The Economic Development of the World: Part 9

World Gross Domestic Product from year 1 AD when Jesus 
was born to 2003 A.D.

 The Industrial Revolution

The causes of the Industrial Revolution were complicated and remain a topic for debate, with some historians believing the Revolution was an outgrowth of social and institutional changes brought by the end of feudalism in Britain after the English Civil War in the 17th century. As national border controls became more effective, the spread of disease was lessened, thereby preventing the epidemics common in previous times. The percentage of children who lived past infancy rose significantly, leading to a larger workforce. The Enclosure movement and the British Agricultural Revolution made food production more efficient and less labor-intensive, forcing the surplus population who could no longer find employment in agriculture into cottage industry, for example weaving, and in the longer term into the cities and the newly developed factories. The colonial expansion of the 17th century with the accompanying development of international trade, creation of financial markets and accumulation of capital are also cited as factors, as is the scientific revolution of the 17th century.

Until the 1980s, it was universally believed by academic historians that technological innovation was the heart of the Industrial Revolution and the key enabling technology was the invention and improvement of the steam engine. However, recent research into the Marketing Era has challenged the traditional, supply-oriented interpretation of the Industrial Revolution.

Lewis Mumford has proposed that the Industrial Revolution had its origins in the Early Middle Ages, much earlier than most estimates. He explains that the model for standardized mass production was the printing press and that "the archetypal model for the industrial era was the clock". He also cites the monastic emphasis on order and time-keeping, as well as the fact that medieval cities had at their center a church with bell ringing at regular intervals as being necessary precursors to a greater synchronization necessary for later, more physical, manifestations such as the steam engine.

The presence of a large domestic market should also be considered an important driver of the Industrial Revolution, particularly explaining why it occurred in Britain. In other nations, such as France, markets were split up by local regions, which often imposed tolls and tariffs on goods traded among them. Internal tariffs were abolished by Henry VIII of England, they survived in Russia till 1753, 1789 in France and 1839 in Spain.

Governments' grant of limited monopolies to inventors under a developing patent system (the Statute of Monopolies in 1623) is considered an influential factor. The effects of patents, both good and ill, on the development of industrialization are clearly illustrated in the history of the steam engine, the key enabling technology. In return for publicly revealing the workings of an invention the patent system rewarded inventors such as James Watt by allowing them to monopolise the production of the first steam engines, thereby rewarding inventors and increasing the pace of technological development. However, monopolies bring with them their own inefficiencies which may counterbalance, or even overbalance, the beneficial effects of publicising ingenuity and rewarding inventors. Watt's monopoly may have prevented other inventors, such as Richard Trevithick, William Murdoch or Jonathan Hornblower, from introducing improved steam engines, thereby retarding the industrial revolution by about 16 years.

What was the Industrial Revolution?

The Industrial Revolution was the transition to new manufacturing processes in the period from about 1760 to sometime between 1820 and 1840. This transition included going from hand production methods to machines, new chemical manufacturing and iron production processes, improved efficiency of water power, the increasing use of steam power and the development of machine tools. It also included the change from wood and other bio-fuels to coal. It began in Great Britain and within a few decades had spread to Western Europe and the United States.

The Industrial Revolution marks a major turning point in history; almost every aspect of daily life was influenced in some way. In particular, average income and population began to exhibit unprecedented sustained growth. In the words of Nobel Prize winner Robert E. Lucas, Jr., "For the first time in history, the living standards of the masses of ordinary people have begun to undergo sustained growth ... Nothing remotely like this economic behavior is mentioned by the classical economists, even as a theoretical possibility."

William Bell Scott Iron and Coal, 1855–60

The period of time covered by the Industrial Revolution varies with different historians. Eric Hobsbawm held that it 'broke out' in Britain in the 1780s and was not fully felt until the 1830s or 1840s, while T. S. Ashton held that it occurred roughly between 1760 and 1830.

Some 20th-century historians such as John Clapham and Nicholas Crafts have argued that the process of economic and social change took place gradually and the term revolution is a misnomer. This is still a subject of debate among historians. GDP per capita was broadly stable before the Industrial Revolution and the emergence of the modern capitalist economy. The Industrial Revolution began an era of per-capita economic growth in capitalist economies. Economic historians are in agreement that the onset of the Industrial Revolution is the most important event in the history of humanity since the domestication of animals and plants.

The First Industrial Revolution evolved into the Second Industrial Revolution in the transition years between 1840 and 1870, when technological and economic progress gained momentum with the increasing adoption of steam-powered boats, ships and railways, the large scale manufacture of machine tools and the increasing use of steam powered factories.

