Economics,%20Science,%20and%20the%20British%20Industrial%20Revolution

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Economics, Science, and the British Industrial
Revolution

• Bob Allen
• Nuffield College, Oxford
• 2006

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Todays questions

• How can we explain the technological
  breakthroughs of the Industrial Revolution?
• Why did the Industrial Revolution happen in
  Britain rather than France, the Netherlands, or
  China?
• Mokyrs question Why did economic growth
  continue through the 19th century rather than
  peter out by 1815?

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Our answers

• Britains unique structure of wages and prices
  was a major factor in explaining when the
  industrial revolution happened and why it
  happened in Britain.
• Britain had an effective innovation system
  based on a high level of human capital, the
  appropriate engineering capability, and a few
  scientific breakthroughs.
• Most of these were consequences of Britains
  trade performance.

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Supporting themes

• Inventing the IR was primarily an engineering
  challenge rather than a scientific challenge.
• Economic incentives were critical in explaining
  why the challenge was met.
• RD was an institutional response to those
  incentives.

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Three major approaches to explaining the
Industrial Revolution

• Political Britain had limited government, low
  taxes, secure property rights
• Cultural Britain had a scientific culture that
  was practical and suffused much of the
  population.
• Economic Economic expansion 1500-1750 generated
  incentives to invent technology substituting
  capital and energy for labour and also the
  capacity to respond to that challenge.

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Political explanation is in vogue. While
plausible, there are grounds for doubt

• Property rights were as secure in Franceand
  maybe Chinaas in Britain.
• Taxes were higher in Britain than in France.
• 1688 produced no sharp break in interest rates.

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1688 gave Britain effective governmentnot
limited government.

• The states despotic power was only available
  intermittently before 1688, but was always
  available thereafter. (Hoppit 1996)
• Higher taxes possible and they financed the Royal
  Navy, imperial expansion, and stable finances.
• Thousands of local acts created infrastructure
  where it paid.

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Industrial Revolution was essentially
technological.The economic approach emphasizes
incentives to invent.
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the demand and supply of new technology

• Demand depended on factor prices, market size,
  and imitation of novel products.
• Britains unusual wage and price structure is
  key.
• Supply depended on standard of living,
  accumulated knowledge and skills, and inventive
  institutions.
• Scientific revolution provided two important
  ideas.
• Routinization of RD was a key.
• Knowledge exchange between firms allowed
  collective invention.

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Part I

• Prices and the demand for technology

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British Prices were unique

• High wages
• Cheap coal

These created a demand for labour-saving,
energy-using technology and increased the
capacity to respond to that challenge.
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British Wages were high in four senses

1. At the exchange rate, British wages were high
   relative to those in its competitors.
2. High British silver wages translated into high
   living standards compared to the rest of the
   world.
3. British wages were high relative to capital
   prices.
4. Wages in northern and western Britain were
   exceptionally high relative to the price of
   energy.

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1. British wages were exceptionally high at the
exchange rate (grams of silver per day).
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2. High British wages meant a high standard of
living.
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3. British wages rose sharply relative to capital
costs after 1640, whilecontinental wages slid
1550-1800.
Builders wage rate relative to the user cost of
capital inputs wood, iron, nonferrous metals,
and bricks.
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4. Wages in northern and western Britain were
exceptionally high relative to the price of
energy.
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The high wage economy was caused by Britains
foreign trade boom.

• This began with the new draperies and was
  consolidated by the creation of a world empire.
• The trade boom pushed the urbanization rate from
  7 in 1500 to 29 in 1800.
• Tight labour markets meant high wages.

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One period flow chart of model
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Britains coal also played a key roleEnergy was
very cheap on the coal fields in northern and
western England.
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Cheap coal did not simply reflect natural
reserves. Cheap coal resulted from the
urbanization of the 17th 18th centuries.

• Britains coal resources were not intrinsically
  superior to those of Germany, Belgium, and
  northeastern France.
• Growth of London meant higher wood prices, which
  induced the development of English coal fields.
• Dutch urbanization led to exploitation of peat
  and, later, importing English coal since those
  fuels were cheaper than German coal.
• Paris grew enormously by using wood--whose price
  rose but not exorbitantly.

