What caused the industrial revolution?

[ray245]

Is there any good primary source from the early industrial period indicating why certain merchants wanted to invest in steam engine? We know that steam engine has existed for a pretty long period of time, but what causes people to stop looking at it as a toy and as a production tool instead?

[Simon_Jester]

Pumps.

Medieval European miners, unlike classical ones so far as I know, actively used deep mineshafts to dig into the ground after minerals. Gunpowder made tunneling easier too, so the shafts tended to sink deeper than before. Which meant they flooded a lot.

Pumping water out of mineshafts is hard work, and the earliest steam engines were stationary devices meant to drive a pump. Before that they were horse-drawn.

The demand for that probably wouldn't have been there in Roman times. The Romans dug mineshafts, but I don't think they were especially deep.

[Thanas]

They were somewhat deep but nobody cared much for the quality of labor back then as miners were essentially condemned criminals/POWs who were worked to death by design.

And the Romans preferred mountaintop removal anyway and used it to great extent in Spain and elsewhere.

[Guardsman Bass]

Is there any evidence for Roman use of coal?

[Thanas]

Yeah, the Romans practically used every coalfield there was in Britain (excepting modern deep fields of cours) and used it for both commercial as well as private usage. They also used coal fields on the continent and exported it from Britain.

[Guardsman Bass]

Yeah, the Romans practically used every coalfield there was in Britain (excepting modern deep fields of cours) and used it for both commercial as well as private usage. They also used coal fields on the continent and exported it from Britain.

Good to know. That reinforces the argument from technology.

[Iron Bridge]

Russia never had free market institutions.

It had a hell of a lot more of them in 1910 than in 1930, I'll say that. Why didn't it collapse into the dark ages instead of following an economic trajectory roughly paralleling that of the capitalist nations that had the same starting position in 1900?

Leaving aside the much different aesthetic, I don't think there was much institutional difference between 1913 Russia and 1984 Russia. Both were primarily military dictatorships with manorial farming systems, centrally-directed urbanisation programmes, semi-free scientists and technologists and largely unfree civil societies. The big difference was that while Tsarism had mostly lost legitimacy and had the potential to develop into something more like British (or at least German) constitutional monarchy, Communism solidly entrenched the status quo.

In 1913, Former USSR (no data for 1917, or I would use that) had a GDP per capita of $1,488 (FY1990), while USA had a GDP per capita of $5,301, so F USSR had a GDP per captia 28% that of the USA. In 1984, the last year before Perestroika, the USSR had a GDP per captia of $6,709, while USA had a GDP per capita of $20,123. So the USSR ended with a GDP per capita 33% than of the USA. This is a slight win for Marxism over Tsarism, while still far inferior to the performance of market capitalism.

How so?

The Russians under communism wound up narrowing the relative gap between themselves and the US, if that figure is to be believed. You'd expect equally good systems to provide equal multipliers: if system A and B are equal, both would double GDP per capita in X years. If system A is much better than B, A would double the GDP while B would take longer to do so... in which case the relative percentage would decline, and we'd expect the USSR to end up with LESS than 28% of the US's per capita GDP, not more.

This is untrue, because it is easier to grow if you start off poorer than other countries with which you have contact. This is because rather than developing new knowledge, processes, and technologies you can simply import or copy them, which is easier. If the USSR had equally good institutions to the USA we would expect it to have grown much faster, and in 70 years to have closed the gap entirely. This is called conditional convergence in economics.

Usually poor countries are poor because they had bad institutions in the past, and continue to have bad institutions, so they reach an equilibrium where harm from their bad institutions balances the benefits of being exposed to more developed countries, and their growth rates roughly coincide with technological development (approximately, the growth rate of the most developed countries). They develop as fast as the rich countries, but remain much poorer in absolute terms. In recent years sophisms like Marxism that previously justified bad institutions in poor countries have gone out of fashion, and the undeveloped world has begun to enjoy much higher growth rates than the developed world. This isn't because they have better institutions than the developed world, it's just because it's very easy with modern technology to increase your per capita GDP from, say, $3k to $6k with even a modest improvement in economic institutions. That's only the difference between something like 1820 Britain and 1850 Britain (note, Maddison data are FY1990 dollars).

Another example from the Maddison data. Spain is generally regarded as a country that "didn't industrialise". And it's true that it both entered and left the 19th century much poorer than the richest countries of the time, but that doesn't mean it didn't grow at all. In 1820, Spain had GDPPC of $1,008 (55% of UK) and in 1880 $1,646 (47% of UK). So Spain remains at a similar level of economic development relative to the UK, and grows almost as fast. But because it has worse institutions it remains at much a lower level of GDP per capita than the UK.

Perhaps you will say this is unfair because the USA started off much more developed too. So let us compare this progress to a country that started off at a comparably low level of development and fully adopted free market institutions in this time period. In 1913, Japan had a GDP per capita of $1,387 (26% USA). In 1984, it had a GDP per capita of $14,773 (73.5% USA).

The fact is the USSR ended up, relative to the technology of the time, about as poor as Tsarist Russia. Japan, South Korea, HK, Singapore, etc. by comparison closed the gap with the West.

Interesting.

Care to try comparing them to, say, Brazil? Or Argentina?

