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The Enlightened Economy: An Economic History of Britain 1700-1850 (The New Economic History of Britain seri) Hardcover – February 16, 2010
This book focuses on the importance of ideological and institutional factors in the rapid development of the British economy during the years between the Glorious Revolution and the Crystal Palace Exhibition. Joel Mokyr shows that we cannot understand the Industrial Revolution without recognizing the importance of the intellectual sea changes of Britain’s Age of Enlightenment.
In a vigorous discussion, Mokyr goes beyond the standard explanations that credit geographical factors, the role of markets, politics, and society to show that the beginnings of modern economic growth in Britain depended a great deal on what key players knew and believed, and how those beliefs affected their economic behavior. He argues that Britain led the rest of Europe into the Industrial Revolution because it was there that the optimal intersection of ideas, culture, institutions, and technology existed to make rapid economic growth achievable. His wide-ranging evidence covers sectors of the British economy often neglected, such as the service industries.
(Edward Glaeser The New Republic)
“It is impossible to do justice to the subtlety and detail of "The Enlightened Economy"; it is the product of a lifetime of research and thought, and stands as a landmark work of history...its perceptive examination of the birth of economic prosperity holds many arresting insights for our fraught economic times” –Trevor Butterworth, Wall Street Journal
(Trevor Butterworth The Wall Street Journal 2010-07-30)
"This book is beautifully executed from beginning to end. . . . This study of British industrialization is certain to be a classic text for generations to come."—Margaret Schabas, American Historical Review (Margaret Schabas American Historical Review)
About the Author
Joel Mokyr is Robert H. Strotz Professor of Arts and Sciences and professor of economics and history, Northwestern University, and Sackler Professor at the Eitan Berglas School of Economics, Tel Aviv University.
- Publisher : Yale University Press (February 16, 2010)
- Language : English
- Hardcover : 550 pages
- ISBN-10 : 0300124554
- ISBN-13 : 978-0300124552
- Item Weight : 2.1 pounds
- Dimensions : 6.5 x 1.75 x 9.5 inches
- Best Sellers Rank: #2,005,100 in Books (See Top 100 in Books)
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Approximately a hundred years before, the Chinese eunuch admiral Zeng He of the Ming Dynasty had made multiple voyages to India, Indonesia and the east coast of Africa. He sailed in fleets of boats that were the biggest wooden boats that have ever been built and manned by as many as 30,000 men.
In the late 16th Century, Francis Bacon observed that mankind's greatest inventions to date were: (1)Gunpowder, (2) the Compass, and (3)Printing. Unbeknownst to him, all three (including woodblock printing and moveable type) had been invented by the Chinese hundreds of years before. Later commentators to Bacon added a fourth great invention: (4)low cost paper. But paper too had already been invented by the Chinese by a scholar of the Han Emperor in approximately 150 A.D.
Was there ANY invention from Europe that Indians or Chinese could have borrowed? The answer, unfortunately, is an emphatic, "No." Inventions flowing from East into Europe, beyond those already mentioned include: waterwheels, the crank handle, the bellows-fed forge , canals and canal locks, water-tight compartments for ships, the stirrup, ceramic and porcelain, hydraulics, among the more significant.
B. How then did European technology (and that of the British in particular) become so overwhelmingly dominant by 1800? And why did Eastern technology stagnate?
Mokyr poses the broad question as follows:
The answer (to why first Britain and then the West became dominant) need(s) to be sought in the realms of knowledge and institutions, not geography. The game of building dynamic states is played at two levels: (1) the level of a game against nature (technology), and (2) a game of controlling and coordinating -as much as possible - human nature (institutions).
By 1850, Britain had a GDP almost 65% higher than Germany and 30% higher than the United States. This is amazing to me in that both had populations at least 50% greater, with land areas far, far larger. Economic statistics display the enormous gap that opened up between Britain and its European competitors. Coal consumption in Britain was 49 million tons, versus 4.4 and 6.7 million respectively in France and Germany. Steam power was 1.29 million hp in Britain versus 370,000 hp and 260,000 hp respectively in France and Germany. Britain had 10,000 km of railroads versus 6,600 km and 3200 km in Germany and France respectively. The disparity in other economic statistics was similar.
Without the proper institutions, technology by itself could not have turned the British economy into the kind of growth-producing engine that it became. In their different ways, the experience of Latin America, the Middle East and Russia have demonstrated to the world that access to modern science and technology without first changing the institutions that set incentives and define the rules of the economic game will not lead to the kind of growth experienced by Britain.
