DeLong Econ 210a Industrial Revolution Slides: March 19: Marx and Urbanization and Industrialization and Marketization

Class Audio

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• Alfred D. Chandler (1992), "Organizational Capabilities and the Economic History of the Industrial Enterprise," Journal of Economic Perspectives 6 (Summer) http://links.jstor.org/sici?sici=0895-3309%28199222%296%3A3%3C79%3AOCATEH%3E2.0.CO%3B2-X
• Susan Wolcott and Gregory Clark (1999). "Why Nation's Fail: Managerial Decisions and Performance in Indian Cotton Textiles, 1890-1938." Journal of Economic History, June http://links.jstor.org/sici?sici=0022-0507%28199906%2959%3A2%3C397%3AWNFMDA%3E2.0.CO%3B2-9
• Karl Marx and Friedrich Engels (1848), "Manifesto of the Communist Party" http://www.marxists.org/archive/marx/works/1848/communist-manifesto/

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In our last episode...

Greg Clark said that there wasn't really an industrial revolution--there was a large demographic expansion made possible by the fact that Britain's population was out-of-sync with Europe and so it could trade manufactured goods for food...

And that technological progress in steam in the eighteenth century was no more impressive than progress in printing in the 15th century or ocean shipping in the 16th, and had bigger effects only because of the luck of demand elasticities...

• Clark: What Was the Industrial Revolution?
• Clark: Different Demography in the North England
• General Purpose Technologies and the Industrial Revolution

And that Britons in 1860 had living standards barely better than those of Britons in the aftermath of the Bubonic Plague...

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Nick Crafts said that there was an industrial revolution, but that it was small beer...

Nicholas Crafts (2002), "The Solow Productivity Paradox in Historical Perspective," (London: CEPR Discussion Paper no.3142) http://www.cepr.org/pubs/dps/DP3142.asp

Compare to 1.86% per year of real output per worker growth from the computer-communications leading sector of the late 1990s...

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Jeffrey Williamson said that there was barely an industrial revolution because Britain tried to industrialize and fight wars...

Jeffrey Williamson, "Why Was British Economic Growth So Slow During the Industrial Revolution?" Journal of Economic History 44, pp.687-712 http://www.jstor.org/view/00220507/di975668/97p1230f/0

DeLong Indeed, back in 1776 Adam Smith had warned that Britain's politico-military state's success might well crush its economy, writing about even successful debt-funded wars:

The practice... has gradually enfeebled every state which has adopted it. The Italian republicks... Spain seems to have learned the practice from the Italian republicks, and (its taxes being probably has, in proportion to its natural strength, been still more enfeebled.... France... languishes under an oppressive load.... The republic of the United Provinces is as much enfeebled by its debts as either Genoa or Venice.... Is it likely that in Great Britain alone a practice, which has brought either weakness or desolation into every other country, should prove altogether innocent?...

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Peter Temin said that there was too an industrial revolution, and it was substantial, and broad-based...

Peter Temin, "Two Views of the British Industrial Revolution," Journal of Economic History 57, pp.63-82 http://ideas.repec.org/p/nbr/nberhi/0081.html

But his argument appears to be vulnerable to a fall in the global price of textiles and other leading-sector goods...

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And Maxine Berg and Pat Hudson said "wait a minute: people thought there was an industrial revolution..."

Maxine Berg and Pat Hudson, "Rehabilitating the Industrial Revolution," Economic History Review new ser. 45, pp.23-50 http://www.jstor.org/view/00130117/di011838/01p0208u/0

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And there was... although when do we want to date it to?

I'm currently wearing... maybe 3 pounds of cotton, 2 pounds of leather and plastic... 4 pounds of wool...

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Now we have Karl Marx and Friedrich Engels http://www.marxists.org/archive/marx/works/download/manifest.pdf, who write in the middle of it and have no doubt that something extraordinary is going on...

Something hopeful...

And yet malevolent...

To which the solution is--well, a new world-religion:

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Susan Wolcott and Gregory Clark (1999). "Why Nation's Fail: Managerial Decisions and Performance in Indian Cotton Textiles, 1890-1938." Journal of Economic History, June http://links.jstor.org/sici?sici=0022-0507%28199906%2959%3A2%3C397%3AWNFMDA%3E2.0.CO%3B2-9:

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Alfred D. Chandler (1992), "Organizational Capabilities and the Economic History of the Industrial Enterprise," Journal of Economic Perspectives 6 (Summer) http://links.jstor.org/sici?sici=0895-3309%28199222%296%3A3%3C79%3AOCATEH%3E2.0.CO%3B2-X

Comments

[dilbert dogbert]

Prof, Thanks for the history lesion.
Bill J. Bernstein in the Birth of Plenty took a run at this also. He is an MD, not a historian or economist but a fun read.
As I was reading this post I considered that during the Napolianic wars the English created quite a factory for building the massive number blocks required by their navy at Portsmith. I am wondering if this technology took some time to diffuse thru manufacturing. It seems to me that some of the same thing happened in our society during the great depression where quite a number of revolutionary things were developed, like ME!, the DC3, penecillin, radar, radio. Also during WW2 world wide air transportation was perfected along with the jet aircraft necessary to make it economic.
Marks was an interesting read with respect to how he may be the author of "Creative Distruction"?
Lots of food for thought.

[Bruce Wilder]

Good stuff!

The steam engine seemed more important than it was, because people saw its potential, and, of course, after 1830, when some of that potential was realized in ships and railroads as well as factories, its importance in retrospect was elevated. But, if I recall correctly, Boulton-Watt produced fewer than 500 engines before 1800, and those engines averaged something on the order of 12 hp each. The total population of Newcomen steam engines worldwide might have approached 1500.

The production function theory of production does a great disservice to our intuition. It emphasizes allocative efficiency and getting right the mix of capital and labor, and misses entirely the twin drivers of the industrial revolution and the IR's reorganization of production: 1.) energy, 2.) control. Energy is obvious, and the development of engines was a critical aspect of the industrial revolution; the other, control, deserves much more attention. The ability to organize, technically and socially, to control error is the core of the economic ability to increase productivity by specialization, scale, "automation" and the application of scientific knowledge.

Capital investment tends to embody control schemes in organization and machinery. The economic gains swamp any consideration of factor allocation -- the intuition of the Ricardians, which leads to a pre-occupation with labor-intensity vs capital-intensity is just a distraction. Of course, the Indian textile manufacturers are buying equipment that leads toward less "labor-intensive" methods -- what other machinery is there? The gains from the machinery are not primarily gains from substituting tools for hands, they are technical efficiency (x-efficiency)gains from the technological advances embodied in the machinery and related ways to run a factory.

[Matt]

If he will allow it, I give you the single explanation for the industrial revolution.

We conquered the plague and the age of survival for children suddenly dropped dropped from age 14 in 1680 to 5 or 6 in 1720. As a result, parents invested in education and care for children much more as they reached survival early.

And we all know, early childhood education raises IQ points.

[Thomas Themel]

There seems to be a problem with the Marx quotations, the last one and the one before are identical...

[Harold]

The steam engine seemed more important because they hadn't discovered particle physics. They didn't even have electricity.

[Harold]

We "conquered the plague" by through advances in agriculture that made it possible to feed more people and hence increase their resistance to infectious diseases, no?