Causes in Europe

A 1623 Dutch East India Company bond.

European 17th century colonial expansion, international trade, and creation of financial markets produced a new legal and financial environment, one which supported and enabled 18th century industrial growth. This growth was led by European Corporations that soon became multinational corporations.

One question of active interest to historians is why the industrial revolution occurred in Europe and not in other parts of the world in the 18th century, particularly China, India, and the Middle East, or at other times like in Classical Antiquity or the Middle Ages. Numerous factors have been suggested, including education, technological changes (see Scientific Revolution in Europe), "modern" government, "modern" work attitudes, ecology, and culture. The Age of Enlightenment not only meant a larger educated population but also more modern views on work. However, most historians contest the assertion that Europe and China were roughly equal because modern estimates of per capita income on Western Europe in the late 18th century are of roughly 1,500 dollars in purchasing power parity (and Britain had a per capita income of nearly 2,000 dollars) whereas China, by comparison, had only 450 dollars.

Some historians such as David Landes and Max Weber credit the different belief systems in China and Europe with dictating where the revolution occurred. The religion and beliefs of Europe were largely products of Judaeo-Christianity, and Greek thought. Conversely, Chinese society was founded on men like Confucius, Mencius, Han Feizi (Legalism), Lao Tzu (Taoism), and Buddha (Buddhism). Whereas the Europeans believed that the universe was governed by rational and eternal laws, the East believed that the universe was in constant flux and, for Buddhists and Taoists, not capable of being rationally understood. 

Other factors include the considerable distance of China's coal deposits, though large, from its cities as well as the then unnavigable Yellow River that connects these deposits to the sea.

Regarding India, the Marxist historian Rajani Palme Dutt said: "The capital to finance the Industrial Revolution in India instead went into financing the Industrial Revolution in Britain." In contrast to China, India was split up into many competing kingdoms, with the three major ones being the Marathas, Sikhs and the Mughals. In addition, the economy was highly dependent on two sectors—agriculture of subsistence and cotton, and there appears to have been little technical innovation. It is believed that the vast amounts of wealth were largely stored away in palace treasuries by totalitarian monarchs prior to the British take over. 

Absolutist dynasties in China, India, and the Middle East failed to encourage manufacturing and exports, and expressed little interest in the well-being of their subjects.

Causes in Britain

As the Industrial Revolution developed British manufactured output surged ahead of other economies. After the Industrial Revolution, it was overtaken later by the United States.

Great Britain provided the legal and cultural foundations that enabled entrepreneurs to pioneer the industrial revolution. Key factors fostering this environment were:

(1) The period of peace and stability which followed the unification of England and Scotland;

(2) no trade barriers between England and Scotland;

(3) the rule of law (respecting the sanctity of contracts);

(4) a straightforward legal system which allowed the formation of joint-stock companies (corporations); 

(5) a free market (capitalism).

Geographical and natural resource advantages of Great Britain were the fact that it had extensive coast lines and many navigable rivers in an age where water was the easiest means of transportation and having the highest quality coal in Europe.

There were two main values that really drove the industrial revolution in Britain. These values were self-interest and an entrepreneurial spirit. Because of these interests, many industrial advances were made that resulted in a huge increase in personal wealth. These advancements also greatly benefitted the British society as a whole. Countries around the world started to recognize the changes and advancements in Britain and use them as an example to begin their own industrial revolutions.

Industrial Revolution on Slavery

The debate about the start of the Industrial Revolution also concerns the massive lead that Great Britain had over other countries. Some have stressed the importance of natural or financial resources that Britain received from its many overseas colonies or that profits from the British slave trade between Africa and the Caribbean helped fuel industrial investment. However, it has been pointed out that slave trade and West Indian plantations provided only 5% of the British national income during the years of the Industrial Revolution. Even though slavery accounted for minimal economic profits in Britain during the Industrial Revolution, Caribbean-based demand accounted for 12% of Britain's industrial output.

It became apparent that paid labor produced more industrial output than slave labor. Here is the reason why British industry eventually turned away from slavery and caused the British government to make antislavery part of British foreign policy. In the United States, the newly formed government argued over slavery from the Revolutionary War against the British to the Civil War between the states. The turning point in the US on the Slavery issue came when President Lincoln figured out that the Union could cripple the Confederate War Machine by freeing the slaves in areas that the Union troops occupied. At the end of the war, the people saw a benefit in a free labor system. However, they did not want these ex-slave in their communities.  

