The Industrial Revolution

Based on Joel Mokyr, “Editor’s Introduction: The New Economic History and the Industrial Revolution,” in The British Industrial Revolution: An Economic Perspective (Westview Press, 1993);
David Landes, The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present (Cambridge University Press, 1969).

Britain experienced a period of rapid technological innovation during the late eighteenth and early nineteenth centuries. The way in which work was done changed radically, and British goods rose to dominance in markets around the world. These events are known as the Industrial Revolution. Although the Industrial Revolution is generally dated from 1760 to 1830, these dates are somewhat arbitrary. The start date excludes some fundamental inventions, such as Newcomen’s steam engine and Kay’s flying shuttle. As for the end date, it might be argued that the Industrial Revolution has never ended, for from that time onward, prosperity has been built upon technological progress.

The New Technologies

The inventions of the Industrial Revolution are the clearest evidence of a changing economy. Some of these inventions allowed inanimate power sources to replace human and animal muscle. The steam engine is often viewed as the most significant invention of the Industrial Revolution — it was the first machine to convert thermal energy into work — but there were also innovations in a very old technology, the waterwheel. The use of both of these power sources grew rapidly during the Industrial Revolution, and it was not until 1830 that steam overtook water as the primary source of stationary power.1 Other inventions replaced hand tools with powered machinery, and still others allowed iron to replace wood as a construction material, and coal to replace wood as a fuel. Part of the fascination of the Industrial Revolution is the breadth of innovation, and the way in which one invention facilitated another. The expanding coal industry used steam engines to pump water out of the mines; the steam engines could only be built if there were accurate machines to bore their cylinders; the machines could only be accurate if they used iron parts in place of wooden ones; iron was plentiful because coke (a coal product) had replaced charcoal (a wood product) as a fuel.

The industry most affected by the Industrial Revolution was cotton textiles. The cotton industry had struggled for survival before the Industrial Revolution, but by the 1830s, it was the most important manufacturing industry in the country. Its explosive growth was almost entirely due to the invention and adoption of machinery, and to the use of those machines in highly regimented factories. Here is Landes’ description of these changes:

In 1760 Britain imported some 2.5 million pounds of raw cotton to feed an industry dispersed for the most part through the countryside of Lancashire and existing in conjunction with the linen manufacture, which supplied it with the tough warp yarn it had not yet learned to produce. All of its work was done by hand, usually (excluding dyeing and finishing) in the homes of the workers, occasionally in the small shops of the master weavers. A generation later, in I787, the consumption of raw cotton was up to 22 million pounds; the cotton manufacture was second only to wool in numbers employed and value of product; most of the fibre consumed was being cleaned, carded, and spun on machines, some driven by water in large mills, some by hand in smaller shops or even in cottages. A half-century later, consumption had increased to 366 million pounds; the cotton manufacture was the most important in the kingdom in value of product, capital invested, and numbers employed; almost all of its employees, except for the still large number of hand-loom weavers, worked in mills under factory discipline. The price of yarn had fallen to perhaps one-twentieth of what it had been, and the cheapest Hindu labour could not compete in either quality or quantity with Lancashire’s mules and throstles. British cotton goods sold everywhere in the world: exports, a third larger than home consumption, were worth four times those of woollens and worsteds.2

Mechanization and the factory system went together. Cotton production before the Industrial Revolution had required only a small capital outlay: a spinning wheel for spinning the raw cotton into yarn, a hand loom for weaving the yarn into cloth, and very little else. Much of the production was done under a putting-out system. Workers would spin or weave in their own homes, often as an adjunct to agricultural work or domestic chores. A merchant would provide them with the raw materials, pay them for the work that they had done, and then sell the finished product. The putting-out system predominantly employed workers who lived in rural areas where there were few employment opportunities. The system benefited the workers because they were able to work when they would otherwise be forced to be idle, and it benefited the merchants because employing this “stranded labour” was cheaper than employing urban labour. The putting-out system fell out of favour as machines grew in importance. The machines were a major capital investment, so they had to be used intensively to be profitable. Also, as more stages of production were mechanized and the volume of production rose, the logistics of moving partially finished materials from one stage of production to another became more important. Both of these factors favoured a factory system in which production was efficiently organized and closely supervised labourers worked regular shifts. By the 1830s an integrated cotton mill operated 24 hours a day, using two twelve-hour shifts of workers. The workers were no longer country people: they lived in the towns that had grown up around the mills.

