The hidden relationship between the Enlightenment and the Industrial Revolution

This article was originally published at Revista Libertalia: www.revistalibertalia.com/single-post/2020/11/28/Relationship-between-Enlightenment-Industrial-Revolution

Modern economic growth is a phenomenon that has just been known for the last two hundred years, as something absolutely unprecedent. Before the nineteenth century no society had experienced the sustained rates of growth in productivity, income per capita and living standards that we have enjoyed for the past couple of centuries. But, why do we enjoy today so high living standards? Which was the historical turning point for modern economic growth? Earlier explanations to modern economic growth tended to be monocausal, however, nowadays, many historians agree that no factor alone can account for all the credit in terms of economic growth. Neither capital accumulation nor education alone can account for such large increases in living standards. With no doubt, technological progress has been and still is at the center of modern economic growth. Economic growth has mainly been driven by faster growth of total factor productivity through continuous introduction of more efficient technologies (Spolaore, 2020). But why did technological betterment occur, why did the transition to higher productivity, more efficient technology, and to the Industrial Revolution took place in late eighteenth-century Britain? To try to answer this question, throughout this article we will look at two important theories surrounding this question, and subject them to criticism and comparison to see how well they stand. In first place, we’ll look at Robert Allen’s (2009) factor price theory explanation, to later on analyze Joel Mokyr’s (2009, 2017) Enlightenment theory of the Industrial Revolution.

Allen (2009) argues that Britain was the first economy to experience an industrial revolution due to relative wages and energy costs. It is argued that the reason for England to be the first to industrialize and to gain a lead in development of labour-saving technologies was the unique combination the nation had of factor prices. Real wages in England were generally high at the time while energy costs were relatively low, due mainly to abundance of coal. This combination, according to Allen (2009) wasn’t present anywhere else in the world in the seventeenth and eighteenth centuries. Profit incentives justified the costs of development of labour-saving technologies, and the consequent transition from invention to effective innovation. It wasn’t economically rational -in terms of profitability- at the time to undergo this transition in any other country in the world. On the other hand, Mokyr (2009) argues that in search of new techniques, firms will try to save costs widely, and not just those of relatively expensive factors, as could be labour at the time. In this line of argumentation, Mokyr (2009) refutes Allen by claiming that very little evidence shows that at the time technological change and progress exhibited any kind of labour-saving bias, either in terms of macroeconomic footprint or from the patents register data compiled by Macleod (1988) (Crafts, 2010). Finally, it should be taken into account that relative factor prices may determine the direction or route of technological change, but not necessarily its pace, which depended more on available capabilities and useful knowledge at the time (Mokyr, 2009).

Allen (2009) shows that British advancements with micro-inventions were copied in other countries when factor- price combinations began to change there, as it occurred throughout the nineteenth century in most of Europe. In his work, he estimates that average wages in London were up to six times the level of basic subsistence at the time, whereas other parts of Europe and Asia had average wages around the subsistence level, or even below it. Whilst in Britain there was a strong incentive to substitute fuel (capital) for labour, in China the opposite happened, due to low labour costs there. However, explanations of the naissance of the Industrial Revolution based on the Enlightenment theory are not supported by Allen (2009), who argues that the “Industrial Enlightenment was mainly an upper-class cultural phenomenon with little relation to production” and attributes the shift from unworkable inventions to workable techniques and machinery to local learning. In Allen’s (2009) theoretical framework, the increase in supply of inventors before and during the British Industrial Revolution was a consequence of increased wages, which led to higher rates of literacy, numeracy, and commercial values. One of the most striking points in Allen’s (2009) theory, and which has been largely debated in academia, is the fact that he thinks that the path to the Industrial Revolution began with the Black Death, as the decimation of the population led to higher wages and allowed for arable fields to be employed for pasture, consequently leading to the production of higher quality wood and new draperies. Later on, as population levels recovered in the whole of Europe, while other European economies experienced steeps contractions in wages, in Britain real wages remained high mainly as a result of international trade success (Allen, 2009). International commercial success was also, according to Allen (2009) the cause for rapid growth of British cities, and hence for increases in demand levels for coal and food, being productive agriculture and more efficient coal extraction in the mines the consequence, and not the cause of urban growth.

