Lecture 9: The Industrial Revolution

1
Lecture 9 The Industrial Revolution
2
Introduction

• What actually happened 1750 and 1850 in Britain?
• Certainly, tremendous increases in industrial
  output.
• Apparently, a break from the Malthusian trap as
  well.

3
(No Transcript)
4
(No Transcript)
5
(No Transcript)
6
(No Transcript)
7
Approaches to the Industrial Revolution

• Old school
• The Industrial Revolution was a true revolution.
• Tremendous changes in the economic, political,
  and social fabric of Britain.
• All of which were generated by a wave of
  innovation in key industries (again coal, cotton
  textiles, iron and steel) and could be physically
  seen in the move to machine/factory production
  and urbanization.

8
Approaches to the Industrial Revolution
9
Approaches to the Industrial Revolution
10
Approaches to the Industrial Revolution
11
Approaches to the Industrial Revolution
12
Approaches to the Industrial Revolution

• New school
• Looking at the production figures, something
  definitely happened.

13
Approaches to the Industrial Revolution

• New school
• In particular, industrial sectors were too small
  of a share of total output to really affect the
  whole economy.
• Consequently, the British experience has been
  de-emphasized.

14
Questions raised by the new school

• How big were the revolutionized sectors?
• The key here is the relation of sector shares and
  productivity growth to aggregate productivity
  growth.
• Specifically, productivity growth in the economy
  is given by

15
Questions raised by the new school

• What was the geographical pattern of the
  revolution?
• Many areas saw little change.
• So maybe we should not talk about a British
  industrial revolution, but rather a distinctly
  regional one.

16
Questions raised by the new school

• Also, if the industrial revolution was a truly
  revolutionary, why did all of the classical
  economists not see it?

17
Questions raised by the new school

• Looking across Europe and indeed across the globe
  (to China especially), why was England first?
• Or what was special about the English
  economy/policy/society?
• Short answermaybe nothing.

18
Questions raised by the new school

• Finally, was the movement in population and wages
  the real break from the Malthusian trap or simply
  a shift in the technology curve?

19
Causes of the industrial revolution?

• One of the older explanations has been the
  scientific revolution of the 17th 18th
  centuries.
• The argument is that basic research as well as
  the application of the scientific method helped
  the English transform industry via mechanization,
  the factory system, etc.

20
Causes of the industrial revolution?

• Problem is that almost none of the critical
  innovations of the industrial revolution period
  were achieved along scientific lines.

21
Causes of the industrial revolution?

• Some have argued (North especially) that the
  Glorious Revolutiona successful implementation
  of limited government sparked the development of
  public and private capital markets, eventually
  paving the way to the Industrial Revolution.

22
Causes of the industrial revolution?

• The evidence used to support this argument is the
  decline in interest rates in England around 1690.
• However, Norths evidence is fragmentary, and his
  good quality data only start after 1720 at which
  time the rates decline.

23
Causes of the industrial revolution?

• Recently, Ken Pommeranz has suggested that the
  reason England experienced an industrial
  revolution was coal and colonies.

24
Causes of the industrial revolution?

• The problem with this argument is that
• it is not apparent how necessary coal really was
  (substitutes available and only a few industries
  actually relied on coal)
• the location of industry is endogenous, or at
  least it was in England (iron and steel
  industries located near coal deposits)