The innovations in the iron industry required less creativity than the innovations in energy or textiles, but they were critical to the Industrial Revolution. The first major innovation was the replacement of charcoal with coke in both the production of pig iron and its conversion to wrought iron.3 Charcoal is made by heating wood in the absence of oxygen, and coke is made by heating coal in the same fashion. Charcoal is the better fuel because it is less contaminated with sulfur and other minerals, but wood was sufficiently scarce in eighteenth century Britain that iron makers had to learn how to produce high quality iron using the less desirable fuel. The second major innovation was the scaling-up of production. Iron had traditionally been produced in small discrete lots, but during the Industrial Revolution, foundries became massive enterprises that operated continuously. The third major innovation was the use of rolling mills to shape the hot iron into plates and beams of any desired shape. Britain’s iron production grew enormously as a result of these innovations.4

Iron was the key building material of the Industrial Revolution. The steam engine was, of course, made of iron parts. Its development produced two transformative transportation technologies: the steam locomotive, built of iron and running on iron rails, and the steamship, which was iron hulled almost from its inception. Bridges were made of iron, and so were the frames of buildings. Iron replaced wood in factory machinery to increase its durability and reduce torsion. Pig iron could also be converted into steel, from which accurate screws, bolts and gears were made, as well as precision instruments like clocks and weapons.

The development of precise industrial tools was another aspect of the Industrial Revolution. An innovation in cannon-making proved to be surprisingly important. Cannon barrels were made by casting a solid cylinder of iron and then boring out the barrel. It was important that the bore be straight, and in 1774, John Wilkinson developed a boring machine of unprecedented accuracy. When James Watt began building steam engines in 1776, he needed accurately bored cylinders to minimize leakage around the edges of the piston. Only Wilkinson could meet Watt’s standards. Another major innovation in precision tooling was John Maudslay’s screw-making lathe, which produced uniform screws of exceptional accuracy. The lathe itself utilized a screw to guide the cutting. Since the screw produced by the lathe was more accurate than the screw installed in it, Maudsley was able to boot-strap his accuracy by producing a succession of screws, each more accurate than the last, for his own lathe.

The innovations in energy, cotton textiles, iron, and precision tools were central to the Industrial Revolution. The innovations that occurred in a number of other industries — including paper, glass, buttons, knives, industrial chemicals, and food preservation — were profitable but less glamorous. The reverse was also true: some very striking inventions had little economic value. Hot air ballooning, introduced by the Montgolfier brothers in 1783, was one of them. The punch card, developed in 1801 by Joseph Marie Jacquard to guide his silk loom, was another. John Babbage adopted the punch card to input programs and data into his proposed “analytical engine” (1837), and in modern computing, punch cards were used for the same purpose into the 1970s. Punch cards were a technological turning point — but they did not change the fortunes of the silk industry.

Growth During the Industrial Revolution

Many parts of the economy trundled along without significant change. At least half of the British economy, as measured by output, was still unaffected in the middle of the nineteenth century.5 This observation explains a finding that initially puzzled historians: per capita output did not grow much faster during the Industrial Revolution than it had before it. Here are the modern estimates of the growth in Britain’s per capita output and per capita industrial production:6

The new technologies raised the growth rate in the sectors that they affected; but these sectors were relatively small, so their impact on the aggregate (economy-wide) growth rate was also small.

Joel Mokyr uses a simple example to illustrate the inertia in the aggregate growth rate.7 Imagine that the economy consists of two sectors, a modern sector in which per capita output grows at 4% per year and a traditional sector in which per capita output grows at 1% per year. The aggregate growth rate is a weighted average of the sector growth rates, where the weights are the sectors’ shares in the aggregate economy. The difference in sector growth rates causes the sector shares to change through time: the modern sector’s share slowly rises and the traditional sector’s share slowly falls. These changes gradually drive up the aggregate growth rate. The process is illustrated by the table below, which assumes that the modern sector is initially one-tenth of the aggregate economy: “Years” is years from the initialization, “Share” is the share of the modern sector, and “Growth Rate” is the aggregate growth rate.