I linked it before, but the data is here. It should be easy for you to do this. However I am not sure what you think that would show. Argentina is interesting because it is one of the few countries to have seriously regressed in terms of economic institutions, and indeed went from being one of the most developed countries in the world in 1914 to merely middle income today. Brazil, I am not so sure why that is interesting.

In the early 1800s, Britain was importing 10,000s of tons of cotton. This is more than enough weight of coal to merely build more transport infrastructure, and pre-dated both construction of railways and iron-hulled ships.

The main problem is on the exporter end.

Put this way, here's a question for you: was there an international trade in coal in the 1770-1820 timeframe? If so, how did it operate and where? If not, why not?

Yes, Britain exported a lot of coal to France. Of course natural resources fanatic can say, "But France was less developed than Britain at this time!". Yes, but there were other institutional factors involved there, so it doesn't prove this was because of the location of coal. Germany was also less developed than Britain (and less than France) even thought it had lots of coal. I have shown that the top industrial country could maintain a huge and profitable industry based on transcontinental import of input goods, and shown that this was possible even before the postulated key input (coal) became important for transporting import goods.

Two reasons. First, historians do not learn economic theory, only qualitative descriptions of events. It is like asking why might an engineer understand more than a historian about how coal mining developed. Second, history as a discipline still perceives events through the prism of some psuedoscience theories, such as Marxism, which are actually long disproven and abandoned economic theories.

I think you are greatly oversimplifying what "history" means compared to "economics." I am also a bit dubious of comparing economics to engineering, simply because of the large number of differing schools.

It is as if engineers couldn't agree on what the laws of physics were reliably, and proposed massively mutually-exclusive bridge designs.

I don't mean to say all historians are Marxists, but it and other similar theories hold a lot of sway, while in economics they're just curiosities of what people got wrong 100+ years ago. There aren't nearly as many fundamental disagreements among economists as you might think from the internet.

[Iron Bridge]

Oh, that is rich. I'll quit "stalling" as soon as you put forth concrete numbers to show how freedom impacted the Industrial revolution. Otherwise you are just preaching "FREEDOM FREEDOM FREEDOM" Gospel.

I don't really know what you are asking for, like physics-style experiments where there is one work bench with a country with all prior factors the same, but with freedom of religion, another with all prior factors the same, but with patent laws, or something like that? The world doesn't work that way.

No, the opposite, I'm saying that your (false) impression that the USA was not economically developed before the 1880s is likely a trick caused by looking at total rather than per capita GDPs. Per capita the US was highly developed in the early 19th century.

http://www.ggdc.net/maddison/Maddison.htm - scroll down to 'Historical Statistics'

This overlays modern borders; nonetheless, the US in 1820 is richer than all the large European countries except the UK. It is poorer than the Netherlands, Belgium and Denmark. The US is 10% richer than France, 17% richer than Germany and 33% richer than Russia in 1870 (no data given for Russia in 1820). This is despite a large population of both slaves and frontier settlers.

Wealth does not equal industrialization, you dolt. If that were true, 16th century spain would have been the most industrialized country possible.

Maddison has GDP per capita data for 16th century Spain! He estimates it as $661 for 1500, and $853 for 1600. So 16th century Spain was 2-3x poorer than 1820 UK, a far cry from "most industrialised country possible" (current UK is more than 10x richer than 1820 UK)!

Of course GDP per capita figures can be fooled sometimes; in this case we might want to average over Spanish America rather than just Iberia. But it isn't showing anything like what you are claiming anyway.

Although I only said that they were not more free, the US in fact had less free markets than UK for most of the 19th century, due to the institution of slavery.

And the British Empire had much more colonial subjects than there were in the USA, none of whom the free market applied to. There also weren't exactly free markets for places like Ireland, which suffered famines and where the majority of the population was not even allowed to own land.

So please provide figures for your claim.

The Maddison data are for the territory of modern UK, ie. the British Isles excluding the Republic of Ireland. The population of Northern Ireland was negligible, and there was no slavery in the British Isles in 1820 or any time since.

The USA also fought a ground war on its own soil, which the UK did not. This is not a permanent institutional difference but it did result in a substantial period even after the abolition of slavery when parts of the US was under military occupation and rule.

You will now cite figures to show how much harm this did.

I've provided a lot of figures, and you've put up only vague qualitative objections. Why don't you provide a citation that the US had freer markets than the UK in 1820? Or, for instance, do you have GDP per capita estimates for just the North Eastern states?

Wherever free markets are present, countries develop. Wherever they're not, they don't.

Rome had no free market and little freedom. It was the most developed country in its day and beat out more free states like Athens, Carthage (the greatest trading city of its time) etc. Spain had no free market and was an absolutionist state. It too was the most powerful country of its time and regularly imposed its will on freeer market societies or republics. France under Louis XIV was undoubtedly the hegomon of its time and had no free market and was the posterchild of absolutism to boot. The teutonic order was an actual theocracy yet ruled over republics and free trade cities like Gdansk.

Your claim is simplistic. More over, it does not answer the question raised by me - show the direct impact of freedom and free market on the industrialization of the UK. Figures, now. Put up or shut up.

You seem to have slid without explanation from discussing which is the most economically developed to which is the most militarily powerful country. Hong Kong was undeniably more economically developed than the USSR in 1989 but that does not mean it would beat the USSR in a war!

For the latter, as I said earlier, the best we can do is to see how differing institutions between and within countries affect their per capita GDP (or some other measure, but that's the standard one) over time. No controlled experiment is possible. The figures I've provided are what you are asking for.

