Monday, 12 October 2009


If you like your economic history, this article (or podcast) at Counterpoint is great. A snippet:

Michael Duffy: But what happened next? The situation you've described...Britain obviously jumped ahead of everyone else for quite a while, but it didn't maintain that lead forever. What happened in those other countries?

Robert Allen: It's very interesting that have these key technologies, breakthroughs that take place in the 18th century, and steam engines, cotton factories, cotton mills, iron making, and as I say they all have the characteristic that they're adaptations to Britain's unique price situation, with the high wages and the cheap energy prices. They wouldn't pay to use anyplace else. But once they get into operation, a whole other process kicks in, and so people begin studying these machines as they're in use, engineers do, owners of businesses study them, they find ways to improve them, and really anything that cuts costs at that point is a good thing.

So they end up saving all the inputs, they reduce their use of expensive inputs, like coal in steam engines, just as much as they reduced the use of cheap ones. So they end up creating technologies that are useful even outside of Britain. So in the case of steam engines, for instance, the first steam engines used, as it happens, 44 pounds of coal per horse-power hour of power they produced. By the middle of the 19th century this has been cut from 44 to three pounds of coal.

Michael Duffy: That's a huge difference.

Robert Allen: A huge difference. When you're using 44 pounds of coal per horse-power hour, the price of coal matters a lot for the economics of your business and so you only do it in Britain, but when you cut it so much, cut it down to three, it's almost irrelevant, the price doesn't matter any more. And at that point you've got a technology that can be used anywhere in the world. So what the key thing that happens in the 19th century that causes the Industrial Revolution to spread is that the genius of British engineering improves the technologies so much they create appropriate technology for the whole world and in the process undermine competitive advantage. Too many good engineers undoing the sources of your process and your lead.


Amazing. And government was not involved in that process in the slightest. No targets were set for reducing coal consumption or CO2 output. Fuel economy regimes and legislation was not required. It was simply private enterprise and the market getting on with bettering the human condition.

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