Industrialisation: Why Britain Got There First, with Nicholas Crafts, University of Warwick 1/2

[Video Content List Below] 26 November 2014: As part of the Legatum Institute's History of Capitalism lecture, Nicholas Crafts, Professor of Economics and Economic History at the University of Warwick, gave a lecture on the industrial revolution. Introductory remarks by Hywel Williams, Senior Adviser at the Legatum Institute. More information: li.com/events/19th-century-ind...
List of Content
00:00:15 - Legatum Institute Introduction
00:03:45 - Introduction to the lecture
00:06:21 - What is Industrial Revolution?
00:07:22 - Context
00:08:36 - Real GDP/Person, 1086 - 1850
00:09:21 - Silver Wages, 1650 - 1840
00:10:11 - Concepts of the Industrial Revolution
00:12:25 - British Industrial Revolution
00:15:29 - Growth During the British Industrial Revolution
00:16:43 - Employment Shares
00:17:48 - Shares of World Industrial Production
00:18:37 - Britain as an Outlier
00:19:53 - Agricultural/Total Employment at British 1940 Income Level
00:20:32 - Family to Capitalist Farming
00:20:47 - is 'Slow' Growth Plausible?
00:25:49 - Slow TFP Growth
00:27:31 - Sources of power, 1760-1907
00:28:31 - Steam Engine Technology
00:29:22 - Total Steam Contribution to Growth of Labour Productivity
00:29:58 - Industrial-Revolution Britain
00:30:48 - Aspects of Broad Capital Accumulation, 1801-1831
00:31:26 - A Difficult Question
00:32:02 - Why Britain?
00:34:29 - Why not Sooner... or Later?
00:37:10 - Innovation in the British Industrial Revolution (Allen, 2009)
00:38:45 - Real Price of Energy
00:39:07 - Allen's argument in Detail
00:40:01 - Internal Rate of Spinning Jenny c. 1780
00:41:46 - rational Adoption of Jenny
00:42:06 - The Enlightened Economy
00:43:36 - Changes in 19th Century Economic Geography
00:44:50 - Location of 19th Century Cotton Textiles
00:46:00 - Map of Cotton Employees
00:46:29 - Why Lancashire? : Traditional
00:47:59 - Map - Relative Humidity
00:48:22 - Why Lancashire? : Econometrics
00:48:36 - Lancashire Textiles and Globalization (Leunig, 2005)
00:48:59 - Why Lancashire? : Policy
00:49:41 - Sic Transit Gloris Mundi
00:50:21 - Legacies of the Early Start
00:52:36 - Q&A

[@yangfan8549]

Prof. Crafts' passion and knowledge in lecturing and publication are great! I hope he will come to Cambridge often for lectures:P

[@bewilderbeastie8899]

Would really be wonderful if we could see the sources for his figures.

[@davidparker64]

A characteristically engaging & informative talk by Prof Crafts. But his implied early C19 TFP stagnation is down to implausibly low GDP growth: show me 1.7% and I’ll show you the late 18th century. I expect a bit more more year-on-year oomph from the man who jointly invented our Industrial Revolution growth rates, however pessimistic! I’m curious as to his take on the timing of peasant agriculture’s eclipse: it may have been gone by 1800, but by 1700? 1600? I agree entirely that agricultural productivity’s important, but when? It seems to be already up in the late 17th century. In that case the TFP growth lag is curious. Is it really telling us anything much that we can’t discern better from the raw data?

[@gravewalker34]

I know. My ancestors know.

[@user-ey6oi4xw8r]

Britain from 1800 to 1900. 20,000 Waterwheels decreased in number. Windmills decreased in number. Englishman Thomas Newcomen's 1,500 Atmospheric Pumps disappeared. Scotsman James Watt's 500 Steam Engines increased in number to 10,000,000 !!! For every SINGLE Waterwheel in 1800 we now had an additional 500 Steam Engines in 1900 !!! That's an increase in Power Capacity and therefore Productive Capacity for the whole country of 500 times !!! The Industrial Revolution was a Power Revolution. And due to only one single Invention, James Watt's Invention of the world's first PRACTICAL Steam Powered Engine in 1769. Take away Steam Power and Steam Engines and there's no Industrial Revolution. Just Newcomen Atmospheric Pumps and Arkwright's Water-Power. Pretty simple really.

[@prof.dr.4224]

The British never talked about the source of finance that made the industrial revolution possible. Also, who provided the market, as the industrial revolution was not self-sustaining. The answer was India, particularly Bengal, which the British want to hide. Bengal was occupied, in practice, by the British, in 1757. Industrial Revolution started in 1760.

