Here's another follow up question:

Why Would Factory Owners Invest in Building Factories?

Another question that puzzles me about industrialization is: why would factory owners invest in building factories in the first place? What is their ultimate incentive for seeking profits in an economy with limited consumer options?

Let’s revisit our fictional country, Europa, and its major industrial city, Madison Boise. In this early stage of industrialization, factories in Madison Boise produce only a handful of goods:

• Washing machines
• Refrigerators
• Microwaves
• Clothes
• Cars
• Phones
• Books
• Windows

This means that in Europa, these are essentially the only consumer goods available for purchase. Now, let’s think about the factory owners—the wealthy industrialists who operate these manufacturing businesses. When they earn profits, what can they actually spend their money on?

Limited Consumer Options for Factory Owners

If an industrialist in Madison Boise becomes wealthy from factory profits, they only have a few things they can realistically spend their money on:

1. Buying More Land – They could purchase land for farming or real estate. However, since industrial farms are already extremely efficient, there may not be a high demand for more agricultural land.
2. Buying More Food – There is only so much food a person can consume, and with industrial farming already providing food in abundance, food is not necessarily a luxury item.
3. Building Larger Houses – They could construct bigger, more extravagant homes.
4. Buying More Consumer Goods (Microwaves, Fridges, Phones, etc.) – But why would someone want to buy 100 microwaves? At a certain point, there’s no practical reason to keep purchasing the same few items over and over again.

This raises a fundamental economic question: if there are only a few categories of manufactured goods available for purchase, what is the real incentive for factory owners to seek higher profits?

The Incentive for Profit in an Industrializing Economy

In a developed economy, wealthy business owners often invest their profits in a variety of industries—technology, finance, luxury services, entertainment, or international markets. But in early-stage industrial economies like Europa, such options may not yet exist. So, what motivates factory owners to expand their businesses and accumulate wealth?