of goods. Factories centralized production processes, allowing for increased efficiency, lower costs, and greater output, which are critical components of a capitalist economy.

The emergence of factories transformed labor practices as well. Workers migrated to urban areas to work in these factories, creating a labor force that was essential for industrial expansion. This concentration of labor and production in specific locations also fostered the development of new markets and consumer bases, which are essential characteristics of capitalism. Furthermore, the factory system encouraged competition among manufacturers, driving innovation and improvements in production methods.

By establishing these factory systems, the Industrial Revolution played a crucial role in moving away from subsistence farming and small-scale production, which were more characteristic of earlier economic systems, towards the large-scale, efficiency-driven production model that defines modern capitalism today.