[@tmnvanderberg]

Other countries had colonies too. It doesn't explain the industrial revolution taking place in Britain.

[@johnpeate4544]

From renowned economic historian Deirdre McCloskey: _But imperialism, it can be shown, did not much help the British, or the First World generally, to an Industrial Revolution and modern economic growth._ _True, the doctrine that imperialism made the West rich at the expense of the East and South is held passionately by the left in the West, and by nearly everybody elsewhere. But understand: the counterargument does not praise imperialism, or excuse it. The counterargument claims that it was economically stupid._ _The simplest and historical argument is that the West did not really get going in its imperial adventure until it had innovated in steam, steel ships, cartridge rifles, and machine guns-that is, after the Industrial Revolution, not before. As Goldstone puts it, “It was not colonialism and conquest that made possible the rise of the West, but the reverse-it was the rise of the West (in terms of technology) and the decline of the rest that made possible the full extension of European power across the globe.”4 Lenin had it right: imperialism, the last stage of capitalism._ _The modern corollary of the historical argument is that the prosperity of the West depends not at all, or at its worst very little, on exploiting the Third World._ _.... British imperialism was about protecting the sea routes to India. Yet India itself yielded no economic benefit to the average person in Britain. It had therefore no economic point._ _......If imperialism was so very subordinating of Indian interests to British, furthermore, why were Indian cotton textile factories allowed to grow in the late nineteenth century? “Given the widespread impression that India’s industrial development was impossible because of implacable British hostility to Indian competition,” writes Om Prakash, “India’s cotton-mill history seems paradoxical: it flourished despite competing against the most important, the most internationally aggressive and politically most powerful industry in Britain. Its rapid expansion began only after 1870, but by 1910 the Indian industry had become one of the world’s largest,” presaging a deep depression for the British industry after the Great War. 10 (A somewhat similar point could be made, about the Japanese cotton textile industry, which again belies the infant-industry notion, especially popular in Germany earlier, that late industrializers had no chance against Manchester’s might.)_ _And even if the trade with India contained some element of exploitation, which is unlikely, and certainly has never been proven, the trade was lower than Britain’s trade with rich countries like France or the German Empire or the United States. In 1899, Angus Maddison reckoned, the U.K. exported goods (that is, excluding services and bonds) to Imperial India of $153 millions worth (9.5 percent of all British commodity exports). Exports to Europe and the U.S. at the time were $728 millions, nearly five times the Indian total. Even confined to manufactures (and thus excluding steam coal from South Wales, for example) the India trade was well below half of British exports to countries who themselves were big exporters of manufactures (the same Europe and the U.S.), and was merely 14 percent of all British manufacturing exports._ _The way the issue is usually discussed speaks of the “drain” from India, said to be the excess of Indian exports over Indian imports, the trade surplus. (Notice that in strict mercantilist theory, such as that practiced by the Japanese over the century past, a trade surplus is supposed to be good, not bad. The drain theory is a little more sensible, considering that Japanese consumers are indeed made worse off, not better, if Japan exports in value terms more in Toyotas than it imports in soybeans. The Japanese nation is made worse off. (The mercantilism would be especially damaging to the Japanese if the assets the Japanese bought in the United States to square the balance of payment were paid back in depreciated dollars [about a half in the event] or if like the Japanese purchase of Rockefeller Center the assets did not pay back at all. After the American anti-oriental hysteria during the 1970s over the Japanese Invasion, all these misfortunes for Japanese consumers and investors in fact came to pass.) One might suppose in parallel, then, that the export of raw jute and cotton from India in, say, 1900, is to be taken as a national loss to the degree it is greater than the imports of railway engines and steel. According to Angus Maddison’s careful calculations, it was on the order of 1 percent of Indian income, and likewise (at any rate before World War I) about 1 percent of British income (Britain was richer but smaller)._ _But anyway there is something wacky about the concept of the drain. The Indians got gold and silver and British bank accounts in pounds sterling for having a trade surplus-unless the exports were simply stolen from them, which after the age of the nabobs is nowhere alleged, and is not beyond reasonable doubt even for the nabobs, as the trial of Warren Hastings showed. Unlike the mercantilist Japanese seeking to have higher exports before anything in the 1970s, the Indian creditors of British firms demanded payment. Now consider. The goods-and- services account, called also the trade balance, is exports minus imports- not merely goods but, say, Indian imports of British services, such as insurance. The overall balance of payments, which is the goods-and-services account together with the capital-and-monetary account, must always balance, to the last farthing. You pay for your groceries either by paying from income you have earned by selling your labor or by borrowing from your bank and then paying. In either case your overall balance of payments-dollars of expenditure minus income, which is dollars of earned income plus borrowing-is exactly zero, always. That is a matter of accounting, not economics. It is always true, by definition of the accounts. Unrequited payments-gifts or thefts-are accounted payments for “services” of benevolence or malevolence. An Indian firm exports tea to England, for which someone in India is paid in sterling. Its Indian owners, its suppliers, and its workersspend the money thus acquired in part to buy British goods, such as steel or boots. If such Indians (or other Indians having no connection with the tea exports) do not buy enough in Britain or elsewhere they keep the pound notes or bank accounts or the IOUs or the gold that paid for the tea. The Indians are free to spend the money on British goods. They might choose not to. But their choice does not transform the money balances they retain into a measure of a hurtful “drain.”_ Continued....