The effect of science and technology on business

The greater liberalization of trade from a large merchant base may have allowed Britain to produce and use emerging scientific and technological developments more effectively than countries with stronger monarchies, particularly China and Russia. Britain emerged from the Napoleonic Wars as the only European nation not ravaged by financial plunder and economic collapse, and having the only merchant fleet of any useful size (European merchant fleets were destroyed during the war by the Royal Navy). Britain's extensive exporting cottage industries also ensured markets were already available for many early forms of manufactured goods. The conflict resulted in most British warfare being conducted overseas, reducing the devastating effects of territorial conquest that affected much of Europe. This was further aided by Britain's geographical position—an island separated from the rest of mainland Europe.

Another theory is that Britain was able to succeed in the Industrial Revolution due to the availability of key resources it possessed. It had a dense population for its small geographical size. Enclosure of common land and the related agricultural revolution made a supply of this labor readily available. There was also a local coincidence of natural resources in the North of England, the English Midlands, South Wales and the Scottish Lowlands. Local supplies of coal, iron, lead, copper, tin, limestone and water power, resulted in excellent conditions for the development and expansion of industry. Also, the damp, mild weather conditions of the North West of England provided ideal conditions for the spinning of cotton, providing a natural starting point for the birth of the textiles industry.

The stable political situation in Britain from around 1688, and British society's greater receptiveness to change (compared with other European countries) can also be said to be factors favoring the Industrial Revolution. Peasant resistance to industrialization was largely eliminated by the Enclosure movement, and the upper class developed commercial interests that made them pioneers in removing obstacles to the growth of capitalism. (This point is also made in Hilaire Belloc's The Servile State.)

Britain's population grew 280% 1550–1820, while the rest of Western Europe grew 50-80%. 70% of European urbanization happened in Britain 1750–1800. By 1800, only the Netherlands was more urbanized than Britain. This was only possible because coal, coke, imported cotton, brick and slate had replaced wood, charcoal, flax, peat and thatch. The latter compete with land grown to feed people while mined materials do not. Yet more land would be freed when chemical fertilizers replaced manure and horse's work was mechanized. A workhorse needs 3 to 5 {{{u}}} (1.21 to 2.02 ha) for fodder while even early steam engines produced 4 times more mechanical energy.

In 1700, 5/6 of coal mined worldwide was in Britain, while the Netherlands had none; so despite having Europe's best transport, most urbanized, well paid, literate people and lowest taxes, it failed to industrialize. In the 18th century, it was the only European country whose cities and population shrank. Without coal, Britain would have run out of suitable river sites for mills by the 1830s.

Transfer of knowledge

A Philosopher Lecturing on the Orrery (ca. 1766). 

Informal philosophical societies spread scientific advances

Knowledge of innovation was spread by several means. Workers who were trained in the technique might move to another employer or might be poached. A common method was for someone to make a study tour, gathering information where he could. During the whole of the Industrial Revolution and for the century before, all European countries and America engaged in study-touring; some nations, like Sweden and France, even trained civil servants or technicians to undertake it as a matter of state policy. In other countries, notably Britain and America, this practice was carried out by individual manufacturers eager to improve their own methods. Study tours were common then, as now, as was the keeping of travel diaries. Records made by industrialists and technicians of the period are an incomparable source of information about their methods.

In the United States, industries were created and managed by ethnic groups so people in these groups learned the trade of whatever ethnic employer had that business. Blacks, Indians, Hispanics, and Asians were left out of this process for the most part.

Another means for the spread of innovation was by the network of informal philosophical societies, like the Lunar Society of Birmingham, in which members met to discuss 'natural philosophy' (i.e. science) and often its application to manufacturing. The Lunar Society flourished from 1765 to 1809, and it has been said of them, "They were, if you like, the revolutionary committee of that most far reaching of all the eighteenth century revolutions, the Industrial Revolution". Other such societies published volumes of proceedings and transactions. For example, the London-based Royal Society of Arts published an illustrated volume of new inventions, as well as papers about them in its annual Transactions.

There were publications describing technology. Encyclopaedias such as Harris's Lexicon Technicum (1704) and Abraham Rees's Cyclopaedia (1802–1819) contain much of value. Cyclopaedia contains an enormous amount of information about the science and technology of the first half of the Industrial Revolution, very well illustrated by fine engravings. Foreign printed sources such as the Descriptions des Arts et Métiers and Diderot's Encyclopédie explained foreign methods with fine engraved plates.

Periodical publications about manufacturing and technology began to appear in the last decade of the 18th century, and many regularly included notice of the latest patents. Foreign periodicals, such as the Annales des Mines, published accounts of travels made by French engineers who observed British methods on study tours.