[Luke Skywalker]

Related question (not to distract from Iron Bridge's discussion): what, if any, impact did the scientific revolution and the enlightenment have on the industrial revolution, or are they just relatively unrelated events?

[K. A. Pital]

Maddison has GDP per capita data for 16th century Spain! He estimates it as $661 for 1500, and $853 for 1600. So 16th century Spain was 2-3x poorer than 1820 UK, a far cry from "most industrialised country possible"

You still refuse to understand what GDP actually means, especially for the XVI and XVII centuries. You cannot gauge the level of industrialization by GDP alone, and this is especially true for early GDP. Argentina's meat industry in the late XIX century allowed it to have a very high GDP which almost equalled that of the First World. However, Argentina was not an industrialized nation and this later paved the way for its demise.

[Iron Bridge]

Maddison has GDP per capita data for 16th century Spain! He estimates it as $661 for 1500, and $853 for 1600. So 16th century Spain was 2-3x poorer than 1820 UK, a far cry from "most industrialised country possible"

You still refuse to understand what GDP actually means, especially for the XVI and XVII centuries. You cannot gauge the level of industrialization by GDP alone, and this is especially true for early GDP. Argentina's meat industry in the late XIX century allowed it to have a very high GDP which almost equalled that of the First World. However, Argentina was not an industrialized nation and this later paved the way for its demise.

Argentina's 'demise' coincides with its election of populist demagogues. Having an economy based on very efficient (dare I say... industrial?) agriculture was not unusual among the better European settler communities like Canada, Australia and New Zealand, the latter three of which did not dramatically change their economic systems in the second half of the twentieth century and as a result are still very highly developed today.

[K. A. Pital]

Argentina's 'demise' coincides with its election of populist demagogues. Having an economy based on very efficient (dare I say... industrial?) agriculture was not unusual among the better European settler communities like Canada, Australia and New Zealand, the latter three of which did not dramatically change their economic systems in the second half of the twentieth century and as a result are still very highly developed today.

Industrial agriculture is a consequence of industrial products being implemented as agicultural tools. Canada, Australia and New Zealand all shifted dramatically from agriculture to complex modern industry at one point or the other. For NZ that was the post-WWII period, not so sure about the others, but it is clear that now all Western offshoots possess a diversified industrial economy where agriculture is providing often less than 2% of GDP - a clear contrast with Argentina. NZ, by and large, is often considered to be the most insulated and anti-laissez-faire economy among the Western offshoots before the late 1980s - and at the same time the shift from vulnerable, agriculture-centered export pattern happened during the post-war "insulation". This sort of gives the lie to the thesis that laissez-faire is responsible for industrialization. Though in a peculiar way it is; agricultural exports failed due to Britain's ability to get cheaper food from Europe after WWII, and NZ had no choice but to industrialize or follow Argentina's footsteps.

Argentina's demise does not "coincide" with any precise event in particular - it was a slow century-spanning process (with the latest act played in 2001).

But I would first ask you to pay attention to the reply here.

[Iron Bridge]

Missed this - thanks!

Looking at presence of coal is missing the point. First because a lot of the early developments in living conditions did not involve what is today regarded as industry - improved agricultural tools for instance - and that second as an input commodity coal would simply be imported from where it could be found. The British Isles did not grow cotton, but they still had the world's largest textiles industry.

Presence of coal does not matter if it can be secured by sea supply; the process of using coal instead of charcoal is what matters a lot more. Skipped the gibberish about stupid historians not understanding history, since that argumentation is so weak it doesn't even warrant discussion. Development of advanced market institutions and a legal base which supposed them did not allow the Roman Empire or its parts to proceed onward to the industrial revolution. Sorry, but technology is just as important as institutional reforms. They go hand in hand; if they do not, then there's a contradiction between the institution and the tech level which can be resolved in many different ways. The industrial revolution is just one of those possibilities.

Technology is a result of institutions. And time, of course, but this is why the quantitative comparisons are more useful than qualitative ones. The use of coal was not a magic wand that suddenly made every process much more cost efficient, because early steam engines were very inefficient and just barely cost competitive with wage labour. It is possible to directly compare the development of the first steam engines with the improvement of agricultural tools as markers of economic development.

It's misleading to view it like that. 1890 India had railways, steam, coal, etc. and yet it was not industrialised.

You're either misinformed or ignorant - all iron for machinery and railways was shipped to India from Britain. Its proto-industry (charcoal based metallurgy) was destroyed by British metal imports. Attempts to set up modern industrial metallurgy in India have utterly failed - in no small part due to the colonial policies - and the first modern domestic metallurgy plant in India was built in the early 1900s by Americans. Coal was not used widely in Indian metallurgy since India had no modern metallurgy to speak of. Britain discovered and introduced the new process in the late XVIII century, but did not care to develop a domestic metallurgy in India. Or the United States, for that matter, where Britain also sought to legally suppress metallurgic developments as those could be used for arms production. Which would later be important in case of rebellion.

What does it matter where they are from? India had industry - railways built by Britain, coal ships and refueling stations, even factories - it was not industrialised because these employed only a small fraction of the workforce and much of it was loss making and subsidised for military purposes.

Just from that sentence alone it is quite clear you barely understand the subject you are touching.

