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Welcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: What if they gave an Industrial Revolution and nobody came?, published by jasoncrawford on May 17, 2023 on LessWrong.
Imagine you could go back in time to the ancient world to jump-start the Industrial Revolution. You carry with you plans for a steam engine, and you present them to the emperor, explaining how the machine could be used to drain water out of mines, pump bellows for blast furnaces, turn grindstones and lumber saws, etc.
But to your dismay, the emperor responds: “Your mechanism is no gift to us. It is tremendously complicated; it would take my best master craftsmen years to assemble. It is made of iron, which could be better used for weapons and armor. And even if we built these engines, they would consume enormous amounts of fuel, which we need for smelting, cooking, and heating. All for what? Merely to save labor. Our empire has plenty of labor; I personally own many slaves. Why waste precious iron and fuel in order to lighten the load of a slave? You are a fool!”
We can think of innovation as a kind of product. In the market for innovation there is supply and demand. To explain the Industrial Revolution, economic historians like Joel Mokyr emphasize supply factors: factors that create innovation, such as scientific knowledge and educated craftsmen. But where does demand for innovation come from? What if demand for innovation is low? And how much can demand factors explain industrialization?
Riffing on an old anti-war slogan, we can ask: What if they gave an Industrial Revolution and nobody came?
Robert Allen thinks demand factors have been underrated. He makes his case in The British Industrial Revolution in Global Perspective, in which he argues that many major inventions were adopted when and where the prices of various factors made it profitable and a good investment to adopt them, and not before. In particular, he emphasizes high wages, the price of energy, and (to a lesser extent) the cost of capital. When and where labor is expensive, and energy and capital are cheap, then it is a good investment to build machines that consume energy in order to automate labor, and further, it is a good investment to do the R&D needed to invent such machines. But not otherwise.
And, when he’s feeling bold, Allen might push the hypothesis further: to the extent that demand factors explain the adoption of technology, we don’t need other hypotheses, including those about supply factors. We don’t need to suppose that certain cultures are more inventive than others or more receptive to innovation; we don’t need to posit that some societies exhibit bourgeois virtues or possess a culture of growth.
Let’s examine Allen’s argument and see what we can learn from it. First I’ll summarize the core of his argument, then I’ll discuss some responses and criticism and give my own thoughts.
High wages and cheap energy
In the first half of the book, Allen establishes that pre-industrial Britain was indeed a high-wage, cheap-energy economy.
Wages
Here are workers’ wages in various cities around the world. By the 18th century, wages in London and Amsterdam were more than twice that of other major cities:
Nor is it just that prices were higher in those cities. Here are the wages deflated by the cost of a “subsistence basket,” the bare minimum of food, clothing, and other goods needed to live. Workers in Vienna, Delhi, or Beijing were only a little above subsistence; those in Amsterdam or London were ~4x above:
There is also qualitative evidence of high wages. Workers in Northwest Europe ate better diets, “in view of the apparent widespread consumption of expensive and highly refined foods like white bread, meat, dairy products and beer. In contrast, workers and peasants in France, Italy, India and China ate a quasi-vegetarian diet of grain, often boiled, with scarcely any animal pro...
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