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thus can be viewed as a consequence of this
historical episode. Some of the specific causal
threads linking modern life to the IR can be
distinguished.

Economy and Labor Force

Industrialization has transformed the predomi
nant types of economic activity carried out
by the population of industrial societies. The
proportion of the labor force employed in the
primary sector (extractive activities such as
agriculture and mining) dwindled in most indus
trial societies from an overwhelming majority in
1750 to less than 5 percent by the close of the
twentieth century. The secondary sector (man
ufacturing industries) rose to approximately a
third of the labor force, reaching a maximum
early in the second half of the twentieth century
before declining in later decades. It is employ
ment in the tertiary sector (services, or the pro
duction of intangible goods) that rose steadily
throughout the course of industrialization, up
to some three quarters of the labor force in many
industrial societies today. These trends in the
nature of work activities have radically changed
the daily life and worldviews of members of
industrial societies.
Industrialization began changing the nature
of firms around 1850 with the spread of cor
porations based on the bureaucratic mode of
organization, with a parallel decline in individu
ally or family owned firms. One major advan
tage of the corporate form of organization, in
which the firm is collectively owned by share
holders in the form of stock, was the principle of
limited liability, a genuine legal innovation of
the industrial era. Limited liability means that
investors are risking only the amount invested in
shares, rather than their entire assets, in the
corporate venture. This allowed the spreading
of risk and the consolidation of vast amounts of
capital. Corporations were run on bureaucratic
principles, including the assignment of positions
on the basis of competence acquired through
education and training. This development coin
cided with the increasingly systematic applica
tion of science to industrial production. The
resulting demand for skills, from the elementary
(literacy) to the most sophisticated (such as
engineering or legal), must have contributed to
the spread of education, although other factors
such as national rivalries may have been at work.
Most industrial societies had extensive systems
of primary education by the late 1800s, often
with compulsory attendance laws. Systems of
mass secondary and tertiary (college level) edu
cation involving large proportions of the corre
sponding age cohorts did not develop until the
second half of the twentieth century, however.
An inherent feature of capitalism is the ten
dency to growth in the average size of firms and
industrial concentration, resulting in the dom
ination of an industrial sector by one firm (a
situation of monopoly) or a few (oligopoly). The
mechanism of industrial concentration is based
on economies of scale, which imply that a firm
producing more units can reduce production
costs by further subdividing fixed costs (such
as costs of machinery, product development,
and advertising). An initial market share advan
tage thus permits reducing production costs,
and capturing an even larger market share.
This autocatalytic process (snowball effect)
inevitably leads to increase in the size of firms
and industrial concentration, a trend that was
already evident in the late 1800s. As corpora
tions grew in size and complexity they became
increasingly controlled by the appointed execu
tives (who had the expertise needed to run the
organization) as opposed to the stockholders.

Demography, Family, and the Role of Women

Industrializing societies (with some exceptions
such as France) experienced the demographic
transition which is marked by a decline in the
death rate followed by a delayed decline in the
birth rate. The decline in deaths was due to
improved food distribution facilitated by better
transportation networks in the form of canals
and railroads, better sanitation such as sewers
and water treatment systems, and other public
health measures such as vaccination. The
decline in birth rate was due to a decline in
the desire for large families more than improve
ments in birth control technology; the phenom
enon is still somewhat mysterious. During
the demographic transition, as the decline in
births lagged behind the decline in deaths,