3.1 Industrial Revolution: Accounting for Growth

Questioning the Industrial Revolution

Why did it happen? Why was it revolutionary? When did it happen? What were its driving forces? Why then and not earlier or later? Why Britain/Europe?

Historiography has moved away from an abrupt, quick transformation. Usually placed in the century from 1750-1850

Traditional narrative: wave of heroic British inventors unleashing a "wave of gadgets"

By 1960s, approach had shifted to a functionalistic analysis of socio-economic conditions. Recipe for industrialisation at the right place and right time

According to this view: once these factors were in place, the transition to modernity was inevitable, inexorable, and irreversible.

NW European / British achievement. Non-European countries like China failed to industrialise by lacking these ingredients

Functionalist revolution of revolutions

Consumer revolution

Agricultural revolution

Price revolution

Institutional revolution

Financial revolution

Scientific revolution

Two distinct phases of irreversible human development: feudal and modern

Rostow's stages of growth

Traditional (pre-Newtonian): capped by availabl land, trade opportunties and technological improvement. Malthusian trap mechanism stymies output gains

Pre-conditions for take-off: sufficient accumulation of knowledge, realisation of potentialities flowing from science and technology, availbility of savings for capital supply, disposible income for consumer demand

Then take-off, drive to maturity, mass consumption

British recipe for Industrial Revolution

Availability of plentiful capital and ways to direct this to industry (financial networks, imperial profits)

Capitalists.inventors requiring an environment conducive to business (no fear of expropriation, incl. of intellectual property). Inclusive institutions

Invention required education, literacy, scientific method, and urbanisation

Consumers posess disposable income, resulting from higher wages

High wages necessitated investment in labour-saving technology (unlike Asian countries, which kept using cheap labour). Productivity increases with mechanisation

Agricultural revolution putting an end to period famines, allowing consumers to consume without fear

Econometric approach

Beginning in the 1950s/60s, attempts to measure growth begin

Tax returns on imports and exports used to calculate growth and estimates of aggregate economy

Revisions downward begin in the 1980s

Even older figures of growth were underwhelming for an industrial revolution, until later in the 19th century

Objections to revisionist accounting

Data comprises of a few commodities subject to custom and excise, excluding much of agriculture, household work, and non-marketed activity

Data does not capture the effects of smuggling, evasion and corruption. Vary especially during times of war

Unsafe to extrapolate local data for country-wide economic trends, because of regional differentiation

Sector and factor weightings are disputed

Contemporaries convinced of ongoing fundemental transformation

Evident shift away from agriculture in the English occupational structure

1710: 51% in primary industry

1871: 26% in primary industry

In GB, decoupling between plateauing agricultural exports and the take-off in manufacturing exports

British exports dominated by cotton, almost 50% by 1820s

Despite objections, revisionists have largely made their point. Gradual transformation with roots in the early modern period now in favour. Claims of British exceptionalism de-emphasised