Industrial Revolution: powerful innovations

By Dr. Ravshonbek (Rosh) Otojanov

The British Industrial Revolution was a watershed moment in the history of humanity; an important result of which was an irreversible positive turning point in the living standards. There have been a number of explanations to what facilitated the transition from low to modern growth in the eighteenth century. In a series of brief posts, I will document the two of the many explanations put forward by scholars Robert Allen and Joe Mokyr. Both the scholars put technological progress at the centre-stage, but they differ in their views on what provided impetus to the technological progress.

Real GDP for the 1500-1914 period. The shaded region covers the 1760-1900 period
                      Real GDP, 1500-1914.                                           Shaded region: 1760-1900.               Data: Broadberry et al. (2015)

During the Industrial Revolution, economic activity moved away from agrarian to industrial sector; the share of labour force in agriculture dropped from 39% in 1700 to 24% in 1851. Undoubtedly, Britain’s geography played a crucial role in this process. It had vast deposits of coal, iron ore, minerals, woodlands and accessible coastlines, which were essential for industrialisation. In fact, it used these resources for centuries prior to the Industrial Revolution. However, Britain began harnessing the power of the nature in large scale for industrial use only in the eighteenth century. Why was then Britain’s industrialisation delayed till the eighteenth century?

Robert Allen (2009) has developed a narrative that could potentially explain why Britain industrialised first and why it did so beginning in the eighteenth century. He claims that the cost of labour relative to the cost of capital and energy was higher in Britain than elsewhere in the eighteenth century; and this induced greater investment in labour-saving, capital-using and energy-based technologies. Increased demand for energy-based technologies that helped economise on labour costs stimulated further investment in research on labour-saving technologies. This self-sustaining technological progress enabled increased capital intensity in many industries and shifted productivity to a new equilibrium. Thus, according to Allen (2009), the divergence in coal price and wages was a precursor for the industrialisation of Britain.

Critics of Allen’s theory argue that the induced innovations alone cannot explain why the change was economy-wide. However, Allen claims, the transformations took place in a few critical proto-industries and were sufficient to lift Britain out of the Malthusian straightjacket. So, what were the influential factor-saving induced innovations?

Coke Iron Smelting

Coke iron smelting
                  Coke iron smelting                   Source: http://www.sutori.com

Iron was expensive in Britain but it became cheaper in the eighteenth century thanks to the shift to coke iron smelting Abraham Darby I invented to reduce costs for his ironfounder business. Prior to the shift, charcoal was the main source of heat energy for iron smelting. Localised wood crisis raised the cost of wood in early eighteenth century. Prevailing high cost of charcoal eventually induced the shift to coke smelting. The shift not only reduced the energy cost, but also reduced the cost of labour. Between 1709 and 1850, the cost of labour per ton of pig iron declined from £1.50 to as little as £0.10 per ton (in 1755 prices) and the cost of energy declined from £17.50 to £3.56 per ton of pig iron (Allen 2009, p. 219). Thus, the shift to coke smelting reduced the cost of labour more than it reduced the cost of energy.

Steam Engine

Britain used coal for industrial purposes even before the advent of the Industrial Revolution. Thus, coal use was not an innovation per se; coal-based technologies were. The development of steam technology is strongly associated with coal mining. Coal mining was not an easy task especially when mines flooded; flooding hampered mining and caused hold-ups in the supply chain. Miners used draft animal and human muscle power to drain mines, but animal fodder and labour were expensive in the eighteenth century. Coal was free at the pithead, therefore, employing a coal-using technology was an economically attractive solution to the problem. Many years of tinkering with steam technology eventually brought about a breakthrough in 1712; Thomas Newcomen erected an atmospheric steam engine on a mine in Cornwall that would not only reduce mining costs, but also speed up mining and later find productivity-enhancing applications in other industries.

Newcomen steam engine
                                        Newcomen steam engine                                      Source: Engineering and Technology History Wiki

Newcomen engine was the first practical steam technology that generated economic value – miners were able to extract previously inaccessible coal reserves at reduced cost in large quantities. Fouquet (2008, p. 78) appraises the contribution of steam technology to coal mining as follows “Manual labour or animals could pump [water], but only if the quantities of water filling the mines were relatively modest. … The introduction of the steam engine, burning cheap coal, managed to pump far greater quantities of water. Improvements in power technology had major impact on the production of coal”. Steam engines offered a large source of power that was not geographically constrained and, therefore, flexibility in the location of factories. Consequently, steam technology helped break the geographical constraint imposed on the growth of the new industries (Kander et al., 2013). Previously, waterpower confined the power intensive industries to areas where it was possible to harness waterpower.

The Spinning Mule

Samuel Crompton’s spinning mule
        Samuel Crompton’s                          spinning mule                   Source: http://www.fotolia.com

Britain had a high wage economy long before the First Industrial Revolution (1760-1830) owing to its commercial success in the world economy. Efforts to save labour were particularly prominent in the cotton textiles where Britain was to become the world leader in the nineteenth century. Two of the most important eighteenth-century technologies, Hargreaves’s spinning jenny (1764) and Arkwright’s water frame (1769), were important advances in cotton textiles that encouraged further innovations. In 1779, Samuel Crompton combined the two inventions into a new machine, the mule. The adoption of the mule reduced demand for expensive labour: instead of one person working with one spindle, one person could supervise the operation of many spindles at once. Allen (2009, p. 208) argues that the aim of developing self-acting mules was to “eliminate the jobs of the high wage spinners who had operated the mules …” By 1830, factory based manufacturing using these technologies reduced labour costs significantly. Labour costs declined from 17.19 d/lb of cotton in 1760 to 0.52 d/lb in 1836 (Allen, 2009; p. 185).

Why are these innovations important for the Industrial Revolution?

These innovations lowered the cost of physical capital; coke smelting meant cheap iron, and this meant cheap capital equipment i.e. steam engine, textile machinery, railways, factories, etc. Thus, a capital-intensive course of development became more attractive and capital-intensive industries were an obvious choice of investment for Britain’s industrialists.

The three innovations have a common feature; they were labour-saving, energy-using and hence capital deepening. The adoption of coke iron smelting was the result of an effective response to expensive charcoal smelting, and it is an example of a biased factor-saving innovation. Newcomen engine was a biased technological improvement that shifted input demand away from an (expensive) animal feed and towards (cheaper) combustible fuel. The steam-based mechanisation of textiles lowered labour costs and enabled the shift to factor-based production. Therefore, Allen (2009) argues that the fundamental cause of these innovations was Britian’s unique price structure where labour was dear and energy was cheap.

References

Allen, R. (2009) The British Industrial Revolution in Global Perspective. Cambridge University Press, Cambridge, 2009.

Broadberry, S.N. Campbell, B., Klein, A., Overton, M. and van Leeuwen, B. (2015) British Economic Growth, 1270-1870. Cambridge University Press. Cambridge.

Fouquet, R. (2008) Heat, Power and Light: Revolutions in Energy Services. Edward Elgar Publications, Cheltenham, UK and Northampton MA, USA.

King, P. (2011) The choice of fuel in the eighteenth century iron industry: the Coalbrookdale accounts reconsidered. The Economic History Review, 64, 1, 132-156.

Kander, A., Malanima, P. and Warde, P. (2013) Power to the People, Energy in Europe over the last five centuries. Princeton University Press, Princeton.

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