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Industrial Revolution (Causes of Industrial Revolution (Britain or…
Industrial Revolution
Causes of Industrial Revolution (Britain or Europe?) and Why in Europe not in Asia?
Geography
Natural resources? Coal and iron deposits
geographical factors do not provide sufficient explanation on their own
Religion and culture
Business leaders in their majority protestant
protestant behavior and mentality favourable to capitalism
interest rates
austerity
reformation spirit
influential theory but there are other religious minorities in Europe or catholics
Cultural factors
scientific research, technological advance, entrepreneurship
debatable for non-European countries
literacy and numeracy
Institutions
institutional economics
contributions of the institutions to economic growth
credible commitment to liberal limits on state action
political institutions
constitutional monarchy
property rights not protected in absolute monarchy
questioned because 1. there were other constitutional monarchies 2. flourishing trade in absolute monarchies 3.high taxes in england (constitutional monarchy 1649)
Colonial expansion and international trade
Britain in the mid 18th century
leading commercial power
modest colonial empire: france and spain much larger colonial empire
benefits of international trade and colonies
know how
export markets
profits
standard of living
Possible Explanation
Britain is the only country that has all the factors mentioned + consumer society
mainly cultural
decisive advantage over old civilization 1300-1500
Judeo-Christian tradition
minor innovations
spirit of innovation and emulation in contrast with opposition to change in old civilizations
municipal autonomy
separation of spiritual and temporal power
limits to despotism, territorial and political fragmentation
property rights in contrast with oriental despotism- market economy
game was over by 1500
industrial revolution
colonization
voyages of doscovery
What is Industrial Revolution?
series of technological changes
mechanization of textile industry
use of coal in the iron and steel industry
steam as a new energy source
radical transformation of industrial production
modern economic growth
sustained and fast economic growth
predominance of manufacturing industry
rise of productivity and standard of living because of technological progress
a continuous process rather than an abrupt change
(lower than modern emerging economies) + at a technological frontier, different from catching up effect
turning point in world history
for industrialized countries
for countries which failed to industrialize
Great Diversion
Old explanation
Comparison between China and England
same level of development in mid- 18 th century
Comparison between China and Europe
Comparison China vs. Europe more convincing that the other
European uniqueness (demography, markets, luxury, consumption, labour and ecology)
Recent explanations
Real Wage
Divergence of real wages between 15th and 18th century
cost of maintaining laborers at bare-bones subsistence (least cost way of staying alive)
comparative advantage: specialization on raw materials
implications for social well-being and economic progress
education of people (people on bare-bones are less educated)
motivation for economic development
labour is cheap so no incentive to invest in machinery
the industrial revolution was the result of high wages not just their cause