Chinese GDP per capita was $488 (5.4% of US). In 1978, the year economic policy switched to "Socialism with Chinese characteristics" (more accurately, Socialism with Anglo-American Characteristics), Chinese GDP per capita was $978 (5.3% of US).

Are you really that fucking stupid to gauge the level of industrialization by GDP per capita? Amazing. I thought that when you get an economics education, you learn the nature of different indicators, such as GDP, and especially take some classes so that the understanding of early GDP indicators may be achieved. That's what I was told.

GDP per capita is a measure of the general level of development of a country. Industry is only important in so far as it increases the level of a country's economic development.

Industrial agriculture is a consequence of industrial products being implemented as agicultural tools. Canada, Australia and New Zealand all shifted dramatically from agriculture to complex modern industry at one point or the other. For NZ that was the post-WWII period, not so sure about the others, but it is clear that now all Western offshoots possess a diversified industrial economy where agriculture is providing often less than 2% of GDP - a clear contrast with Argentina.

Right, because it abandoned previous British-influenced free market institutions and replaced them with what culminated in a native form of nationalist socialism, Peronism.

[ray245]

It is as if engineers couldn't agree on what the laws of physics were reliably, and proposed massively mutually-exclusive bridge designs.

I don't mean to say all historians are Marxists, but it and other similar theories hold a lot of sway, while in economics they're just curiosities of what people got wrong 100+ years ago. There aren't nearly as many fundamental disagreements among economists as you might think from the internet.[/quote]

Doesn't that depend more on which country those historians were from? Even then, the academia in countries such as China for instance are still more insulated from this kind of thinking as compared to the general pubic and politicians.

The people who actually wrote history with a marxist lens were mostly not from the academia anyway.

[K. A. Pital]

Technology is a result of institutions.

Technology is a result of (1) precise inventions (2) their introduction - or non-introduction - in the overall production process.

The use of coal was not a magic wand that suddenly made every process much more cost efficient, because early steam engines were very inefficient and just barely cost competitive with wage labour. It is possible to directly compare the development of the first steam engines with the improvement of agricultural tools as markers of economic development.

The use of coal was not important; what was important - was the ability to use coal in a precise way for mass-production of cheap steel & pig iron, primarily, along with other types of metallurgy products. Vast quantities of cheap pig iron and steel allowed to build industrial machinery without it becoming too expensive; the use of coal in metallurgy precluded natural barriers becoming a strict limitation on growth (as it would have happened with charcoal). Not to mention that cheap pig iron and steel allowed to build weapons of war which were so potent that made it possible to carve the whole world into pieces ruled by industrialized, no matter how tiny, imperial metropoles.

What does it matter where they are from? India had industry - railways built by Britain, coal ships and refueling stations, even factories - it was not industrialised because these employed only a small fraction of the workforce and much of it was loss making and subsidised for military purposes.

It matters, since if you have no metallurgy plants, you cannot have workers being employed en masse in metallurgy. Industrial employment occured in the metropole. "Industry" is not "railways" and not "coal ships" - industry is the production of industrial goods. As one can gather, India did not produce industrial goods itself. Britain did that. This automatically excludes the possibility of India being "industrialized" by virtue of Britain building a railway there. Infrastructure is not industry itself.

GDP per capita is a measure of the general level of development of a country. Industry is only important in so far as it increases the level of a country's economic development.

GDP is not exactly a measure of the general level of development of a country - that's a tautology which does not explain what the indicators actually means. It is a measure, a sum of production-related final market transactions in the economy. Only market transactions can be adequately incorporated into the GDP. A non-market system such as subsistence agriculture has a GDP of zero; the ass-backwards methods of estimating the value of a non-market production process through a market would be the only way to somehow estimate early "GDP" - in primarily agrarian societies without universal commodity & capital markets the GDP figure is rather meaningless. Like I said, I thought this is pretty much common knowledge for any person with a shred of education in economics.

Right, because it abandoned previous British-influenced free market institutions and replaced them with what culminated in a native form of nationalist socialism, Peronism.

This does nothing to explain why New Zealand's equivalent of Peronism in the 60s allowed NZ to industrialize while real Peronism in Argentina did not reverse the already-existing downward trend. This does nothing to explain why there was a downward trend throughout the entire XX century, which started well before Peronism. Peron came to power in 1946 - by that time Argentina's GDP per capita was well below its heyday 70-80% of US one, for example, and more like 50% or lower. So?

[Zinegata]

Skimming the thread, one huge factor that hasn't been mentioned so far is resource extraction from overseas colonies. I've been on-again, off-again reading The Great Divergence by Kenneth Pomeranz.* The thesis (as I recall) is that one main factor in European - particularly British - industrialization is low-cost resource imports from new world colonies. Basically, as I've been able to figure it, prior to the industrial revolution, increases in the production possibilities frontier occurred so slowly that population had time to catch up. The influx of cheap resources from the new world caused a boom that pushed the economy's PPF out so quickly, population couldn't catch up in time, and that spurred investment and all of the capital development that characterized the industrial revolution.

This is of course not to deny the importance of other factors and necessary conditions: relatively free markets, banking, international trade, higher return to capital, cheaply available fossil fuels, the English Channel, and so on. But given the similarity in many of these factors between comparable regions in China, India, and Europe, I guess the biggest difference was that the Europeans - especially the British - had colonies from which they could extract resources.

*Published by an academic press and assigned in one of my wife's graduate classes, so I'm pretty sure it's not a crank book.

