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Should-Read: Anton Howes: Inducing Ideas for Industrialisation

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Should-Read: Anton Howes: Inducing Ideas for Industrialisation: “Perhaps the most popular modern theory of the causes of the Industrial Revolution is Robert C. Allen’s “Induced Innovation”… …as outlined in his 2009 book The British Industrial Revolution in Global Perspective. The argument is straightforward, but compelling: Britain had uniquely high wages from about as far back as the Black Death, along with relatively low capital and energy costs.* At the same time, places like China had low wages and relatively higher capital and energy costs. Britain’s relative factor price structure therefore induced a lot of labour-saving inventions, whereas China was stuck with a bunch of labour-intensive innovations. The benefit of this theory is that it even goes some way towards explaining why Britain might have been earlier than most other European countries: it had relatively higher wages…. But… imagine yourself a creative potter in the 18th Century-do high wages cause you to sit down and focus on a labour-saving invention? Or are you more likely to simply grumble and make do? There seem to be a few extra steps required here. One key facet of the IR is not so much the type of inventions that Britain witnessed, but their sheer volume: in every industry, and all around the same time. Indeed, many of these were saving labour, energy and capital indiscriminately.

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Should-Read: Anton Howes: Inducing Ideas for Industrialisation: “Perhaps the most popular modern theory of the causes of the Industrial Revolution is Robert C. Allen’s “Induced Innovation”…

…as outlined in his 2009 book The British Industrial Revolution in Global Perspective. The argument is straightforward, but compelling: Britain had uniquely high wages from about as far back as the Black Death, along with relatively low capital and energy costs.* At the same time, places like China had low wages and relatively higher capital and energy costs. Britain’s relative factor price structure therefore induced a lot of labour-saving inventions, whereas China was stuck with a bunch of labour-intensive innovations.

The benefit of this theory is that it even goes some way towards explaining why Britain might have been earlier than most other European countries: it had relatively higher wages…. But… imagine yourself a creative potter in the 18th Century-do high wages cause you to sit down and focus on a labour-saving invention? Or are you more likely to simply grumble and make do? There seem to be a few extra steps required here. One key facet of the IR is not so much the type of inventions that Britain witnessed, but their sheer volume: in every industry, and all around the same time. Indeed, many of these were saving labour, energy and capital indiscriminately. One thing that Allen’s theory does not explain is the source of this generalised and accelerated outburst of inventive activity….

[With] the out-of-the-blue, game-changing inventions like the steam engine, coke smelting, or the spinning machine… becomes even more stark than if we’re only talking about incremental improvements to a pre-existing technology (so-called ‘micro-inventions’)…. Allen’s theory is strongest when it comes to the success of an invention in the market… explaining why particular major inventions were successful in high-wage Britain. This rings true: look at the extraordinary successes in Britain of foreign-invented contraptions such as the Lombe silk loom (stolen from Piedmont), or of the Jacquard Loom (a French-invented attachment to looms enabling patterns to be programmed-the inspiration for Babbage’s proto-computer, the analytical engine). By focusing on market viability, this aspect of the theory also goes some way to explaining the rate and pattern of industrialisation’s spread….

Thus, while Allen’s theory might explain why some inventions were adopted for further development, many other inventions appear to have been developed further despite the bias of relative factor prices…. It’s only after research and development that Allen’s theory really kicks in…. For a fuller explanation of the Industrial Revolution, though, we need to go right to the inventive source-why was there so much more invention in Britain to be adopted in the first place? 

Bradford DeLong
J. Bradford DeLong is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research. He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations. His role in designing the bailout of Mexico during the 1994 peso crisis placed him at the forefront of Latin America’s transformation into a region of open economies, and cemented his stature as a leading voice in economic-policy debates.

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