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Newcastle coal could be landed in London at 4 g
silver/million BTUs.From 1450 to 1550, wood and
coal sold at that price.Wood was a superior fuel
and had to double in price to create a market for
coal.The growth of London raised the price of
wood given the geography of supply.
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High British wages and cheap coal underpinned the
Industrial Revolution by creating a demand for
technology

• mechanize production and substitute coal for
  labour
• mass market for new products
• Imitation of Asian products
• Consumer revolution

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Nails are an example. TFP rose in nail making.
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Rising wages stimulated the development of simple
ways of raising the capital-labour ratio.
The oliver was a treadle- operated sledge
hammer that formed the heads of nails. Output
per worker rose, as more capital was used.
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A similar process occurred in Needle-making where
the Nail-making tools were copied.
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Higher British wages meant a higher
capital-labour ratio in Britain than in France.
There was no oliver hammer in the French nail
shop!
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Four generalizations about inventions

• British inventions were biased toward saving
  labour and energy.
• Consequently, British inventions cut costs more
  at British factor prices than elsewhere, so they
  were adopted in Britain but not France.
• Since British technology was not used on the
  continent when freely available, it would not
  have been profitable to have invented it there.
  Thats why the IR happened in Britain.
• As British technology was improved, energy and
  capital requirements were cut, and continental
  producers adopted it.

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Part IIThe Supply of Technology Human Capital

• Not all high wage economies have invented labour
  saving machinery and industrialized. Why did
  18th century Britain?

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Britain met the demand for technology because it
had an effective innovation system

• High level of human capital (literacy, numeracy,
  trade skills)
• An appropriate engineering industry (gears)
• Two useful scientific discoveries (doesnt
  distinguish Britain from Europe)

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Two secondary features of the innovation system

• An upper class interested in science and
  technology (industrial enlightenment)
• Appropriate business organization
• routinization of private RD
• Collective invention (copying between industries
  and sharing within industries)
• An endogenous response?

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Britains high level of human capital stands out
in literacy
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Urbanization and trade led to numeracy

• Commercial transactions raised value of
  arithmetic skills (arithmetic texts emphasize
  business applications).
• Navy and merchant marine require geometry.
• So does land surveying

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Literacy, numeracy, and trade skills were supply
by the private market.

• High wage economy meant that people could afford
  to pay for schools and apprenticeships.

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Part IIISupply of Technology Science and
Engineering Capability
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Scientific discoveries were an important part of
the innovation system. Two were important.

• The discovery that the atmosphere has weight led
  to the steam engine.
• The discovery of the laws of pendulums led to the
  mass production of gears and geared machines.
• In both cases, however, the effects were indirect
  and mediated by economics.

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In 1605, Francis Bacon first proposed that
scientific advance could improve technology and
raise the standard of living
Scientific discovery
Technological improvements
Economic growth
In 1671, Robert Boyle elaborated the theme is his
essay That the Goods of Mankind may be much
encreased by the Naturalists Insight into Trades.
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It is tempting to apply this theory to history by
specifying the boxes like this
Scientific revolution of 17th century
Technological inventions of the 18th century
Industrial Revolution
Examples
Rising income and wages
Spinning jenny steam engine
Newton, Galileo
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Scientific discoveries were the basis of two
General Purpose Technologies that transformed the
world in the 19th centurySteam Power and Gears
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In both cases, the connection was mediated by the
economy

• The scientific discovery led to a commercial
  application.
• The application, in turn, led to improved
  materials, designs, and work practices.
• These improvements in intermediate inputs then
  allowed the GPT that was so transformative.
• We can see the sequence with steam and gears.

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Steam Galileo first suspected that the
atmosphere had weight, and his secretary
Toricelli invented the mercury barometer and
weighted it.
In 1672 von Guericke found that if air was pumped
out of cyclinder A, the weights D rose as the
weight of the atmosphere pushed down the piston
in cylinder A. In 1675 Papin found that filling
the cylinder with steam and then condensing it
accomplished the same purpose.
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In 1712 Newcomen invented an atmospheric steam
engine that pumped water from a mine.
Steam from the boiler filled the cylinder.
When water was injected into the cylinder, the
steam condensed, and depressed the
piston raising the pump. The social saving of
this engine was tiny.
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The Newcomen engine was developed in Britain
because it was profitable there but nowhere else.

• It took Newcomen 10 years to develop the engine.
• Profitability depended on large coal industry so
  demand for drainage was great and fuel was free.
• These conditions were only satisfied in Britain.
• Newcomens RD project would not have been
  profitable anywhere else.
• The knowledge that the atmosphere has weight was
  a necessary but not a sufficient condition for
  the invention of the steam engine.