I'm also not very convinced by the "low cost imports from colonies" theory. If that were the case Spain should have industrialized with all the gold and silver it was getting from the Americas.

Also, America was again pretty close to Britain's industrial level for a good chunk of the "Industrial Revolution" period (or at least some states were) and these were more important to British trade than most of the simple "resource extraction" colonies.

[Iron Bridge]

Technology is a result of institutions.

Technology is a result of (1) precise inventions (2) their introduction - or non-introduction - in the overall production process.

And these things don't emerge from the aether. Inventions only occur if people are broadly free to do, think and write what they want. Introduction only occurs if there is some impartial mechanism for funneling capital to the most productive enterprises, of which the free market is by far the best.

The use of coal was not a magic wand that suddenly made every process much more cost efficient, because early steam engines were very inefficient and just barely cost competitive with wage labour. It is possible to directly compare the development of the first steam engines with the improvement of agricultural tools as markers of economic development.

The use of coal was not important; what was important - was the ability to use coal in a precise way for mass-production of cheap steel & pig iron, primarily, along with other types of metallurgy products. Vast quantities of cheap pig iron and steel allowed to build industrial machinery without it becoming too expensive; the use of coal in metallurgy precluded natural barriers becoming a strict limitation on growth (as it would have happened with charcoal). Not to mention that cheap pig iron and steel allowed to build weapons of war which were so potent that made it possible to carve the whole world into pieces ruled by industrialized, no matter how tiny, imperial metropoles.

You are presenting a qualitative difference what is actually just a quantitative difference. If you had to pay for more coal transport, outputs become more costly. That is perfectly true. And all it does is pushes back by a few years or at most decades the point at which value exceeds costs.

What does it matter where they are from? India had industry - railways built by Britain, coal ships and refueling stations, even factories - it was not industrialised because these employed only a small fraction of the workforce and much of it was loss making and subsidised for military purposes.

It matters, since if you have no metallurgy plants, you cannot have workers being employed en masse in metallurgy. Industrial employment occured in the metropole. "Industry" is not "railways" and not "coal ships" - industry is the production of industrial goods. As one can gather, India did not produce industrial goods itself. Britain did that. This automatically excludes the possibility of India being "industrialized" by virtue of Britain building a railway there. Infrastructure is not industry itself.

I was not arguing that India was industrialised in the quote, nor in the latest passage you're replying to. India had trappings of industry - as did China - but they were not widespread enough to be important. That is the key distinction, not where the equipment is made. If India had been exporting grain and cloth and importing railways and spinning jennies, that would for sure be industrialisation.

GDP per capita is a measure of the general level of development of a country. Industry is only important in so far as it increases the level of a country's economic development.

GDP is not exactly a measure of the general level of development of a country - that's a tautology which does not explain what the indicators actually means. It is a measure, a sum of production-related final market transactions in the economy. Only market transactions can be adequately incorporated into the GDP. A non-market system such as subsistence agriculture has a GDP of zero; the ass-backwards methods of estimating the value of a non-market production process through a market would be the only way to somehow estimate early "GDP" - in primarily agrarian societies without universal commodity & capital markets the GDP figure is rather meaningless. Like I said, I thought this is pretty much common knowledge for any person with a shred of education in economics.

It is possible to compare the value of agricultural products to industrial products in monetary terms, even if they are not all traded for money rather than being consumed locally. 1500s Europe was not a barter society, nor indeed was the Roman Empire. Angus Maddison and his GDP estimates are well known and regarded in the economics community.

Right, because it abandoned previous British-influenced free market institutions and replaced them with what culminated in a native form of nationalist socialism, Peronism.

This does nothing to explain why New Zealand's equivalent of Peronism in the 60s allowed NZ to industrialize while real Peronism in Argentina did not reverse the already-existing downward trend. This does nothing to explain why there was a downward trend throughout the entire XX century, which started well before Peronism. Peron came to power in 1946 - by that time Argentina's GDP per capita was well below its heyday 70-80% of US one, for example, and more like 50% or lower. So?

1. NZ did not become Personist.

2. Although it did shift further left than Canada and Australia, it was also much poorer than them at that time.

3. Peron was the culmination, not the beginning, of Argentina's shift away from anglospheric institutions.

[K. A. Pital]

And these things don't emerge from the aether. Inventions only occur if people are broadly free to do, think and write what they want. Introduction only occurs if there is some impartial mechanism for funneling capital to the most productive enterprises, of which the free market is by far the best.

Inventions occur when people are free to pursue science; they occur at even greater rate when there is communication between people - there must be a sizeable minority of people who can both read and write. If that's not present, no amount of marketeering will help inventions to be made or introduced. Productivity is a wrong gauge; it always relies on the current technological process and not the future one. Ford was a profitable and productive enterprise; however, it created a ghost-town in the middle of LA to gather natural rubber. Synthetic rubber made the whole venture, troubled from the very start, absolutely useless.

You are presenting a qualitative difference what is actually just a quantitative difference. If you had to pay for more coal transport, outputs become more costly. That is perfectly true. And all it does is pushes back by a few years or at most decades the point at which value exceeds costs.

It is a qualitative difference - industrialization with charcoal proto-industrial metallurgy is impossible. Not because transports become more expensive; because you run out of forests. Period. The cap is absolute.