According to Mokyr, three factors held back every economy in the world before the Industrial Revolution in Britain(~1700 to 1850): 1. Population and what might be called the Malthusian negative feedback loop, (2) inappropriate institutions and (3) inadequate technical knowledge. Other nations and other areas had experienced periods of wealth creation and technological innovation; but always before they fizzled out.
For much of recorded history, the arch-enemy of economic growth was not population pressure per se so much as predators, pirates and parasites, often known euphemistically by economists as grent seekersh, who found it easier to pillage and plunder the work of others than to engage in economically productive activities themselves. Whether they were the King's or the Bishop's tax collectors, highwaymen, corrupt officials, greedy local monopolists, guilds that tightly controlled entry and production, or invading neighboring armies, aggressive rent-seeking often led to the end of the economic activity that brought about growth.
In the 17th C, Britain became unusually good at restraining "the greatest local bully of them all, namely the king." The age old query: "Who shall guard us from the guardians?" had been resolved in Britain.
In 1776, Adam Smith wrote " the security which the laws of Great Britain give to every man that he shall enjoy the fruits of his own labor is alone sufficient to make any country flourish." His words were prophetic.
Every nation struggling to advance technologically has to struggle with many interest groups and g"distributional coalitions" who wish to use the coercive mechanism of the state to redistribute resources to its members through exclusions, subsidies, price controls, minimum wage laws and many other mechanisms.
Britain was not immune from these distributional coalitions. The worst example is the notorious Corn Laws which protected the land -owning elite of Britain from food imports. The King, in return for money, gave monopoly privileges to manufacturers. Or, as was done 1722, Parliament prohibited "the use or sale of cloth buttons"so aa to support the silk and mohair industry. Lobbying was just as much a concern for 18th C Britains as for us.
Enlightenment thinkers, however, especially in Britain, were hostile to these classical manifestations of mercantilism and crony capitalism (they even opposed patents) and by 1850, Britain was as liberal and free of them as any nation has ever been, before or since. How did free trade triumph over powerful vested landed interests? How was it possible for enlightenmenth to prevail when the groups that held the privileges effectively ran the country?
We are dealing now in the area of ideas. Kant's famous characterization made in 1784 was that it was "an age of Enlightenment but not an enlightened age." If ideas affect technological and economic outcomes - and from Britain's history we know that clearly they did - where do these ideas come from and how do they become sufficiently accepted to make a difference?
What then was the Enlightenment, and why did it matter? It has been pithily defined as a gradual switch from asking how can I be good? to "how can I be happy?" ANSWER: It encouraged research and reflection on the human condition.
The Enlightenment was an intellectual movement, a set of beliefs and values about both positive matters (what the world is) and normative matters ( how the world ought to be). It consisted of a political project that would create a better society, but also a project to make the economy produce more wealth and thus to increase economic welfare.
The Enlightenment did not arise in a vacuum; it was influenced by, and developed from, Renaissance Humanism and the Protestant Reformation. While there were many different and often conflicting Enlightenment thinkers, among these, no one was so admired, as Francis Bacon (1556 -1627). Admiration of him permeates 18th Century writings. Admirers included Benjamin Franklin, Diderot, Montesquieu, Robert Boyle, etc. The Baconian program included three elements: first, research that expands human knowledge; second, that it should be directed to areas where there was a high chance of solving practical problems; and third, that it should be organized and classified for wide dissemination. Bacon has been called the father of empiricism His works established and popularized inductive methodologies for scientific inquiry, often called the Baconian method, or simply gthe scientific method. He famously died of pneumonia contracted while studying the effects of freezing on the preservation of meat.
Useful knowledge was central to the British Enlightenment. While this included knowledge of natural phenomena, the Enlightenment concept of usefulness, according to Mokyr, involved both practical uses (that is technology) but also a moral and intellectual improvement of humanity so that people would lead more virtuous lives. Why moral improvement? Some, but not all, of the Enlightenment thinkers realized that even with better knowledge, the potential for human beings to make stupid and cruel decisions, or to behave opportunistically and against the general good, "was not to be underestimated."
Mokyr argues that intellectual innovation can only occur in tolerant societies in which outrageous ideas do not entail a violent response. By our standards, Britain in the 18th C may not seem very tolerant. But at that time, it was. The best proof of this? Consider how congenial the long exile in Britain was for the German-born Marx and Engels. After 1680 or so, few Britains ever got into serious trouble about their ideas, however unorthodox. The Scottish philosopher David Hume, is an excellent example; even today his views seem outrageous (openly agnostic), yet his writings at the time were both popular and highly lucrative.