Many economic historians do not agree with Allen’s (2009) theories, and his work has been subject to severe and solid criticism throughout the last years. Jane Humphries and Benjamin Schneider (2019), from the University of Oxford, present empirical evidence on how wages for hand spinning before the Industrial Revolution were actually very low, so the high-wage economy depicted by Allen (2009) couldn’t have really been a cause for the Industrial Revolution. Some methodological errors are also pointed out, as when measuring working lives and living standards, Allen (2009) takes just men into account, while female and child spinners are usually ignored, even though they were crucial for the British textile industry in terms of productivity. Humphries and Schneider (2019) show that daily earnings in Britain in the seventeenth and eighteenth centuries were around 3.8 or 4 mu per day, being this much lower than Allen’s (2009) estimations, and showing how daily earnings didn’t reach 12 mu until the end of the eighteenth century, to later on decrease again to 5 mu in the first years of the nineteenth century. All these empirical evidence shows that spinning, even being a widespread activity in Britain was a low- productivity and low-wage employment in which wages didn’t rise consistently even after the introduction of innovations as the spinning jenny. This argument, along with the presented empirical evidence discredits in great part “high wages” as being a cause for the British Industrial revolution, being spinning an especially low-paid sector for women and children, with spinners being barely able to support themselves. Larger and more diverse evidence has been presented on top of this recently, contributing to refute Allen’s (2009) “high-wage argument”. One of the greatest contributions to this came from Judy Stephenson (2018) who shows that low-wages were not just associated to the spinning industry, but also to the building sector, presenting empirical evidence of how actual wages paid to London building workers were substantially below current estimates. By studying and re- examining organizational arrangements, Stephenson (2018) shows how real wages were much lower than what bills of the epoch might show. The effects of organizations before hadn’t been studied enough, and failure to understand the contracting system gave a false impression of the relationship of capital and labour in the building industry. When institutions, business cycles, and bargaining costs are taken into account, pay received by men working in construction is shown to be substantially lower than thought by previous works, as those of Allen (2009).

On the other hand, Mokyr (2017) argues that sustained technological progress stemmed from a change in cultural beliefs about the natural world and the diffusion of knowledge. This change took place in Europe after the beginning of the sixteenth century, and with higher intensity during the seventeenth and eighteenth centuries. Mokyr (2009, 2017) centres his argument precisely on a factor that for such a long time has been neglected by economists -specially by growth theorists-, as is the influence of cultural beliefs and attitudes on economic growth and socioeconomic development. The change at the time in Europe was about the attitude towards nature and the willingness to understand and adapt nature to human material needs. However, cultural transformation occurred gradually, ignited by a small but influential elite that shared new habits of mind and communication towards the wider public. These intellectuals formed what came to be known as the Respublica literaria, which anticipated the ethos of modern science. They started to believe that knowledge should be universalised and not just confined to an specific group, being shared by placing it in the common domain, and being acquired by intellectual researchers whose findings were continuously verified by their peers, in what centuries after would comprise the bases for Popperian falsifiability theory.

However, there is no precise date for the beginning of the Enlightenment. The term was made famous by Kant’s essay on the subject, even though some date the beginning of the period with the publication of Descartes’s Discourse on Method, in 1637. This is very important, because an Enlightenment dated to 1637 would have begun 130 years earlier than stated by Mokyr (2009, 2017), which would be nearly four generations before the Industrial Revolution, being a too long gap to have any feasible causal role. Going even back in time, up to 1620, Francis Bacon -a central figure in Mokyr’s (2017) Enlightenment theory- defended the idea that the source of human power over nature is deep causal knowledge of natural rules, allowing us to profit from understanding nature for human’s own goals. Mokyr (2017) argues that Baconian theories about the practical power of scientific knowledge were crucial for long-term development of technology, and how this led to the Industrial Revolution in a long- term perspective. Through this argument, the widespread view that formal scientific knowledge wasn’t essential to the emergence of modern growth is completely rejected. It is argued that in the absence of deep understanding of the natural principles that make techniques work, technological progress would have eventually stagnated (Mokyr 2009). However, Allen (2009) rejects Mokyr’s (2009) model of “Industrial Enlightenment”, by presenting a sample of 79 inventors of whom 10 were creators of macro-inventions, investigating the link of these inventors with the Enlightenment and finding that Enlightenment influence was infrequent for textiles or metals which had a much greater impact for the irruption of the Industrial Revolution. Allen (2009) also sees experimentation and innovation more as a cause of better education due to higher wages than to a cultural revolution as was the Enlightenment.

Mokyr (2017) puts forward the thought that ideas are fundamental causes of economic development and digs deeper into the interplay of cultural and institutional changes that led to intellectual innovation, and consequently to economic growth, precisely in Europe, rather than in other advanced and much more populated civilizations such as China. An essential factor that differentiated Europe from other regions was its competitive market for ideas, with modernity and improvement triumphing over antiquity and reactionary ideologies on an empirical basis. Each new generation showed that it had the potential to create a more advanced culture and a superior and materially practical body of knowledge. While in Europe modern science triumphed, in China conservative and reactionary ideology took the lead (Mokyr, 2017).