I was not arguing that India was industrialised in the quote, nor in the latest passage you're replying to. India had trappings of industry - as did China - but they were not widespread enough to be important. That is the key distinction, not where the equipment is made. If India had been exporting grain and cloth and importing railways and spinning jennies, that would for sure be industrialisation.

You said, and I quote, "india had industry". Now you backpedal to "trappings of industry". Not so fast. Neither China nor India had industry. All they had was proto-industry which was - surpirse - qualitatively different from industrial production processes employed by Britain. Proto-industry is not industry. It is a manufacture which is not sustainable on a large scale.

Just so you know, India barely had over a hundred cotton mills by the end of the XIX century. India was not "importing railways" - British colonial government was for their own purposes. Industrialization is the production, not the consumption of industrial products. The Third World imported industrial products from Britain and other First World and Second World nations which industrialized. However, this did not constitute industrialization, which is the establishment of industrial enterprise (sic!) in the nation proper.

It is possible to compare the value of agricultural products to industrial products in monetary terms, even if they are not all traded for money rather than being consumed locally. 1500s Europe was not a barter society, nor indeed was the Roman Empire. Angus Maddison and his GDP estimates are well known and regarded in the economics community.

Who cares if it was not a barter society? Agricultural societies with community- and individual subsistence farming have no market for a final transaction count to be made. If the majority of products are not traded, the GDP estimate is nigh useless. The current World Bank special instruments for gauging agricultural performance of African nations only prove my point.

1. NZ did not become Personist.
2. Although it did shift further left than Canada and Australia, it was also much poorer than them at that time.
3. Peron was the culmination, not the beginning, of Argentina's shift away from anglospheric institutions.

New Zealand was not "much poorer" than Australia or Canada in 1950-1960s - for the most part it was just as rich, if we count GDP per capita (reasonable for industrial market economies). If you don't know such simple things, I really start wondering if this debate is worth it.

GDP/capita, PPP:
Country 1950 1960 1970
Australia 7237 8791 12024
New Zealand 7521 9465 11189
Canada 7 064 8753 12050

Cut down the bullshit if you want to continue the discussion. Numbers are there and your attempt to lie has not been funny at all.

[ray245]

The use of coal was not important; what was important - was the ability to use coal in a precise way for mass-production of cheap steel & pig iron, primarily, along with other types of metallurgy products. Vast quantities of cheap pig iron and steel allowed to build industrial machinery without it becoming too expensive; the use of coal in metallurgy precluded natural barriers becoming a strict limitation on growth (as it would have happened with charcoal). Not to mention that cheap pig iron and steel allowed to build weapons of war which were so potent that made it possible to carve the whole world into pieces ruled by industrialized, no matter how tiny, imperial metropolis.

I wonder if the need to produce better guns and canons were one of the main influence in building more machinery. The desire to mass produce matchlocks and flintlocks would most probably necessitate the need for more wrought iron and machines to facilitate the production process.

[Iron Bridge]

And these things don't emerge from the aether. Inventions only occur if people are broadly free to do, think and write what they want. Introduction only occurs if there is some impartial mechanism for funneling capital to the most productive enterprises, of which the free market is by far the best.

Inventions occur when people are free to pursue science; they occur at even greater rate when there is communication between people - there must be a sizeable minority of people who can both read and write. If that's not present, no amount of marketeering will help inventions to be made or introduced. Productivity is a wrong gauge; it always relies on the current technological process and not the future one. Ford was a profitable and productive enterprise; however, it created a ghost-town in the middle of LA to gather natural rubber. Synthetic rubber made the whole venture, troubled from the very start, absolutely useless.

I haven't said lots of "marketeering" is a criterion for growth. Literacy is important but it too rises naturally in proportion with GDP per capita.

Second bit about Ford and rubber - I don't understand what point you are trying to make.

You are presenting a qualitative difference what is actually just a quantitative difference. If you had to pay for more coal transport, outputs become more costly. That is perfectly true. And all it does is pushes back by a few years or at most decades the point at which value exceeds costs.

It is a qualitative difference - industrialization with charcoal proto-industrial metallurgy is impossible. Not because transports become more expensive; because you run out of forests. Period. The cap is absolute.

I haven't mentioned charcoal anywhere.

I was not arguing that India was industrialised in the quote, nor in the latest passage you're replying to. India had trappings of industry - as did China - but they were not widespread enough to be important. That is the key distinction, not where the equipment is made. If India had been exporting grain and cloth and importing railways and spinning jennies, that would for sure be industrialisation.

You said, and I quote, "india had industry". Now you backpedal to "trappings of industry". Not so fast. Neither China nor India had industry. All they had was proto-industry which was - surpirse - qualitatively different from industrial production processes employed by Britain. Proto-industry is not industry. It is a manufacture which is not sustainable on a large scale.

Re-read the thread. Someone was arguing KMT China was industrialised because it had some railways and isolated factories. I said that India was an example of a country with railways and isolated factories that everyone agrees wasn't industrialised. I think you have misread the original post. Otherwise I do not know how you think I have backpeddled.

It is possible to compare the value of agricultural products to industrial products in monetary terms, even if they are not all traded for money rather than being consumed locally. 1500s Europe was not a barter society, nor indeed was the Roman Empire. Angus Maddison and his GDP estimates are well known and regarded in the economics community.

