The Industrial Revolution: Why Britain Got There First
January 15, 2015 6 Comments
This has been lying around here for a while but, it’s pretty interesting material. Stephen Clarke writing in History today tells us there are three predominate theories as to why Britain was the first country to industrialize.
Underpinning my analysis is the recent work of Professor Nicholas Crafts, Professor of Economics and Economic History at the University of Warwick. In November the Legatum Institute welcomed Professor Crafts to explore the question: ‘why Britain got there first?’
What do we understand by ‘Britain was first to industrialise’? Professor Crafts is one of the leading scholars unpacking the Industrial Revolution and his work reveals a number of salient points. First, there was no great ‘take-off’ in industrialisation or productivity: in Britain industrial employment increased by just 12% between 1759 and 1851, similarly total factor productivity increased by just 0.4% a year until the 1830s. By 20th century standards such growth was underwhelming.
That is a lot slower than we (or at least I) was led to believe. Although I would expect this type of expansion to approximate a logarithmic curve, as it builds on itself. He also notes that Britain, along with Italy and the Netherlands already was far richer than China. In fact, my impression is that Britain (specifically England) was quite prosperous even at the time of Magna Charta in the early 13th century.
He also notes that this growth was centered in manufacturing and very little changed in the service sector. I would expect this personally since neither steam or water power was very mobile at this point.
Most successful is Robert Allen who puts forth a compelling argument in The British Industrial Revolution in Global Perspective. Britain’s success was the result of relative prices and market potential. Allen argues that in Britain wages were high, while capital and energy were cheap. Britain also provided a large market for manufactured products. The result was that it made sense to invest in the spinning jenny in England, while it did not in France.
However, this picture is too simplistic. While British workers were paid more than their French counterparts, even at lower French wages, adopting the jenny would still have been profitable (albeit less so). Similarly, American workers were paid more than their British counterparts, but industrialisation did not take off there.
It is too simplistic but it’s not all economics either. Britain had an established entrepreneurial class class and a rock solid rule of law, which in this context would mean that your investment (and profit) was safe, France did not.
America on the other hand shared Britain’s rule of law ethos, but was short of skilled craftsmen, engineers, transportation, and capital. When the Civil War really drove industrialization, much of it was financed by British firms looking for a higher return.
Joel Mokyr in The Enlightened Economy: an Economic History of Britain 1700-1850 posits that the Enlightenment meant that Britain was best positioned to take advantage of the ideas and equipment of the age.
There’s quite a bit more at the linked article but I think it important to emphasize that an “Enlightenment Education”, desirable as it might have been, wasn’t necessary to understand the relatively crude machinery in use. Practical engineering was the order of the day. It wasn’t nearly as academically oriented business community in those days, as it is now.
Least successful is Gregory Clark who moves further from the realm of inductive reasoning than Mokyr. Clark in A Farewell to Alms: A Brief Economic History of the World argues that Britain’s Industrial Revolution was a rapid transformation bought about by demographic and genetic changes
While I see his point, I think this is more important than he does. With the upper classes passing their inheritances to the eldest son, and somewhat limited posts in both the army and the church, the rest of those surplus sons had to make a living, and I suspect many went into trade and quite a few into manufacturing, increasing the level of education amongst the middle class quite rapidly. And I think this (and the family and foreign contacts included) would have provided a springboard for the expansion of British industry and especially banking in the next few years.
In short, I think this is an immensely complicated story and no one theory is going to unpack it satisfactorily.