F. A PARADOX: BRITAIN ACHIEVED ITS PROMINANCE WITHOUT INSTITUTIONS OF FORMAL EDUCATION
Britain's rise was propelled by a technological elite of dexterous and clever men, without formal technical or scientific education... Their unique strength was to learn, copy, imitate, and improve ideas conceived by others (usually foreign)..In our own time, it's become accepted dogma that education -especially higher education - is essential for economic growth. Yet Britain, throughout the Industrial Revolution altogether lacked a public education system. Further, it could not boast anything like the French system of grandes ecoles (the first of which was founded around 1750) or the technical and engineering schools that began sprouting up on the European continent in the early 19th C. By 1830, only 28% of English boys were enrolled in schools, compared to 70% in Prussia and 38% in France.
The key to British technological leadership in all of these areas was a system of apprenticeships in technical and engineering workshops and factories. Formal schools and Universities, especially Oxford and Cambridge, had as their primary purpose the education of ggentlemenh and they served Britain poorly when compared to the informal education at the artisanal level involving tricks, gimmicks and rules of thumb .
Oxford and Cambridge catered mainly to the military and clergy and taught little that was of value to the economy. Adam Smith hated the time he spent at Oxford remarking sarcastically that because of the Universities large endowments the dons had long ago given up all pretence of teaching.Joseph Priestly, the famous chemist and philosopher, compared all of the mainstream colleges (from which dissenting Protestants like himself were excluded) to "pools of stagnant water."
Of the 498 applied scientists and engineers born between 1700 and 1850 who contributed to the Industrial Revolution in a significant way, 91 were educated in Scotland, 50 at Oxford, none at Cambridge, and 329 had no university education at all. Conclusion: The great English engineers learned their skills by being apprenticed to able masters, and otherwise were largely self-taught.
It is striking how many of those who contributed to Britainfs rise were, in one sense or another, outsiders. The most significant religious minority in Britain were the nonconformist Protestants These Protestants, as well as Catholics and Jews, were discriminated against. They could not serve in Parliament, the military, or the civil service, nor before 1829, could they attend Oxford or Cambridge. In many ways, of course, this ironically turned out to be an advantage as they were thus directed into non-traditional career paths. By some estimates they supplied as much as 50% of the great entrepreneurs in manufacturing.
The Unitarians included James Watt, Wedgwood and the scientist/businessman, Joseph Priestley. Quakers had a reputation for fairness and probity, as well as a reputation for active philanthropic projects .There were many very Quaker industrialists but the best known today would include the banker David Barclay and the cocoa and chocolate pioneer, John Cadbury.
One factor in English success was their willingness to borrow ideas from other societies. Britain had few compunctions about adopting and adapting useful knowledge generated in societies they may otherwise have detested. The slogan "Not invented here" was replaced by the ironic "stolen with pride."
Another factor was the willingness to criticize and deviate from the accepted wisdom of the previous generations. The degree to which a society reveres accepted wisdom can be an important element in its ability - and desire - to innovate.
In Europe, heresy and rebelliousness became increasingly ingrained, says Mokyr, as the Renaissance and Reformation progressed. Dogma and authority were everywhere challenged.
Through approximately the year 1800, Britain had had a substantial cottage industry, primarily in rural areas, where spinners and weavers and other craftsmen, usually with the help of their families, produced yarn, cloth, lace , etc. This disappeared after 1800 causing substantial hardship. There were riots over this technology driven unemployment and attempts to destroy the machines ( as in the famous ludditeh movement). But these were short term and put down firmly by an Enlightenment elite who realized that any innovations rejected would soon be adopted by rivals nations.
The American philosopher Robert Nozick argued for a minimum night-watchman's state where the state would not redistribute wealth at all, but would only perform those minimum functions like law, justice, defense health and safety
Britain in 1850 was below this minimum. Nearly all of its non-military employees were employed in collecting import duties and excise taxes, the only national taxes ever employed, except for an income tax briefly employed during the Napoleonic wars. Nearly all other government functions were carried out at the local level, usually by unpaid officials. Justices of the Peace were unpaid and were usually local gentry or aristocrats. There was no police force, except in London, and it was small. Prosecution of criminals was left to either volunteer prosecution societies or the victims themselves. Most crimes were capital crimes, but because of the reluctance of juries to convict and the absence of professional prosecutors, relatively few prosecutions were undertaken. And in the majority of cases the penalty was commuted, excepting murder cases. Amazingly, the crime rate fell continuously from about 1750 to 1850 and Britain and its cities were considered to be amazingly crime free by foreign visitors.
The major tax burden on the localities was the Poor Tax for relief of the poor. The tax was mandated by Parliament but administered locally, usually by unpaid notables. It is estimated that the poor taxes amounted to 2 per cent of GDP through 1834, when the level of support was halved. This 1834 reduction was pushed, perhaps surprisingly, by intellectuals such as the anti-slave activist William Wilberforce, because the poor laws conflicted with their enlightenment philosophy.