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The Newcomen engine was not transformative but it
led to the high pressure steam engine, which was.

• Social saving of the Newcomen engine was tiny
  since it was so expensive and inefficient.
• High pressure steam was much cheaper but required
  iron plates, riveting techniques, boiler designs
  that were not available in 1712 and only
  developed as Newcomen engine was used.
• High pressure steam led to mechanization of
  industry, the railway, and steam ships that
  transformed the world economy in the 19th century
  and accounted for half of UK TFP growth.

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The second discovery was Huygens analysis of the
pendulum
This was the basis of his invention of the
pendulum clock. It greatly increased accuracy
and led to a big growth in clock production.
Look at all those gears!
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The clock was important because it led to the
mass production of gears.

• Specialized equipment to make cheap, accurate
  gears was invented.

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Eighteenth century mechanics applied gearing to
automatons that replicated human and animal
movement. This dulcimer player was fully
operational. It was a toy of Marie
Antoinette. Notice the gearing that controlled
the movements of the figure.
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If Vaucansons duck could walk, eat, and poop,
couldnt a machine weave cotton?
Cartwright thought so!
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Watch making also led to better materials
Huntsman invented crucible steel for watch
springs.
Crucible beside furnace.
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Lancashire made half of the worlds clocks and
watches.

• This was the first engineering industry.
• It was the reason that the water frame could be
  mass produced.
• No other region in the world had a comparable
  engineering capability.
• This explains Britains comparative advantage in
  micro inventions.

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Part IV

• The Supply of Technology
• Maybe the Industrial Enlightenment explains the
  Industrial Revolution?

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Mokyr, Jacob and others have recently emphasized
that science was important not for its
discoveries but for its culture. The Scientific
Revolution may have influenced production as the
scientific method was applied to technology and
interest in science spread.
The Scientific method includes the ideas

• that there are natural laws.
• that these laws are mathematical.
• that they can be discovered by studying facts.
• that they can be used to improving the world.

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A culture of science did develop.

• Given institutional structure by the Royal
  Society in 1660
• Knowledge of science was spreader to a wider
  publicand interest stimulatedby courses of
  instruction.

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This apparatus was used by King George III when
he studied pneumatics and mechanics.
This measures elasticity.
This is an air pump.
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The popularization of science and the
descriptions of technology sparked an upper class
interest in craft hobbies in the 18th century.
Here is a gentleman with his lathe and drill
press.
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This is a close-up of Louis 16ths lathe.
The ruling ideas of the age are the hobbies of
the ruling class?
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Collecting was changed. The 17th century
cabinet of curiosities in which a Greek vase, a
beautiful stone, and a piece of the true cross
were mixed together...
Notice the intermixture of artifacts, fish,
reptiles, and so forth.
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gave way in the 18th century to specialized
collections of minerals, plants, etc. that could
be analyzed to abstract laws of nature.
Notice Birds together, Shells together, And so
forth
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It wasnt only science that was studied
scientifically!
Arthur Young toured England in the 1760s and
recorded the details of farming in hundreds of
villages and farms in order to find out how
agriculture worked.
I have hitherto given the mere register of a
journey, with an eye to reduce all to averages,
and from them to draw such conclusions as their
nature dictated.
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Heres part of his data set about rotations, soil
type, rent, and crop yields (in bushels per acre)
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He divided his data into groups and averaged his
variables to find laws of nature.
, This table fails to show that more frequent
fallowing raised yields (measured in quarters,
bushels and pecks)a result that surprised Young
since it contradicted his views. But now the
grand object is before me, I want several
penetrating political arithmetricians at my elbow
to point out the combinations between different,
and seemingly distinct circumstances, too many
of which will, I fear, escape me. Still good
advice!
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The 18th century did see an institutional
invention of great importanceResearch
Development.

• RD means that considerable resources are devoted
  to solving a technical problem in the hope of
  getting future gain.
• Famous examples of RD projects include
• Josiah Wedgewood collected and tested 5000
  materials to create the recipe for cream ware.
• John Smeaton carried out systematic experiments
  on models of water wheels to improve their
  design.
• John Harrison invented the chronometer (the first
  public RD project).

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There are reasons to be sceptical about the
Industrial Enlightenment

• It was mainly an upper class affair.
• Its twinthe Agrarian Enlightenmentwas
  singularly unproductive.
• Most inventions were made by artisans. Most of
  them were not involved in these events.

