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The Industrial Revolution: Sea Change in Some Human Settlements


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Title: The Industrial Revolution: Sea Change in Some Human Settlements

The Industrial Revolution Sea Change in Some
Human Settlements
Some human settlements
  • Initially in Great Britain (1750 1850)
  • Not in much of South and Central America
  • Not in much of Africa
  • Not in much of Asia
  • Not in much of mid-east (e.g. Afghanistan)
  • United Nations Centre for Human Settlements

Geographical Distribution of Manufacturing and
  • What was the industrial revolution?
  • Diffusion from Great Britain
  • What caused the industrial revolution?
  • Endogenous growth models
  • Market size
  • Capital accumulation
  • Entrepreneurship and innovation
  • Transportation
  • Demand side models
  • Cybernetic explanation of the industrial
  • Industrialization and living standards
  • Conclusions

Life before the industrial revolution
  • People were typically concerned with the most
    basic of primary economic activities
  • Acquired the necessities of survival from the
  • Society and culture was overwhelmingly rural and
  • Before 1700 virtually all manufacturing was
    carried on in two systems, cottage and guild
    industries, both depended on hand labor and human

Cottage industry
  • Most common, was practiced in farm homes and
    rural villages
  • Usually a sideline to agriculture
  • Objects for family use were made in each
  • Most villages had a cobbler, miller, weaver, and
    smith who worked part-time at home
  • Skills passed from parents to children with
    little formality

Guild industry
  • Consisted of professional organizations of highly
    skilled, specialized artisans engaged full time
    in their trades and based in towns and cities
  • Membership came after a long apprenticeship
  • Was a fraternal organization of artisans skilled
    in a particular craft

Origins of the industrial revolution
  • Arose among back-country English cottage
    craftspeople in the early 1700s
  • First human hands were replaced by machines in
    fashioning finished products
  • Rendered the word manufacturing (made by hand)
  • Weavers no longer sat at a hand loom, instead
    large mechanical looms were invented to do the
    job faster and more economically

Origins of the industrial revolution
  • Second Human power gave way to various forms of
    inanimate power
  • Machines were driven by water power, burning of
    fossil fuels, and later hydroelectricity and the
    energy of the atom
  • Men and women became tenders of machines instead
    of producers of fine handmade goods
  • Within 150 years, the Industrial Revolution
    greatly altered the primary (extraction),
    secondary (manufacturing), and tertiary sectors
    of industrial activity (transport, communications)

Origins of the industrial revolution
  • Textiles
  • Initial breakthrough occurred in the British
    cotton textile cottage industry, centered in the
    Lancashire district of western England
  • First changes were modest and on a small scale
  • Mechanical looms, powered by flowing water were
  • Industries remained largely rural
  • Diffused hierarchically to sites of rushing
  • Later in the eighteenth century invention of the
    steam engine provided a better source of power
  • In the United states, textile plants were also
    the first factories

Origins of the industrial revolution
  • Metallurgy
  • Traditionally, metal industries had been
    small-scale, rural enterprises
  • Situated near ore sources
  • Forests provided charcoal for smelting process
  • Techniques had changed little since the beginning
    of the Iron Age, 2500 years before

Origins of the industrial revolution
  • Metallurgy
  • In the 1700s, inventions by iron makers in the
    Coalbrookdale of English Midlands, created a new
    scientific, large-scale industry
  • Coke, nearly pure carbon, which is derived from
    nearly pure coal, replaced charcoal in the
    smelting process
  • Large blast furnaces replaced the forge
  • Efficient rolling mills took the place of hammer
    and anvil
  • Mass production of steel resulted

Origins of the industrial revolution
  • Mining
  • First to feel effects of new technology was coal
  • Adoption of steam engine necessitated huge
    amounts of coal to fire boilers
  • Conversion to coke further increased demand for
  • Fortunately, Britain had large coal deposits
  • New mining techniques and tools were invented
  • Coal mining became a large-scale mechanized

Origins of the industrial revolution
  • Mining
  • Because coal is heavy and bulky, manufacturing
    industries began flocking to the coal fields, to
    be near supplies
  • Similar modernization occurred in mining of iron
    ore, copper, and other metals needed by growing

Origins of the industrial revolution
  • Railroads
  • Wooden sailing ships gave way to steel vessels
    driven by steam engines
  • Canals were built
  • British-invented railroad came on the scene
  • Need to move raw materials and finished products
    from place to place, cheaply and quickly, was
    main stimulus leading to transportation

Origins of the industrial revolution
  • Railroads
  • Impact of the Industrial Revolution would have
    been minimized if distribution of goods and
    services had not been improved
  • British revolutionized shipbuilding industry and
    dominated it from their Scottish shipyards even
    into the twentieth century
  • New modes of transport fostered additional
    cultural diffusion
  • New industrial-age popular culture could easily
    penetrate previously untouched areas

Scope of the industrial revolution
  • Not a sudden event
  • Protracted change in hitherto inevitable
    correlation between increasing population and
    declining income per person
  • Change in scale of industry
  • Change in scale of urban areas
  • Why did it occur when and where it did?

