Loading document…
Opening in Pages for Mac...
Your browser isn’t fully supported.
For the best Pages for iCloud experience, use a supported browser.
Learn More
Cancel
Continue
20th Century Economic
History
:
The Era of the
British Industrial
Revolution
J. Bradford DeLong
U.C. Berkeley, WCEG, and NBER
2017-02-06
key
:
html:
pdf:
pages:
https://www.icloud.com/pages/
0tHAaS4rB2yI3pTUWhulr1JFQ#2017-02-06_The_Era_of_the_British
_Industrial_Revolution_.TCEH
Notebook: Twentieth Century Economic History:
http://www.bradford-
delong.com/twentieth-century-economic-history-1.html
Economics Teaching Master:
http://www.bradford-delong.com/-
_housekeeping_-this-page-edit-this-page.html
1552 words
1
I. The Acceleration of Technology
There were a lot of inventions in the years from the
invention of agriculture and herding to the start of the
Commercial Revolution in the Age of
Discovery: human
technological capabilities tripled between Catal Huyuk and
the rise of the Roman Empire. Human technological
capabilities did advance—goats, cows, horses, wheels,
barrels, ploughs, printing, sails, pots, guns—but they
advanced at a glacial pace.
However,
because of the large time scales involved
,
and
because of the absence of large-scale technological
knowledge-destroying catastrophes
, invention and
innovation did add up. Figure on perhaps a little more than
a doubling of
human technological capabilities
—the power
2
to turn natural resources, stored labor in the form of
previously-produced items, and current labor into useful
goods and services—between the invention of agriculture
in 8000 BC and the year -1. Figure on growth in
human
technological capabilities
at a cumulative rate
half as much
again from the year
one
to
1500—technological capabilities
amounting to 3 on a scale in which capabilities in 8000 BC
count as 1. And then count on marked acceleration after
1500 in the Commercial Revolution era
.
Then comes the Industrial Revolution era. As far as
technology is concerned, it began in 1710 or so. But it
started very small and very localized. We can only begin to
see its effects on global aggregates of production and living
standards as of 1870 or so. And yet the Industrial
Revolution era of technological advance and diffusion from
1800-1870 sees global human technological capabilities
increase proportionally as much as the entire era
1500-1800: three times as fast.
T
here
had
been a lot of technological progress in the world
before 1870, especially since Thomas Newcomen’s
invention of the “atmospheric” steam engine in 1712. But
invention and innovation had proceeded by fi ts and starts,
and had built on itself only partially and hesitantly, had
tended to run out of steam when it reached the limits of
demand for the products of that particular sector or
industry.
3
I
I. The Sweet Spot of Innovation
One reason growth had accelerated in the Industrial
Revolution era—global real GDP growth from an average
of 0.08
%
/year in the Middle Ages to 0.2
%
/year in the
Commercial Revolution era to 1.0
%
/year in the Industrial
Revolution nineteenth century—was that the
inventions
that set off the Industrial Revolution happened to hit
a
particular sweet spot in
technolog
y and demand
. For the
fi rst time
in human history
there was a burst of invention—
centered around the 1712 invention of the steam engine—
that did not run into diminishing returns in production and
in use, but that instead made a host of other technological
advances from automatic looms and power lathes to
railroads and streetcars and telegraphs possible.
A
general
purpose technology
.
Now there had been many
inventions that were
transformative for individual sectors before the eighteenth-
century invention of the steam engine and the spinning
jenny
. Consider four:
the windmill, printing, gunpowder
and the musket, the seagoing caravel. Large-scale drainage
was transformed by the windmill, the place of literacy in
society and the importance of books were transformed by
printing, military and political affairs were very different
after gunpowder and the musket, and ocean travel after the
caravel bore no resemblance to what it had been before.
4
But all of these had limited impact on the economy as a
whole. As Clark (2001) wrote:
T
he effects... depend crucially on… the size of the
sector affected and the price elasticity of demand….
P
rice-inelastic [demand means]… reductions in
prices... reduce the share of expenditure... so reducing
the general productivity gains from further
advances….
I
nnovations such as guns, spectacles, books, clocks,
painting, new building techniques, improvements in
shipping and navigation… in areas of small
expenditure and/or low price elasticities of demand…
[do] not show up [much] in terms of output per capita
or... productivity…. Gutenberg in 1445… output per
worker increased by roughly 30 fold from manuscript
production in the fourteenth century till the early
nineteenth century…. But the impact of these
productivity gains in printing on the economy as a
whole was unmeasurably small because the share of
the economy devoted to printing always remained
small
….
Before 1600… improvements in shipping and
navigation… a dramatic fall in the sixteenth century
in the price of eastern spices... price of pepper
relative to English farm output prices fell to about
one fi fth…. Yet… though this decline represented a
host of technical and organization changes the
[aggregate] economic impact was negligible given
the dietary habits of the English...
And, because the application of the invention was limited,
and since humanity was caught in the Malthusian trap
,
5
invention had done much much more to raise the numbers
of humanity than to make people’s lives less inhuman.
