Lecture 11: The Consequences of the Industrial Revolution in Great Britain (The Standard of Living Debate) and the Free Trade Era in Europe.
The Consequences of the Industrial Revolution: The Standard of Living Debate. What happened to living standards during the Industrial Revolution? From today’s perspective, over 200 years later, most people would say that industrialization has raised living standards dramatically from those that prevailed in the 1700s. In fact, there is general agreement among scholars that from 1850 forward, the standard of living in the West improved. The debate centers on what happened between 1760 and 1850.
Higher wages due to
Some Groups (Handloom weavers)
Lower prices for
Rigid work Manufactured goods
Employment in factories
Conditions in factories
Real Wages. Service pay records from govt. wage data from factory records, household surveys and budgets, adjusted for price indicies, but not really true purchasing power.
1. Substantial increases only after 1820. But from 1820-50 real wage increased est. 155%
2. Problems with real wage indices as a measure of the standard of living. Disamenities of working in factory and crowded urban area.
Consumption. Mokyr (1988) examines the consumption of imported small luxury items: sugar, tea, tobacco, and coffee.
1. Why look at this?
Because they are wholly imported/ Carefully recorded customs duties. Mostly consumed in households
Little change in per capita consumption until 1840s, then increases. Consumption increases lagged wage increases
C. Biological Indicators of the Standard of Living. More plentiful of data. Broader range of effects captured, not just wages and consumption. Refect pollution, overcrowding, physical stress
1. Life Expectancy.
Increased from 1670-1820, then constant at 40 yrs. Until 1851, the rises again
Nicholas and Stechel use data from heights of convicts sent to Australia, fairly representative in terms of literacy rate and occupations. 23-49, 1770-1815. Male born after 1785 were shorter than previous cohorts, indicating a fall in the standard of living with industrialization.
Why do biological measures tell us different story than wage series? a.
Biological measures pertain to the whole population whereas wage series pertain to the modern or formal sector only. b.
Even though real wages rose, other aspects of life deteriorated.
1. Revealed preferences
Those who lived through the industrial revolution chose to industrialize, so they must have been better off doing so. But, did they really have a choice?
2. Enclosure and new technology forced artisans out of business; the move to the factory was made out of necessity.
Conclusion: The debate is still open. What seems safe to say is that the evidence is too weak to argue that living standards improved substantially in the early stages of the Industrial Revolution.
The Free Trade Era in Europe. During the mercantilist era, trade was seen as a zero-sum game: one country’s gain was another country’s loss. If Spain imported more from England that she exported to England, she had to send specie to England to make up the difference. In the mercantilist view, this was viewed as a loss for Spain and a gain for England. So, countries established policies to encourage favorable trade balances: they...
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