A laundry list of associated factors
  • Growing demand (as result of increased population
  • Export growth and trade
  • Newly efficient capital markets and plentiful
    supply of capital
  • Newly productive agriculture
  • Improved base of scientific knowledge
  • Vastly improved transportation networks
  • Protestantism and nonconformity
  • Stable government
  • New energy sources (e.g. coal)

Select major advances in technology
  • Textile technology Spinning jenny, water frame,
    spinning mule (1760 1770)
  • Factory system one roof, one power supply,
    division of labor (1770s)
  • Steam engines Thomas Savery (1698), Thomas
    Newcomen (1712), James Watt (1765)
  • Railroads (1820s)
  • Sewing machine 1830

Newcomen Steam Engine 1712
Spinning Jenny 1764 (had a moving carriage)
Water Frame 1769 Powered by water
James Watt's Improved Steam Engine Powers the
Industrial Revolution 1769
Spinning Mule 1779 (combined moving carriage
and water power)
Power loom 1785 steam-powered,
mechanically-operated version of a regular loom
Eli Whitneys Cotton Gin 1794
Population Factors Growing Population Size
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Agricultural advances
  • Previously, land allowed to lay fallow after it
    had been exhausted through cultivation
  • In the 1700s it was discovered that the
    cultivation of clover and other legumes would
    help to restore the fertility of the soil
  • The improved yields also increased the amount of
    food available to sustain livestock through the
  • This increased the size of herds for meat on the
    table and allowed farmers to begin with larger
    herds in the spring than they had previously.
  • The use of sturdier farm implements fashioned
    from metal

Leaps forward in agriculture
  • More efficient food production
  • Cheaper food
  • More disposable income
  • Less workers needed in rural areas

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Migration to the Cities
Increased Trade
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Diffusion from Britain
  • For a century, Britain held a virtual monopoly on
    its industrial innovations
  • Government actively tried to prevent diffusion
  • Gave Britain enormous economic advantage
  • Contributed greatly to growth and strength of
    British Empire

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Diffusion from Britain
  • New industrial technologies finally diffused
    beyond the British Isles
  • Continental Europe first received its impact in
    last half of the nineteenth century
  • Took firm root hierarchically in coal fields of
    Germany, Belgium, and other nations of
    northwestern and Central Europe
  • Diffusion of railroads provides a good index

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Diffusion from Western Europe
  • The technology finally diffused beyond the
    British Isles
  • United States began rapid adoption of new
    technology about 1850
  • About 1900, Japan was the first major non-Western
    country to undergo full industrialization
  • In the first third of the 1900s, diffusion
    spilled into Russia and Ukraine
  • Recently, countries such as Taiwan, South Korea,
    China, Indian, and Singapore joined the
    manufacturing age

What caused the Industrial Revolution?
  • Understanding based upon models simplified,
    abstract representations of reality
  • Mores models of the Industrial Revolution
  • Capital accumulation
  • Entrepreneurship and innovation
  • Endogenous growth
  • Market size
  • Transportation
  • Demand side models
  • A Cybernetic answer

Simple economic growth models
  • More land, or more labor, or more capital
  • More efficient use of one or more of these
  • -- larger labor force
  • -- economies of scale
  • -- specialization of function and gains from
  • -- innovation and entrepreneurship

Capital accumulation
  • Investment exceeds depreciation
  • Build-up of assets such as textile machines,
    ships, roads, tools, and engines, sometimes known
    as fixed capital
  • Build up of circulating capital
  • Associated with Adam Smith, Karl Marx, W.W.

Entrepreneurship and innovation
  • Entrepreneurship numerous definitions
  • -- Joseph Schumpeter the possession of a
    special quality of foresight and a heightened
    ability to seize opportunities
  • -- exploitation of opportunity to reduce
    uncertainty in markets
  • Innovation
  • -- Provides opportunity for technical and social
  • -- Innovation vs. invention
  • -- Social vs. physical technologies
  • Enables substitution of technology for labor

Endogenous growth a systems view
  • Innovation and diffusion processes are both
    individual and collective acts
  • The determinants of this process are found within
    individuals but not only within individuals
  • Organizations and firms are embedded in
    innovation systems that guide, aid, and constrain
    individual actors within them

Endogenous growth models
  • Growth originating from within the system
  • Contrast with exogenous growth models
  • -- Both postulate capital and labor factors
  • -- Differ on source of technological change
  • Does the genesis of technological change occur
    within the existing framework of economic
    relationships in a region?
  • -- Exogenous growth models no
  • -- Endogenous growth models yes

The endogenous growth model
  • YKa(AL)1-a where

  • Y is output,
  • K is the stock of capital,
  • L is the labor force,
  • A is knowledge, and
  • ? is a constant returns to scale parameter.