By 1870 this Industrial Revolution had spread over Great
Britain, Belgium and Holland, northern France and western
Germany, some of Ontario, and what we now call the
Northeastern United States. In this North Atlantic region
technology had for the fi rst time beaten population
expansion in the race. Most people were still farmers, most
non-human power was still provided by animals, and
transformative technological changes were still limited to
textiles, metallurgy, metal- and wood-manufacturing, and
steam transportation. But there was the prospect of a world
in which the pressure of population on a scarce resource
base did not condemn the overwhelming majority of
humanity to lives that were nasty, brutish, and short.
Focus on this: The eighteenth and nineteenth centuries saw,
for the fi rst time, productive capability outran population
growth and natural resource scarcity. By the last quarter of
the nineteenth century, the average material wealth in a
leading economy—in Britain, Belgium, the Netherlands,
the United States, Canada, or Australia—was perhaps twice
the typical pre-industrial economy. Productive potential per
capita had undergone a substantial, sustained, and
unreversed rise in the eighteenth and nineteenth centuries
for perhaps the fi rst time in a thousand, if not in seven
thousand years.
6
The cotton-spinning-weaving-steam-coal-iron-rails
invention complex of Britain’s Industrial Revolution had an
impact because these sectors were fertile ground to
maximize the impact of invention. Textiles, heat, and
transportation are all large parts of the economy. For them,
demand is not price-inelastic: halve the price, and demand
tends to double so that the expenditure share does not
decline.
III. But Only a
Veneer of Modernity
But do not overestimate the impact of the Industrial
Revolution: Especially on a global scale, the effects on
aggregate productivity levels and average living standards
up until 1870, while visible, were not overwhelming.
Even where things were most different, in the rapidly-
growing half-industrialized core of the world economy,
what we would call “modern life” was a thin and new crust
on top of older patterns. Great Britain was the economic
heart of the late nineteenth-century world. But a quarter of
Britons were still illiterate as late as 1870. Primary school
enrollment did not become universal until the eve of World
War I. Life expectancy at birth was still fi fty years or less.
Less than fi ve percent of the population went to secondary
school.
7
To put it another way: In 1870 the daily wages of an
unskilled worker in London would buy him about 5,000
calories worth of
wheat
bread—5,000 calories. In 1800 the
daily wages would buy him about 3,500 calories, and in
1600 2,500 calories
of wheat bread
. Today the daily wages
of an unskilled worker in London would buy him 2,400,000
wheat calories. The most important fact to grasp about the
world economy of 1870 is that the economy then belonged,
even for the richest countries, much more to its past of the
Middle Ages than to its future of—well, of us.
Thus the big change does not come in 1710
or 1800
: it is
not the invention and spread of steam engines to pump
water out of coal mines built to supply London with fuel to
keep warm for the winter, wood and charcoal no longer
existing within transport range of St. Paul’s Cathedral.
The
big change—even for people living at the leading edge of
the most technologically progressive economy—came later.
IV.
Would
Economic Growth
Accelerate
?
But would
economic transformation accelerate, or even
continue,
after January 1, 1870? And would it spread
beyond its original North Atlantic heartland? And would
8
humans manage to make use of the cornucopia of material
wealth to build, for the fi rst time, a truly human world?
That it would continue was not a foregone conclusion.
Consider Argentina: in 1913 its capital, Buenos Aires, had
the tenth in the world among cities in the density of its
telephone network; in 1939 it was fi fth in the world among
nations in automobiles per capita. Since 1913 Argentina has
been able to draw at will for free upon the enormous
storehouse of tech
n
ological capabilities and practices
developed in the Northwest European, North American,
and also Japanese technological growth poles. Argentina
has not had runaway population growth from a pre-
demographic transition fertility pattern putting pressure on
limited natural resources. Argentina’s politics has been
rather less poisonous than the politics of Western Europe
before 1945.
And yet from 1913 to
today
Argentina
has
managed only
one doubling of its living standards and productivity levels
—and
more than half
of that doubling took place between
1943 and 1977.
Or consider China. China’s standard of living in 1967
may
have been
some 40
%
below what it had been in 1800. We
think that China
may have
not again reach
ed
its 1800
9
standard of living until around 1982. Economic growth at
the national level is not guaranteed
.
But we also
note
that in the generation since
1982
China
has multiplied its standard of living tenfold.
We also n
ote
that very poor performance relative to the rest of the world
over as long as a century does not preclude truly
extraordinary catchup when institutions and politics shift so
that an economy can draw at will for free upon the
enormous storehouse of tech
n
ological capabilities and
practices developed in the Northwest European, North
American, and also Japanese technological growth poles.
You can argue that in the post-1870 world some country,
somewhere, would adopt institutions and have politics that
would enable it to grasp the opportunities for scientifi c
research, technological development, and economic
application via the market economy—and that, eventually,
the rest of the world would follow suit. But that seems a
bold Panglossian step too far, even leaving to one side the
potential hazard that the path of technological development
would lead to thermonuclear war. We today are more likely
the products of good luck than of any benevolent necessity.
Nevertheless, the answer to the fi rst question—would the
Industrial Revolution continue and in fact accelerate?—
turned out, it became clear soon after 1870, to be: “Yes.”
10