Who cares if it was not a barter society? Agricultural societies with community- and individual subsistence farming have no market for a final transaction count to be made. If the majority of products are not traded, the GDP estimate is nigh useless. The current World Bank special instruments for gauging agricultural performance of African nations only prove my point.

Only some products need to be traded to establish a price for food. Do you think GDP measures even of fully post-industrial countries track every single sale or something? They take representative prices and then an estimate of the scale of production.

1. NZ did not become Personist.
2. Although it did shift further left than Canada and Australia, it was also much poorer than them at that time.
3. Peron was the culmination, not the beginning, of Argentina's shift away from anglospheric institutions.

New Zealand was not "much poorer" than Australia or Canada in 1950-1960s - for the most part it was just as rich, if we count GDP per capita (reasonable for industrial market economies). If you don't know such simple things, I really start wondering if this debate is worth it.

GDP/capita, PPP:
Country 1950 1960 1970
Australia 7237 8791 12024
New Zealand 7521 9465 11189
Canada 7 064 8753 12050

Cut down the bullshit if you want to continue the discussion. Numbers are there and your attempt to lie has not been funny at all.

1. New Zealand begins as the richest country and ends as the poorest. This data fits my claim, not yours.

2. You have picked 1970 as end date. Why not 1984, the year NZ policy turned more toward markets?

Aus 15,062
NZ 13,666
Can 16,836

The gap has become even larger. Nowhere as dramatic as Argentina, but then your claim that NZ was "Peronist" in 50s and 60s is absurd.

[K. A. Pital]

I haven't said lots of "marketeering" is a criterion for growth. Literacy is important but it too rises naturally in proportion with GDP per capita. Second bit about Ford and rubber - I don't understand what point you are trying to make.

Literacy does not rise "naturally", it rises due to education and can, in fact, rise when the GDP is decreasing in an absolute or relative sense. Same with life expectancy, which can rise with the introduction of basic sanitary policy even if GDP declines. The point about Ford was that capital was funneled to a productive and profitable enterprise (such as Ford). Yet, it, when accumulated, allowed Ford to waste invested money on a costly and useless venture which had nothing to do with innovation. What matters is the potential future profitability edge of an enterprise with new technology. This is what drives introduction of inventions forward, not "productivity".

I haven't mentioned charcoal anywhere.

I haven't said that the availability of domestic coal was important.

Re-read the thread. Someone was arguing KMT China was industrialised because it had some railways and isolated factories. I said that India was an example of a country with railways and isolated factories that everyone agrees wasn't industrialised. I think you have misread the original post. Otherwise I do not know how you think I have backpeddled.

You said "India had industry". Either you don't understand what "industry" means or you're really bad at relaying your point in English.

Only some products need to be traded to establish a price for food. Do you think GDP measures even of fully post-industrial countries track every single sale or something? They take representative prices and then an estimate of the scale of production.

No, the important part is that the majority of goods are traded, while the non-traded goods are a minority. This makes the estimate, even if flawed due to the exclusion of non-market activities, viable - non-market production is a minor share of the total production in society. The less goods are traded - and traded in a free market, may I add - the less useful the estimate becomes. If 90% are not traded, the market is not representative, monetary conversions become nigh meaningless and in general the estimate would be bullshit. That's ignoring the obvious deficiencies of GDP - it does not care which goods are traded, so a nation of do-nothings selling oil pumped out by foreign-built machinery will have the same GDP per capita as a nation with diverse modern industry that makes several scientific-industrial breakthroughs.

Services are traded just like goods. So post-industrialism is irrelevant. If there is a services market which encompasses the majority of final services, the GDP estimate would be correct.

1. New Zealand begins as the richest country and ends as the poorest. This data fits my claim, not yours.

2. You have picked 1970 as end date. Why not 1984, the year NZ policy turned more toward markets?

Aus 15,062
NZ 13,666
Can 16,836

The gap has become even larger. Nowhere as dramatic as Argentina, but then your claim that NZ was "Peronist" in 50s and 60s is absurd.

Wow, that's the very definition of fail. A laughable "gap" of 3000 dollars with Canada - the US' "northern states". You said "NZ was much poorer than them at the time". In fact, it was not "much poorer" during the whole 1950-1985 period, and its economy diversified during the period. Furthermore, my claim was not that NZ was Peronist, but that its insulationism was a domestic equivalent of Argentina's policies - an anti-laissez-faire policy with regards to foreign trade with a society where income differentiation was rather low. As you seem to continue bullshitting when being caught in the act, this discussion ends.

[Iron Bridge]

I haven't said lots of "marketeering" is a criterion for growth. Literacy is important but it too rises naturally in proportion with GDP per capita. Second bit about Ford and rubber - I don't understand what point you are trying to make.

Literacy does not rise "naturally", it rises due to education and can, in fact, rise when the GDP is decreasing in an absolute or relative sense. Same with life expectancy, which can rise with the introduction of basic sanitary policy even if GDP declines.

The return to education vs opportunity cost becomes more favouable with rising GDP per capita. Life expectancy also tracks GDP per capita as food and water supply become stable, and understanding of and counter-measures to disease spread improve.

The point about Ford was that capital was funneled to a productive and profitable enterprise (such as Ford). Yet, it, when accumulated, allowed Ford to waste invested money on a costly and useless venture which had nothing to do with innovation. What matters is the potential future profitability edge of an enterprise with new technology. This is what drives introduction of inventions forward, not "productivity".