Economic growth through capital investment
  • Venture capital availability
  • New business formation
  • Infrastructure investment
  • Tax abatement

Economic growth through augmentation of the labor
  • Job creation
  • New business formation
  • Immigration
  • Education

Market size
  • Related to transportation, population size, and
  • As it is the power of exchanging that gives
    occasion to the division of labor, so the extent
    of this division must always be limited by the
    extent of that power, or, in other words, by the
    extent of the market.
  • Adam Smith The Wealth of Nations, Book I
    Chapter III
  • As markets grew in size geographically and in
    terms of population and wealth, this allowed an
    increase in the division of labor

Transportation (facilitates exchange)
  • 2000 BC Horses domesticated
  • 1662 AD First public bus horse drawn
  • 1783 First hot air balloons ?
  • 1787 Steamboat ?
  • 1790 Bicycle ?
  • 1801 Steam powered locomotive (for roads) ?
  • 1814 Steam powered railroad locomotive ?
  • 1867 Motorcycle
  • 1871 Cable Car
  • 1885 Internal combustion automobile
  • 1899 Dirigible (Zeppelin)
  • 1903 Airplane
  • 1908 Automobile assembly line
  • 1926 Liquid-propelled rocket
  • 1940 Helicopter
  • 1947 Supersonic jet

Demand side models
  • Assume existing land, labor and capital fully
  • Additional demand from, say, population growth,
    will not increase production but rather will
    either increase prices or shift output between
  • Rising prices become stimulation for innovation,
    additional investment, and growth
  • Lord Maynard Keynes

The cybernetic question
  • Why did we observe the industrial revolution
    rather than one of the other possible sets of
    circumstances that could possibly have come about?

Cybernetic explanation
  • Allows for consideration of multiple factors
  • Allows for non-linear relationships between
  • All of Mores factors may have had a part
  • Endogenous growth models particularly useful
  • Removal of constraints

Constraints on thought and action
  • Constraints preclude thoughts and actions e.g.
    species (wings and humans), social (e.g. laws) or
    mechanical (cars and flying)
  • Constraints on thoughts conceptual
  • Constraints on actions behavioral
  • Situational development of corporations,
    development of property rights, etc.
  • Methodological development of know how through
    innovation and diffusion

Background Adam Smiths Pin Factory
  • Smith argued that the main cause of prosperity is
    the division of labor
  • Absent the division of labor, a worker would be
    lucky to produce even one pin per day
  • But in a pin factory, ten workers produce 48,000
    pins per day if each of eighteen specialized
    tasks is assigned to particular workers (average
    productivity 4,800 pins per worker per day)

Productivity and labor
  • If Smith is correct then specialization leads to
  • Productivity leads to higher wages relative to
    other regions
  • Higher wages lead to in-migration
  • In-migration leads to a larger labor force

The Pin Factory, Revisited
  • Pin-making specialists created new tools and dies
    which turned out to be useful for the manufacture
    of other kinds of goods
  • These new tools and dies could turn out to become
    a specialization of their own, and could generate
    new firms
  • Manufacturers in other industries might bring in
    new machines to the Pin Factory
  • Specialization brings benefits not only inside
    the Pin Factory, but around it as well
  • Cumulative causation

Cumulative causation
  • Progress in knowledge of how to do things
    increases the carrying capacity of land for
    people which increases the size of the population
    which makes for more potential inventors which
    accelerates further technological progress, etc.
  • In markets the more people that have already
    adopted a new product, the stronger the
    word-of-mouth impact. More references to the
    product lead to more demonstrations, more
    reviews, and this self-generates sales

The division of labor is limited by the extent
of the market -- Smith
  • The degree to which specialization is possible
    depends upon how much product can be sold (e.g.
    on scale)
  • To Smith, the extent of the market had to do
    largely with transportation costs
  • In the world of the industrial revolution,
    transportation was a relatively major factor
  • In todays world of small products (e.g. computer
    chips) and relatively accessible transportation,
    the extent of the market may extend to the
    entire globe

Economic growth through new technological
  • Core concept in endogenous growth literature
  • We know where new labor comes from (births-deaths
    and migration)
  • We have an idea where new capital comes from
  • 1. Human capital (marketable skills)
  • 2. Social capital (marketable contacts and
  • 3. Intellectual capital (intellectual property
  • 4. Building capital (real estate plant and
  • 5. Financial capital
  • 6. Environmental capacity (physical capital)
  • But where does new technological knowledge come
  • Absence of an economic theory of knowledge

An unanswered question What is the mechanism
through which new knowledge originates, makes its
way into the market, and eventually effectuates
economic growth?
The knowledge production function
  • ?AdLA?Af G where
  • ?A represents the level of change and advancement
    of knowledge,
  • A is the current stock of knowledge within the
  • LA is the number of workers in knowledge-producing
  • d, ? and f are empirical parameters on the
    production function, and
  • G represents the occurrence or expression of new
    and innovative ideas.