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Mandeville would have agreed!
They are very seldom the same Sort of People,
those that invent Arts, and Improvements in them,
and those that enquire into the Reason of Things
this latter is most commonly practisd by such,
as are idle and indolent, that are fond of
Retirement, hate Business, and take delight in
Speculation whereas none succeed oftener in the
first, than active, stirring, and laborious
Men, such as will put their Hand to the Plough,
try Experiments, and give all their Attention to
what they are about.
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Second, Britains pragmatic, upper class culture
may have been the product of economic opportunity
rather than the cause.

• New agricultural, mining, and transport
  technology raised the value of land.
• English land law and the rise of the great estate
  meant that the English gentry and aristocracy
  were unusually well placed to profit from
  improvement.
• Is that why the English had a more pragmatic
  culture than the French?

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Part IV An example Arkwrights cotton
spinning machine
Here it is!
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Spinning includes two elements that define the
technical problem

• Drawing out the roving to make the thread thin
• Twisting the thread (as it is wound on the
  spindle) to give it strength.

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Arkwrights ideas were simplenot rocket science!

• The thread was wound and twisted by a flyer--an
  old device.
• Trains of rollers were used to stretch out the
  roving.
• Rollers were a general purpose technology of the
  period.
• Arkwright stole the idea from Paul and Wyatt.

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Arkwrights use of rollers was a creative
application of a 17th century General Purpose
Technology--the use of gears to control sets of
opposed, revolving cylinders (mangels)
This invention had wide application

• Rolling mills for copper, brass, iron
• Flattening paper sheets
• Crushing rock
• Drawing out the cotton fibres in roller spinning.

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In rolling and slitting mills, it was the rollers
that pulled the length of hot metal between
them.
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This was copied in roller spinning where the
rollers pull the thread between them.
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• The hard part was making the thing work. Note
• The thick roving at the top
• The thin thread at the bottom
• The flyer that winds the thread
• The three trains of rollers
• The clockwork gearing
• The weights

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Notice how far the design has been improved over
Lewis Pauls patents of 1738 and 1758.
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Key changes included

• Three sets of rollers
• Wood rollers on top
• Fluted metal rollers on bottom
• Spacing between them
• Speed doubling from one roller to the next
• Weights setting the tension on the thread

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Arkwrights RD project

• Several clockmakers were employed over five years
  to perfect the machine.
• By trail and error, they worked out the number of
  trains of rolls, their speed, materials, spacing,
  and weighting.
• Jedediah Strutt was the venture capitalist who
  financed most of the RD.
• Patents were used to capture the returns.
• A carding machine was also invented to make the
  roving.
• Mill lay-out was perfected with Cromford 2.

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Why did Arkwright take up these technical
problems? Competition with the Indian cotton
industry created an economic opportunity.

• The Indian industry was the largest in the world
  and exported to Europe and Africa.
• Indian wages were one fourth English.
• The English industry was on the margin.
• Inventing a way to cut labour costs would allow a
  vast increase in output at the expense of Indian
  producers.

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Neither Arkwrights water frame nor Hargreaves
spinning jenny was much used in eighteenth
century France.

• Labour was much cheaper relative to capital in
  France, so mechanical spinning did not pay.
• Since the technology was not adopted when it was
  freely available, there was no pay-off to the RD
  involved in inventing it.
• The famous inventions of the IR were made in
  Britain because they paid in Britain, not because
  the British were more practical, more
  enterprising, or better governed.

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The invention of the water frame illustrates the
key themes

• Technology not based on big ideas or science
• Engineering problems were the crux of the matter.
• The engineering problems were addressed in
  response to economic incentives resulting from
  Britains high wages.
• The IR happened in Britain because it paid to
  invent it in Britain rather than elsewhere.

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Part V Conclusion

• New Scientific knowledge does not explain the
  Industrial Revolution.
• The key to the Industrial Revolution was the
  improvement of technology by simple engineering.
• Possibly the Scientific Method improved RD, but
  experimenting is universal among humans.

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• Britains unusual wages and prices created the
  profit opportunities that animated the impulse to
  invent.
• Britains success in the global economy between
  1500 and 1800 lay behind these prices and wages.
• Success in the global economy, therefore, was the
  main cause of the technological breakthroughs of
  the Industrial Revolution.