American History

From 1776, the United States grew to a huge, integrated, industrialized economy that made up almost a quarter of the world economy. The United States possessed a unified market, a supportive legal-political system, vast areas of highly productive farmlands, and a huge labor and market capital. US economic growth from 1830 to 1890 attracted immigrants from Europe, Asia, and South America.

Cotton boomed following the invention and commercialization of the cotton gin. Large plantations, based primarily on slave labor, expanded in the richest lands of the south. There was also large-scale trade with colonial powers like Britain, Spain, and France. People moved to the fertile lands of the West. The federal government created national roads which helped settlers migrate west. After the US Civil War, rapid industrialization occurred. By 1890, the United States had overtaken the gross economic output of Great Britain. During the so-called Gilded Age, new discoveries and inventions took place, causing a Second Industrial Revolution in the West. Railroads increased the mobility of both capital and labor. Locomotives were mass-produced to carry more people and goods. Inventions like the telephone, phonograph, typewriter, and electric light facilitated development. At the dawn of the 20th century, cars replaced horse-drawn carriages as the primary mode of transportation. As the industry grew larger, it developed mass-production methods (Ehrenreich, 2002). Henry Ford established the first factory which used the assembly line. During the First World War, the United States outpaced Europe in the production of ammunitions, ships, and other war commodities.

However, after the Second World War, an economic transition occurred. There was a shift from a manufacturing-based economy to a service-based economy, the diffusion of national and labor capital, and mass privatization. This event can be wholly termed as transition to a knowledge-based economy.

According to Kochan (2005), there are four characteristics of a knowledge-based economy. Here are as follows

There is a transition from mass production of commodities to increased provision of services. The production of goods such as clothing, ammunition, and food declines while services increase. Services dominate the health, education, research, and government sectors. In the 1970s, there was a 57 in the number of service jobs in the country. Most of the service jobs catered to immigrants from Europe and Asia. Today, the service sector accounts for 31 of the countrys GDP

There is an increased emphasis on professional, technical jobs over blue-collar jobs. In the 1950s, there was a marked increased in the number of scientists specializing in various fields. A number of mining towns and settlements faced depressing unemployment rates as a result of increasing importance of theoretical knowledge. There was also an increased emphasis on environmental issues which the old framework failed to address

Theoretical knowledge is seen as the primary source of innovation. Advances in knowledge also lead to other innovations such as means of dealing with ethical issues on theoretical rather than empirical methods. In short, in a knowledge-based economy, supply and demand are based on codified knowledge which is disseminated to consumers

A new relationship is formed between scientists and the new innovations they create. Technological growth lies at the base of the new economy. It is the lifeblood of economic growth. This situation leads to the need for more universities and learning centers. The university, with its vivid image of reliability, produced experts who can generate, guide, and control new technologies.

At the heart of this economy is the federal government. The roles and functions of the government have been theoretically modified to suit these new conditions. The essential function of the government is to provide a favorable atmosphere for the development of technologies. Note that the traditional role of government (classical economics) is to provide public goods (such as roads, canals, docks, airports, etc.). In a knowledge-based economy, the governments role is both passive and active. It is active in the sense that it must ensure the continuity of technological growth. It is passive in the sense that it must not intervene in the affairs of the market (Kochan, 2005).

Liberalization is the totality of this economic arrangement. The market is assumed to be beyond the confines of the state, and thus functions as a semi-independent appendage of the state. Because the world economy is integrated, changes are continuous  that is, a change in one part leads to a parallel change in all parts. In the United States, shifts in the world economy influence the decisions of economic actors in the country. For example, the oil crisis in the 1970s sent shockwaves across the country which, for a short period of time, deterred technological growth. Indeed, the shift to a knowledge-based economy has not without dangers.

Conclusion
The shift from an industrial to a knowledge-based economy occurred after the Second World War. There was then an emphasis on technological growth. In effect, the United States market had been fully integrated into the world market.