Why was England first to industrialise?

Why was England first to enter the Industrial Revolution? Why not France? Belgium? Or even China? So asked Nico Voigtländer and Hans-Joachim Voth from the Universitat Pompeu Fabra, Barcelona, in a recent paper Why England? Demand, Growth and Inequality during the Industrial Revolution (PDF).

The authors conclude that "starting conditions were unusually favorable" in England, which had "higher per capita income" - and hence a ready consumer market for manufactured goods - as soon as favourable agricultural productivity shocks boosted incomes. Government policy, principally through "the relatively generous Poor Law system", played a role in boosting per capita living standards. So did the "low-pressure European marriage pattern", whereby age at first marriage for women was determined by socioeconomic conditions, not age at first menarche. The paper abstract explains their modeling and findings:

Why was England first? And why Europe? We present a probabilistic model that builds on big-push models by Murphy, Shleifer and Vishny (1989), combined with hierarchical preferences. Exogenous demographic factors (in particular the English low-pressure variant of the European marriage pattern) and redistributive institutions – such as the Old Poor Law – combined to make an Industrial Revolution more likely. Industrialization was the result of having a critical mass of consumers that is “rich enough” to afford (potentially) mass-produced goods.

Our model is calibrated to match the main characteristics of the English economy in 1780 and the observed transition until 1850. This allows us to address explicitly one of the key features of the British Industrial Revolution unearthed by economic historians over the last three decades – the slowness of productivity and output change. In our calibration, we find that the probability of Britain industrializing before France and Belgium is above 90 percent. Contrary to recent claims in the literature, 18th century China had only a minimal chance to industrialize at all.

Splendid stuff.

Comments

[Jonn]

Interesting stuff... Research like this seems to give credence to John Kay's idea of the embedded market. Particularly interesting to note that a redistributive policy such as the "poor law" was vital in kick starting the process of industrial growth - which pretty much contradicts the Chicago School consensus that all such government policies can only weaken the economy.

[Elin Whitney-Smith]

Why Europe? - For this we have to go back to the fall of Rome.

Before the fall of Rome it like all other complex societies were governed by a tripartite elite - military, emperor, priesthood. The priesthood is the information owner and got its living from the other two partners. The priesthood has a vested interest in keeping the common people subservient to the elite.

After the fall of Rome, in Europe the Catholic Church had a monopoly on information and it had the right of direct taxation - the tithe. For the first time in history the information owners had a financial incentive to encourage the economic development of the common people. The laity was encouraged to be more productive monasteries acted like agricultural extension centers do in our day, and in the late middle ages we see saints pictured with new technology (compass, clocks, and astrolabe). The church encouraged technological innovation as a source of "good works" and financial prosperity.

Thus, when the press was invented it wasn't given to the emperor, the way it was in China and used as a toy, it was used to print bibles to sell and eventually led to a literate crafts-producing class who eventually invented capitalism.

[Jason Ruspini]

Like all models, it would be nice if it made some explicit predictions.

[Elin Whitney-Smith]

I agree that for models to be useful they should predict. This is true whether they are mathematical or conceptual models.

The information model fits a number of cases. Simply stated it is that where there is the greatest depth of information access there will be the greatest economic development. Hence, contrasting Europe with Byzantium with in the early middle-ages or the Arab Empire before 1450 they are both in advance of Europe informationally and economically.

If you look within Europe at the beginning of the high middle-ages you see that Italy, Spain and Portugal who had the closest ties with the church are also the wealthiest. As the inquisition suppressed the press it decreased information access in contrast to information access in the Protestant countries and so they lost the economic dominance of Europe.

The information revolution following press changed that dynamic such that Europe surged ahead because more people had more access to more information. They innovated so that massive social, managerial, cultural and technological changes necessary for the industrial revolution were put in place.

With the invention of the telegraph and telephone Europe, including the British Isles did not adopt the new technology with the same fervor as people in the United States and as a consequence economic dominance shifted across the Atlantic.

The prediction of the information model is simple - in this information revolution the country (or group of countries) with the greatest information access will be economically dominant until such time as another group assumes information dominance - for the US this is problematical as we currently are the most informationally literate however, it has been observed that we have a huge investment in wire and many thire world countries are adopting wireless at an amazing rate. It remains to be seen if we keep our dominance.