In relation to technological advancements, however, it is very important to remark a crucial difference between Allen’s (2009) and Mokyr’s (2009) theories of macro and micro-inventions in their books, because even if they use the same terminology, both historians employ it in a different sense. For Mokyr (2009), macro-inventions are “radical new ideas without clear precedent that emerge more or less ab nihilo with potentially dramatic effects” (Crafts, 2010). Micro-inventions, however, are the transition which turns the invention into viable business propositions with technical feasibility. On the other hand, for Allen (2009) even though macro-inventions are still important technological breakthroughs, the key difference lies in the fact that the more radical changes occur in factor proportions, which in the case of the Industrial Revolution were labour-saving. Micro-inventions, on the contrary, is the process of localized learning after the introduction of new technology.

Mokyr (2009), gives greater importance to informal institutions as social norms or informal rules in the creation of a well-functioning market for non-rival goods, as is the market for ideas, scientific research and discoveries, than to formal institutions in the pursuit of growth. Consequently, culture and institutions are not alternative or opposite explanations for modern economic growth. Instead, culture and institutions coevolve together, and culture sets the foundations of institutions, providing them with the necessary legitimacy (Mokyr, 2017). We need to bear in mind that the Respublica literaria, the Scientific Revolution or the Enlightenment didn’t happen in a vacuum but were also a consequence of a cultural and institutional (even if informal) environment favourable to them. So, culture and institutions are fully complementary for economic development. This is something with which Bateman (2019) agrees, by arguing that “Culture can affect prosperity independently of formal institutions, but it can also affect the evolution and success of those formal institutions”. Bateman (2019) here makes an interesting point by asserting that family systems which were more supportive to women’s freedom, as the European family system were a central cause to the emergence of good institutions, both, formal and informal. Women’s freedom is an essential part of those cultural practices that deliver greater prosperity and socioeconomic development.

Furthermore, Mokyr’s (2009) theory is not clear enough on how the Enlightenment could have been a differential factor for the Industrial Revolution to happen first in Britain and not in other nations. Italy, in the eighteenth century had such Enlightenment figures as Galvani, Volta or Beccaria, but at the time experienced severe economic stagnation. So, was really the Enlightenment the main factor that drove to the Industrial Revolution? Or was that the Enlightenment in Britain provided specific incentives for a certain type of investigation, towards science and more practical and materially applicable discoveries, while in other countries such as Italy other disciplines as art were more developed, which had less relation to the Industrial Revolution? We need to be aware that the Industrial Revolution was largely made not by philosophers in their rooms, but by craftsmen and women, who largely developed and bettered their techniques in solving basic technical problems. Could we then say that were certain scientific movements and discoveries what caused the Industrial Revolution and not the overall Enlightenment? Or was the Enlightenment a necessary frame for the Industrial Revolution to ignite?

In conclusion, both of Allen’s and Mokyr’s books are really valuable in understanding the possible factors that led to the Industrial revolution, and why it occurred first in Britain than anywhere else. They clarify certain ideas and concepts and leave a great debate open around the plausible causes of Britain’s differential aspects at the time and the causes that led to modern economic growth. However, I don’t see both theories as completely opposing each other, but rather as complementary at some points, as could be the relationship between high wages, greater education levels and enlightened science, in line with the comments made beforehand. However, this intellectual debate is to be continued for many years at the edge of research in Economic History.

References

Mokyr, J. (2009), The Enlightened Economy.
Mokyr, J. (2016/2017), A Culture of Growth, Princeton University Press, chapters 10-11

Allen, R. (2009), The British Industrial Revolution in Global Perspective
Crafts, N. (2011). “Explaining the First Industrial Revolution: Two Views.” European Review of Economic

History 15(1): 153-168
Stephenson, J. Z. (2018). “‘Real’ wages? Contractors, Workers, and Pay in London Building Trades,1650–1800.” Economic History Review 71(1): 106-32.
Humphries, J. and Schneider, B. (2019). “Spinning the Industrial Revolution.” Economic History Review 72(1):

126-155.
Bottomley, S. (2019). “The Returns to Invention during the British Industrial Revolution.” Economic History Review 72(2): 510-530

Bateman, V. (2019), The Sex Factor: how women made the West rich, chapter 1.

Spolaore, E. (2020), “Commanding Nature by Obeying Her: A Review Essay on Joel Mokyr’s A Culture of Growth.” Journal of Economic Literature, 58(3): 777-792