Industrial Revolution

The Industrial Revolution is an ambiguous term, freighted with multiple meanings,

interpreted differently by different writers. First, it describes the extraordinary
transformation the British economy experienced between 1760 and 1850. In these
years Britain moved from being a largely self-sufficient, self-sustaining, and still
principally agrarian society, to being an economy where a substantial fraction of
food, raw materials and energy was imported, or mined from the earth as coal, and
where the great majority of the population was engaged in industry and commerce.
But second, and more importantly, it has come to mean the general move in the
world economy in about 1800 from the pre-industrial economy, which experienced
extremely low rates of efficiency growth, to the modern economy, where efficiency
growth is rapid and persistent. That shift from low rates of efficiency advance to rapid
rates had nothing inherently to do with industry or industrialization. Efficiency
advance in agriculture has been as rapid as in the rest of the economy since 1800.
So for the more general use of the term ‘Industrial Revolution’ the ‘industrial’
component is a misnomer, but a misnomer that we have to live with.

The Industrial Revolution of the historians

The ‘Industrial Revolution’ more traditionally describes a specific period in British
history, most commonly taken as 1760 to 1850. In 1760 Britain was a prosperous
but still heavily agrarian economy, with half the labour force employed in agriculture.
Foreign trade was insubstantial. Britain was largely self-sufficient in staple foods.
The main imports were Mediterranean or tropical products such as sugar and spices,
wines, raisins, coffee and tea. The main export was woollen cloth produced by
domestic weavers or handloom workshops. London was already a huge city with over
750,000 inhabitants, but the other towns in England circa 1760 were mostly small. The
next biggest city was Bristol with only 50,000 people. Travel and communication were
slow and costly. The road system was poorly maintained, and there were few canals.
By 1850 the share of the population employed in agriculture in Britain had dropped
to less than a quarter. Staple foods and raw materials such as timber had become
major imports. Exports were dominated by factory-produced textiles, but included a
whole range of manufactured goods and even substantial amounts of coal. The urban
population had grown enormously. Manchester, for example, had grown from about
20,000 in 1770 to over 300,000 by 1851. London had nearly 2.4 million by 1851, more
than 13 per cent of English people, and was the largest city in the world. The
road system had greatly improved, and alongside the roads there were now about
2,000 miles of canals and improved river navigations, as well as more than 5,000 miles
of the new railways.

S. N. Durlauf et al. (eds.), Economic Growth

© Palgrave Macmillan, a division of Macmillan Publishers Limited 2010
 Industrial Revolution 149

Rapid population growth accompanied the change in occupational structure,

location and trade patterns. The English population grew from seven million in the
1770s to 19 million by the 1850s. Periods of population growth earlier in English
history, as in the 13th and the 16th centuries, were associated with declining living
standards. The Industrial Revolution represented a sharp break with this past. For the
first time living standards improved even as the population swelled. Figure 1 shows
the real wage of building workers vis-à-vis the English population from 1250 to 1850.
The unusual character of experience in the Industrial Revolution era is clear.
Between 1760 and 1850 England experienced what was cumulatively profound
economic change, though the actual rate of change for most measures of the economy
such as gross output per person or the fraction of the population employed in
agriculture was by modern standards very slow. Indeed, the changes were so slow that
many economists writing in this period – such as Adam Smith, Thomas Malthus and
David Ricardo – had little comprehension of the fundamental break from the past that
was occurring.
The recent consensus has been that the immediate cause of the Industrial
Revolution was the dramatic increase in efficiency in a minority of the economy: yarn
and cloth production, iron and steel making, and rail transport. Most of the economy,
including surprisingly the coal industry, saw little technological advance (Clark and
Jacks, 2007). Textiles alone explain perhaps 60 per cent of all measured technological
advance from 1760 to 1850. The concentration of technological advance in textiles,
aligned with the move of production there into factories, explains why the general

100

1830s
Real income per person (1860s = 100)

80

1770s

60

40
1640s

1280s

20

0
0 5 10 15 20 25
Population (millions)
Figure 1 Real building workers’ day wages vis-à-vis population by decade, 1280–1849. Note: The line
summarizing the trade-off between population and real wages for the pre-industrial era is fitted using the
data from 1280–9 to 1590–9. Source: Clark (2005b, Figure 5).