[@johnpeate4544]

Continued.... _Think again of your own balances of payments. You export more labor services to your employer than the labor services you import from him (none, probably). You have a balance of trade surplus in labor with your employer. Do you feel “drained”? Of course you would prefer to get food and shelter for no expenditure of your labor at all, in the manner of a Mughal prince, or the divided princelings whom the British kept in power. But, no, in a world of trade you are not drained. You take the money paid by your employer and spend it at the grocery store (and the store, too, has a “drain,” a surplus of exports over imports, relative to you: does that make you the exploiting Raj over the grocery store?) Or else, like the Indians, you keep your money in gold necklaces in Pushkar or bank balances in London. The world is composed of such “drains,” between your house and the neighbors, between Ealing and Hampstead. All exchange, 100 percent of it, becomes on balance a shameful exploitation. That’s what I mean by “wacky.”_ _In short, the average person in Britain got little or nothing out of the British Empire._ _..... The cost of protecting the Empire devolved almost entirely on the British people at home. (A century earlier the British people had likewise paid for the defense of the first empire. Notoriously, the colonials in North America refused to pay even a little for imperial defense against the French and Indians.) British taxpayers at home 1877-1948 paid for the half of naval expenditure that was for imperial defense, a by-no-means negligible part of total British national income each year.14 Give the figure They paid for the First War against the Boer republics (1880-1881, lost but cheap) and the Second (1899-1902,won but expensive). They paid for the imperial portions of World Wars I and especially II. They paid for protection of Jamaican sugar during the eighteenth century and special deals for British engineering firms in India during the nineteenth. They paid in fatalities, 800,000 in the First World War and 380,000 in the Second, and lost all their foreign assets, too. For the great British Empire the great British public paid and paid and paid._ _What were the vaunted benefits to the British people? Essentially nothing of material worth._ _......Economically, materially, it did not matter. Standards of literacy exceeding those of Southern Europe mattered a great deal more to later British economic growth, as did a tradition of industrial and financial innovation exceeding those of Germany, and a free society in which to innovate exceeding that of Russia, and above all an early shift to a rhetoric of bourgeois virtues exceeding most of the world._ _Look at the accounting and the magnitudes. Most of British national income was and is domestic. This is true of all countries much larger than Luxembourg or Singapore. And what income there was from abroad was largely a matter of mutually advantageous trade having nothing to do with empire-Britain invested as much in places like the United States and Argentina as in comparable areas of the Empire, and there is no evidence in any case that returns to investment were especially high._ _....Did the acquisition of Empire, then, cause spurts in British growth? By no means. Indeed, as I said, at the climax of imperial pretension, in the 1890s and 1900s, holding sway to the east and west of Suez, the growth of British real income per head notably slowed._ _...... The temptation to attribute the Industrial Revolution to the overseas adventures of the Europeans from the 1490s to the 1950s comes from the confusion I have noted before in Landes, Kennedy, Diamond, Findlay, O’Rourke, and many other between conquest and enrichment. And it comes from the crude correlation in time. Again it is a case of post hoc-or rather dum hoc-ergo propter __hoc.It__ is true that the British for example prospered at the about same time that they acquired their empire-although, to repeat, the crucial industrializing decade of the 1780s, just to take one temporal problem with the argument, is precisely when Britain lost its first empire and had not established a firm grip over its second one._

The reason was simply the english werte, on a curve, more intelligent then anyone else. Britain then was superior to everyone in all things. Industry was just one more thing. they were more intelligent based on puritan protestant christianity and God blessed them somewhat more. intelligence is the issue.

[@davidleckie1076]

You're serious but you're a joke