[Arthur Eckart]

You can have the best information in the world. However, if it's not used effectively, it won't make much difference. For example, China failed to adopt many well-known successful economic policies for hundreds of years (I mentioned China, because there's a Chinese guy in here who's pretending to be from India to make his pro-China statements more effective). The philosophy of a country makes a big difference.

[Elin Whitney-Smith]

Arthur Eckart wrote, "You can have the best information in the world. However, if it's not used effectively, it won't make much difference."

Absolutely, but this is not about the policy level, the elite classes, or the economic philosophy of a country.

Simply put, if you have 2 countries and each has 100,000 people and in one 50% have information access and in the other only 10% do the one with 50% will have a stronger economy.

England had more literate and numerate craftspeople than did Spain, France, Italy etc.

Pre-capitalist production, the putting out system, was invented by literate craftsmen, the sons of weavers, brewers, blacksmiths etc. They could model their business and innovate because they could keep track of the work being done without having to live with their apprentices and journeymen. Therefore they could hire 100 apprentices. This was of thinking about business had to, and did, predate technological innovation. Technological innovation is not useful if you don't have the business context that can take advantage of it.

Europe, after the press, had more literate and numerate people than Byzantium or China.

[Arthur Eckart]

Elin, you stated: "Simply put, if you have 2 countries and each has 100,000 people and in one 50% have information access and in the other only 10% do the one with 50% will have a stronger economy."

That may be true (it would also be tougher for an economy to expand without a communication infrastructure). However, you stated yourself (above) that the printing press was used as a toy in China, which prevented a "literate crafts-producing class" to grow (also, a communist government can strictly control information). Values, philosphies, and policies have a powerful influence on economic growth. For example, in some European countries, labor is more important and more powerful than in the U.S. Consequently, there are greater wage rigidies and labor immobilities in those European countries, which restrict economic growth. So, some European countries are willing to fall behind other countries in exchange for greater labor security.

[Jonn]

The most convincing theory I've read - though I'm buggered if I can remember where - about why Europe developed while China stagnated after the 15th century can be summed up in one word: competition.

China was a region-wide empire, dominated by a ruling class that didn't feel its position was significantly threatened by either other powers or discontent among its own people. Consequently, it was complacent.

Europe, though, was characterised by turmoil. Relatively small states competed with each other for dominance; and a similar dynamic was played out between different groups within states. Consequently, whenever any one group or state became too powerful, the others were spurred to work harder and take it down again (see, for example, the Thirty Years' War).

One consequence of this was economic development. Look at the history of the Netherlands in the 16th-17th centuries: it went from being a Spanish colony to being one of the richest, most powerful trading states in Europe within roughly a century. China didn't have that kind of impetus to develop.

[Elin Whitney-Smith]

I agree with both John and Arthur Eckart. It policy that controls the information technology but it is not necessarily economic policy.

For example, the inquisition (religious policy) controlled the press and so printers moved to Holland - the Spanish Netherlands. This glut of printers combined with the non-control of printed matter created the literate crafts-producing class.

In the addoption of the telegraph and telephone English busnessmen had their messenger boy system (cultural usage) and weren't interested in using the telephone. In the US there was a shortage of labor, greater distances to be covered, and less investment in old business structures, which spurred on adoption of the telegraph and telephone.

Nonetheless the model holds - economic dominance shifts to the context with greater information access - (from Spain to Holland to England and from England to the US).

John talks about competition of many small states and, in the middle-ages, that was coupled with the monopoly of the church and the tithe that "set information free". It encouraged the use of technology for economic gain rather than as something to be given to the Emperor. In all other cultures that I know of the priesthood (or other information controller) had and has a vested interest in supporting the existing power structure. By the time nation states began to form the freedom of information was a given in the Protestant countries and was still much freer in other European countries than in other parts of the world.

[Jameel]

Hi ! Your site is very interesting. Thank you.

[Tifany]

Hi ! Your site is very interesting. Thank you.

[barry]

didnt realise Glasgow was in England.