Transportation outside the cities was handled by private (usually local) private highway and canal trusts. These worked surprisingly well.Society in 1850 was just beginning to realize that there were serious problems that the free market could not effectively deal with. Life expectancy in cities was reduced as much as 10 years as a result of disease and unsanitary conditions. Large cities were truly death traps. Public education for the poor was non-existent. In 1850, society was just beginning to realize that the poor's suffering from economic panics was not something they had control over..
WHAT MADE BRITAIN GREAT WERE NOT MACROINVENTIONS BUT THOUSANDS OF MICROINVENTIONS THAT MADE THESE MACROINVENTIONS SOCIALLY USEFUL
Most people think of the Industrial Revolution in terms of macro-invention milestones reached by such superstars as James Watt, Richard Arkwright, and Henry Cort. This impression is totally wrong. As will be shown, the microinjections/ideas were usually thought of by foreigners but then turned into usable products through literally thousands of micro inventions. This was accomplished by artisans and engineers who used little tricks and know-how based on experience and imitation.
By the early 18th Century, Britain had raised a class of craftsmen who were of crucial importance. One group was clock and instrument makers, many of them Huguenot artisans who had fled France when religious freedom for protestants was abolished. Clock and instrument makers were trained to be accurate and use the appropriate materials; they understood cogs, springs, pulleys, and levers and learned the fine art of the possibilities and constraints of mechanics,. Some of the great inventors of the 18th Century were trained as clockmakers, including James Watt himself and James Huntsman who developed the crucible steelmaking technique in 1740 that made Sheffield the world center of steelmaking for the next century.
Leibniz, the philosopher scientist (co-discoverer with Newton of calculus) said in 1670: "It is not laudable that we Germans were the first in the invention on mechanical, natural, and other arts and sciences, but are the last in their expansion and betterment."
As Adam Smith noted, radical breakthroughs in technology often required an outsider or a clever man from a different background. A barber, a clockmaker, and a clergyman were responsible for the three dramatic breakthroughs of the cotton industry.
THE STEAM ENGINE
For most people today, the steam engine is the signature invention of the Industrial Revolution. The concept a steam engine was first conceptualized by a Frenchman, Denis Pain, around 1700. But the first engine (the famous Newcomen engine) was developed in 1702 by British engineers to pump water from coal mines. Coal engineers and entrepreneurs were the technological whiz kids of their time. Newcomen, was an artisan, although an extraordinarily talented one, who had apprenticed as an mining engineer. There was a deep complementarity between artisanal competence and the growth of guseful knowledge. Much of the actual implementation still depended on the trial -and-error evolutionary process of technological development in which inspiration and perspiration accounted for a lot more than scientific understanding.
Mines tended to flood, requiring constant pumping. Pumps are devices that by definition need to be built with a high degree of engineering accuracy and with high-quality material. Mining concentrates some of the most difficult technological problems, such as water control, earth-moving, prospecting, chemistry, and the use of powerful machinery for hoisting, conveying, and so on. As such, mines operated as focusing devices, which directed the ingenuity of Britainfs engineers towards a specific problem that needed solving.
The iron rails used by railroads were first developed for British mines.Steam became more than a mine pump only after better-trained minds like Watt turned to the task of improving it, and the continued exchange between technique and science gradually picked up speed. The improvements introduced by Watt after 1769 turned it into a source of industrial power. Wattfs improvements - the separate condenser, double-acting steam-jacketing, and the sun-and planet gears - greatly increased the enginefs efficiency, versatility and reliability. Though Watt gets credit, in solving these problems he picked the creative minds of many other engineers and artisans. And even then, the steam engine required hundreds more innovations before it could have a significant effect on the British economy.
We can liken coal mines to the internet of today. While the idea may have resulted from government sponsored research, the actual transformation of that idea into a game- changing technology depended on the trial -and-error evolutionary process of technological development by literally thousands of intrepid engineers and entrepreneurs who invested their own inspiration and perspiration.
Other British innovations were: crucible steel, Portland cement, gtinnedh food, mass-produced paper and steel tools, sheet glass, bleaching, improved porcelain, standardized bolt heads and screw threads, the mining safety lamp, and rubberized textiles. The key to British technological leadership in all of these areas was a system of apprenticeships in technical and engineering workshops and factories.
Without good artisans -who could realize the inventor's design, then maintain it and repair it, and see how it could be made to work marginally better - the ideas and inventions likely have ended up like Leonardo's wonderful machines, none of which were ever built.