A proposed answer the idea variation hypothesis
  • G f (sA)
  • where
  • sA is the dispersion in the existing supply of
    recognizable and communicable ideas and
  • G the occurrence or expression of new and
    innovative ideas is determined by the process of
    blind variation.  

A possible mechanism blind variation
  • Process of generating variation in pool of ideas
  • Conjectures and Refutations, Karl Popper, 1963
  • Blind Variation and Selective Retention in
    Creative Thought as in Other Knowledge Processes
    Donald T. Campbell, Psychological Review 67
    1960 380-400
  • The Phenomenon of Science, Valentin Turchin

A core concept in evolutionary epistemology
  • Origins of variation in storehouse of ideas are
  • There is no generally applicable way to tell in
    advance, at the time an idea arises, before it is
    put to the test of informing action, and before
    feedback about the outcomes of its application is
    available, whether or not it is viable
  • It is not possible to anticipate today which
    ideas will work only tomorrow, one cannot predict
    today which of the currently existing range of
    ideas will be necessary in the future.
  • In the absence of trial, error, and feedback, new
    ideas must therefore remain insufficiently

Selective retention
  • Process of destruction of variation in pool of
    ideas (refutation)
  • Not all ideas prove themselves viable (in fact,
    most do not)
  • Ideas may be selected through hypothesis testing,
    or they may be vicariously selected through
    systematic application of deep and long logical
    chains of reasoning in light of existing

Modeling blind variation
  • Modeled as a stochastic process
  • State-dependent rather than history-dependent
  • e.g. First-order Markov process
  • The question is how does one establish the
    social and psychological conditions that maximize
    G, the occurrence or expression of new and
    innovative ideas?

Endogenous Knowledge and the Industrial Revolution
  • Blind variation and selective retention formed
    the social and psychological mechanisms by which
    new knowledge effectuated economic growth in the
    industrial revolution
  • One of the causes of the industrial revolution
    was thus the availability of ready stock of
    competing ideas

Ideational constraints that had previously
blocked much potential economic growth and
  • Authoritarian regimes, personalities,
    institutions and thought structures
  • Supernaturalistic premises that had required
    conformity to revealed and non-testable truth
  • These were brought into question by the

Additional ideational constraints that block much
potential economic growth and development today
  • Corporativistic (philistine) mentalities and
  • Intellectual relativism (e.g. racial, cultural,
    or linguistic polylogism)
  • Political correctness

  • Author (More) concludes that in attempting to
    explain the causes of the industrial revolution,
    the bulk of evidence favors endogenous growth
    models and models that emphasize invention over
    those that emphasize capital accumulation

Industrialization and living standards
  • Optimists increases in national income per
    person inevitably feed through into living
  • Pessimists industrialization is negative, or
    only weakly positive, for living standards
  • Wage evidence is mixed
  • Evidence on height is mixed
  • Quite possibly, the worst enemy was not
    industrialization, but rather lack of it in the
    face of rising population

Explaining the industrial revolution (More)
  • Endogenous growth in which three components came
  • -- sufficient human capital
  • -- a market large enough to stimulate invention
  • -- a patent system allowing the rewards of
    invention to be captured

Cybernetic explanation of the industrial
  • Mores understanding plausible and seemingly
    coherent, so far as it goes (but it is positive)
  • A fuller explanation would require a theory of
    the origins and use of knowledge
  • When drawing lessons from the industrial
    revolution and applying them in todays context,
    consider removal of constraints

Implications for planning and policy
  • Can humanity continue to progress as we seem to
    have done through the industrial revolution?
  • Yes. But progress is difficult and we can also
  • Economic progress originates in the size of the
    labor pool, capital investment, and new knowledge
  • The theory of knowledge constitutes a core set of
    issues in regional economic growth and

Endogenous, knowledge-based regional economic
growth and development
  • Remove situational, personal and methodological
    constraints upon thought and behavior (Warfield,
    1990 Bowen and Schwartz 2005).
  • Make human capital investment (Mathur 1999)
  • Make investment in institutions that enhance
    leadership, learning, and social capital (Stough
  • Support ethnic diversity (Rupasingha, Goetz and
    Freshwater 2002)
  • Invest in labor force development (Harrington and
    Ferguson 2001)
  • Promote entrepreneurship (Armstrong and Taylor
    2000 76- 78)
  • Promote tolerance and creativity (Florida 2002)
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