The point of markets isn't that every single decision made in them is good, but that money is naturally diverted toward people and organisations that consistently make better decisions and away from those which make worse ones. It's like evolution: the point isn't that every random mutation is beneficial, most even are harmful, but only the useful ones survive the generations.

I haven't mentioned charcoal anywhere.

I haven't said that the availability of domestic coal was important.

I don't know what you are saying, then.

Re-read the thread. Someone was arguing KMT China was industrialised because it had some railways and isolated factories. I said that India was an example of a country with railways and isolated factories that everyone agrees wasn't industrialised. I think you have misread the original post. Otherwise I do not know how you think I have backpeddled.

You said "India had industry". Either you don't understand what "industry" means or you're really bad at relaying your point in English.

Interpreted as having more than zero industrial enterprises, it did.

But since even if I am wrong about this we still agree with the basic point, what are you trying to say here?

Only some products need to be traded to establish a price for food. Do you think GDP measures even of fully post-industrial countries track every single sale or something? They take representative prices and then an estimate of the scale of production.

No, the important part is that the majority of goods are traded, while the non-traded goods are a minority. This makes the estimate, even if flawed due to the exclusion of non-market activities, viable - non-market production is a minor share of the total production in society. The less goods are traded - and traded in a free market, may I add - the less useful the estimate becomes. If 90% are not traded, the market is not representative, monetary conversions become nigh meaningless and in general the estimate would be bullshit. That's ignoring the obvious deficiencies of GDP - it does not care which goods are traded, so a nation of do-nothings selling oil pumped out by foreign-built machinery will have the same GDP per capita as a nation with diverse modern industry that makes several scientific-industrial breakthroughs.

Services are traded just like goods. So post-industrialism is irrelevant. If there is a services market which encompasses the majority of final services, the GDP estimate would be correct.

Nothing magical happens when a "majority" of goods are traded. The vast majority of houses aren't traded in a given year, for instance, but that doesn't mean I can't estimate the total value of a country's housing stock.

I don't think you are in a position you think you are to accuse me of ignorance of economics. Out of interest, what is your background in economics?

1. New Zealand begins as the richest country and ends as the poorest. This data fits my claim, not yours.

2. You have picked 1970 as end date. Why not 1984, the year NZ policy turned more toward markets?

Aus 15,062
NZ 13,666
Can 16,836

The gap has become even larger. Nowhere as dramatic as Argentina, but then your claim that NZ was "Peronist" in 50s and 60s is absurd.

Wow, that's the very definition of fail. A laughable "gap" of 3000 dollars with Canada - the US' "northern states". You said "NZ was much poorer than them at the time". In fact, it was not "much poorer" during the whole 1950-1985 period, and its economy diversified during the period. Furthermore, my claim was not that NZ was Peronist, but that its insulationism was a domestic equivalent of Argentina's policies - an anti-laissez-faire policy with regards to foreign trade with a society where income differentiation was rather low. As you seem to continue bullshitting when being caught in the act, this discussion ends.

You are right it is wrong to say NZ is "much" poorer than Canada in the sense of not being a developed country or something. It nonetheless was one of the poorer developed countries, with 'laughable' 25% GDPPC gap - same as the gap between UK and Slovenia today.

Argentina did not just take an anti-market approach to external trade but also internal trade. Argentina in 1970 does not have institutions resembling those of New Zealand in 1970; it is a tendentious comparison that you have used to distract from being wrong about the key point of Argentina's economic trajectory, and one I should never have indulged.

[K. A. Pital]

What part of "this discussion ends" did you not understand, Iron Bridge? Economics was my uni specialization. Waste somebody else's useful time, please.

[Iron Bridge]

You can of course withdraw from a debate whenever you wish; you can't make other people give you the last word.

What do you by "specialisation"? You got a degree in it? I am interested then that you don't agree that free market institutions aren't the key driver of industrial development.

[K. A. Pital]

You can of course withdraw from a debate whenever you wish; you can't make other people give you the last word.

What do you by "specialisation"? You got a degree in it? I am interested then that you don't agree that free market institutions aren't the key driver of industrial development.

Yes, a degree, and no, I do not expect to have "the last word", I was just baffled by you still asking me questions. They won't be answered.

I have already said that market institutions by and large predate industrial capitalism - even as far as to the Roman Empire - and thus cannot, alone, explain industrialization. I obviously consider capitalism a driver of industrial development, but capitalism is not just "free market", not to mention the fact that after primary industrialization has commenced, even non-capitalist nations have been able to execute industrialization. From the very primary step, which is the creation of domestic industrial production.

In short, I find your thesis simplistic and unsubstantiated. Your theory should be able to make meaningful predictions and also be falsifiable. It fails to do so - protectionist or alter-globalisation policies may coincide with industrial development and even a major shift from agrarian to industrial production (NZ in 1950-1960, the post-war USSR, et cetera). On the other hand, the laissez-faire experiment in Latin America of the 1980s and 1990s by and large has been a failure. Which again - if we were talking about falsifiable theories, would mean that your theory is falsified, since laissez-faire did not cause an industrial upsurge. You say that Marxism has been falsified - this is because Marxism as originally conceived made meaningful predictions and the theory was falsifiable, the evolution of XX century capitalism in advanced nations and the rise of fascism made most of the Marxist predictions false.

If you believe that your theory is apriori correct without any possibility of falsification, it cannot and will not be treated as scientific.