G. Cultural Transformation of Britain
One of the most significant transformations in the 18th Century was the rise in social standing of inventors, engineers and businessmen. Culture is critical in determining the allocation of talent in a society, whether, for example, ambitious and talented young people become rabbis or army generals.
The change in culture or attitudes with respect to the social hierarchy of occupations occurs through different kinds of biases: model-based bias and salient events bias.
The work of Issac Newton affected the 18th Century much as Einstein's : although most people were incapable of understanding the details, these breakthoughs became symbols of human ability to understand and tame nature. Newton was the thinking person's ideal, a role model whose work others wanted to emulate. James Watt was another admired 18th Century model.
Salient events bias occurs when people change their beliefs and attitudes as a result of some traumatic or memorable event that leaves a deep cultural impression on a large number of individuals. In our own generation, the attack of 9/11 qualifies; so did Sputnik for an earlier generation. For people in the 18th Century, technology was working and it was improving the their lot. Many of these improvements were hardly conspicuous, but some of them were. Like, steam power and railroads: large, noisy and alien. Some were dramatic and seen as such; like ballooning. The invention was of little intrinsic economic value, but it greatly enhanced belief in the capability of technology to do truly remarkable things. The defeat of gravity, which seems to us so commonplace, had never been accomplished until 1783.
As a result, the social respectability of inventors and innovators kept rising. They gave successful inventors fame, respect and (sometimes) riches. The impressions created by this observed glory sent a powerful signal to other would-be inventors and entrepreneurs.
Thinking and conversing about mundane subjects such as science, engines, chemicals, etc., became something that was not only fitting for a gentlemen, but extremely popular . Literally hundreds of local science and technological societiesh grew up in all the major cities. They gave regular lectures and published their own newsletters. The carriages bringing audiences to science lectures in London became so dense that city authorities created the world's first one-way street.
I. The moral climate of Britain during the Industrial Revolution
In 18th Century Britain, to be a gentlemen one had to be sociable, to be part of a community. Urban society created special organizations that made polite society function, such as coffee-houses, philanthropic organizations, and intellectual societies. The social interaction that took place in these organizations was the core of civil society and its rules guided the actions of those who could claim to be gentlemen.
Well-functioning institutions do not require people to be moral or altruistic; only self-interested. Other self-interested individuals would have a well-founded belief that other (apparent) gentlemen would do the same. Before the Enlightenment, a gentlemen was a man without an occupation who was presumably not driven by greed. In the Enlightenment, a new concept of gentlemen arose, to wit, someone who could be trusted. In 18th Century Britain, civil lawsuits were expensive and prolonged, and therefore something to be avoided. A culture of cooperation and responsibility was created; handshake agreements were usually sufficient; economic transactions were thus facilitated; the nation benefited.
It was the institutional environment which was the key to Britain's success. A century passed in which the belief slowly began to take hold that this was an attractive place to to do something new and get rich in the process.
Mokyr acknowledges multiple ingredients of the British Industrial Revolution (1700-1850) -- favorable location, mineral resources, a pre-existing middle class, artisans' skills, and so on -- but he argues that "the real factor that transformed the economy was the general drive for progress and not just its various manifestations." He credits what he calls the "Industrial Enlightenment" with creating an environment where technical and practical knowledge was valued and readily disseminated.
He proposes that the Enlightenment abetted economic development on another front, as well: it helped place "rent-seeking" (mercantilist policies of monopoly and privilege) on the defensive, as the ideas of Adam Smith and others filtered into political discourse.
These connecting sinews between Enlightenment thought and economic development seem plausible enough, although one might quibble that Mokyr is stronger at asserting the nexus than he is at demonstrating it compellingly. The bulk of his book, in fact, is not especially dependent on the scaffolding of this theme and could easily stand alone.
Mokyr weighs various debates regarding the relevant economic history and renders a number of judgments which may challenge some readers' prior understandings. He contends, for instance, that much of the economic history of this period had little to do with the Industrial Revolution, that only part of the British economy was affected by mechanization; that the rate of economic growth was relatively slow, accelerating only after 1830; that artisans and mechanics contributed small improvements in existing technology ("microinventions") which should not be lost in the shadow of more dramatic innovations; and that the "enlightened" Industrial Revolution economy was not laissez-faire, that the limitations of the free market were recognized, as well as the blessings.
The Enlightened Economy would be an excellent suggestion for the reading list of a graduate student seeking a thoughtful review of much of the literature on the Industrial Revolution. More casual general readers should be forewarned, however, that this is a work of scholarship, packed with details that may not consistently hold their interest.
Suggested reading for people in academia and other ones curious about the subject.