Despite the substantial difference in sector growth rates, it takes 80 years for the economy’s growth rate to double!

The evidence on per capita output growth does not diminish the importance of the Industrial Revolution. The modern era, in which technology drives the standard of living, began there.

Slow Diffusion to the Continent

The impact of the Industrial Revolution in Britain was geographically concentrated. Industries kept their transportation costs low by locating near deposits of key inputs such as coal, tin and iron, or near navigable rivers. The industries that processed sugar, cotton and tobacco established themselves near the seaports through which these commodities entered the country. The presence of industry encouraged the development of infrastructure, which drew still more industry to the same locations. These factors meant that industrial centers were often dense and isolated, and surrounded by rural hinterlands from which they drew workers and foodstuffs.

The Industrial Revolution spread to the Continent in a like manner, with one important difference: the industrial concentrations were much sparser. The technologies of the Industrial Revolution were profitable under Britain’s factor prices, notably cheap energy and expensive labour, and there were few places in Europe with similar factor prices. Those few places imported British technology without change, and the rest of Europe remained a hinterland:

The steam-engines, spinning-mules, blast furnaces, or railway-systems installed on the Continent were exactly like the British ones, though in the early phases they might be ten or twenty years out of date….This was so even though the technical solutions developed in Britain had been answers to specific British problems and were appropriate to British factor endowments which might not always be those of the Continent: cheap coal, plentiful but low-grade iron ore, easy access to colonial cotton, plentiful water, certain types of skilled labour, and so on. Where factor endowments were different, British technology might not be accepted at all: thus the slow adoption of coke-smelting in ironworks in many French regions was clearly due to the fact that in their actual locations, small-scale charcoal furnaces were actually cheaper than the large coke plants would have been. But no alternatives were developed: if local factor endowments were such that British technology could not be made to pay, the region remained agricultural or, if it had had some early industry, it de-industrialized. It was not until several generations later, towards the last quarter of the nineteenth century, that alternative technologies, not particularly suitable for British conditions, were to be developed.8

Regions with different but potentially equally rich endowments, did not develop rival technologies to make use of them. The rich timber lands of the north and east of Europe, the water power of many great rivers and mountains, let alone the oil of Romania, were not developed as alternatives to the British coal and iron technology. Instead these areas were frequently made subservient and colonized, confirming them in their backwardness…9

If imitation alone was not to be the path to industrialization, what was? How could the Continent compete with the commercial juggernaut across the channel? Continental governments began to design policies that would help to modernize their national economies. The remnants of feudalism, where they still existed, were abolished. Internal barriers to trade were eliminated in order to obtain greater economies of scale, and tariffs were imposed to protect the national markets from foreign competition. Basic education was extended, universities strengthened, and technical schools created. Procurement policies favoured and encouraged domestic industry. The countries in which these policies were most diligently applied would be leaders, not followers, during the next round of scientific and technological innovation, which has been called the Second Industrial Revolution (here).


  1. The development of water power ultimately led to the water turbine. The mathematician Leonhard Euler devised its theoretical foundations during the Industrial Revolution, and Benoit Fourneyron perfected it in 1837. The histories of steam and water power converged in 1884 when Charles Parsons developed the steam turbine. Steam and water turbines are today the dominant power sources for the generation of electricity.
  2. David Landes, The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present (Cambridge University Press, 1969), pp. 41-2.
  3. Pig iron is produced by the initial smelting of iron ore. It is converted into cast iron, wrought iron, or steel.
  4. David Landes, The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present (Cambridge University Press, 1969), p. 96.
  5. Joel Mokyr, The Lever of Riches (Oxford University Press, 1990), p. 83.
  6. This table is a condensed version of Table 1.1 in Joel Mokyr, “Editor’s Introduction”.
  7. Joel Mokyr, “Editor’s Introduction: The New Economic History and the Industrial Revolution,” in The British Industrial Revolution: An Economic Perspective (Westview Press, 1993), pp. 9-10.
  8. Sidney Pollard, Peaceful Conquest: The Industrialization of Europe 1760-1970 (Oxford University Press, 1981), p. 85
  9. Sidney Pollard, Peaceful Conquest: The Industrialization of Europe 1760-1970, p. 86