Europeanization of the International Economy and Industrial Revolution
Europe in World Economy 2015





•Commercialization of Agriculture
-
-Why did peasants in West begin to work for the market while rest of Europe no sooner than in
18th and 19th? (vs. DCs)
-
-Decision market vs. subsistence:
–Small local market - sharply declining demand curve:
•Lower price can be compensated by specialization and productivity growth - after certain point
commercialization is a self-reinforcing process;
•Subsistence – no scale, no learning, no technological change;
–West: cities and employment outside agriculture - bigger markets and technological change (ToT in
favor of agriculture);
–
–Institutional structure of society… (Aldcroft)
•Less developed market have higher transaction costs (transport, tolls, middlemen, information) –
preference to subsistence or provision locally;
•Transition costs of transformation from autarky to commercial farming (switch back costly);
•New forms of dependence – middlemen (supply capital in return for buying crops in advance);
•







•International trade
•
•Opportunities beyond limits of domestic market and agricultural productivity –  international
division of labor (A. Smith: DL extent M);
•
•IT – most dynamic element of early modern European economy;
•i.e. Holland – shift towards livestock and diary, fishing, urban expansion;
•Shift of basic agriculture into Eastern Europe (intensifying feudal methods of exploitation
there);
–
•Initially little to do with free markets (FM) – governments trying to force competing nations out
of markets;
•Mercantilism: nations‘ wealth grows by achieving favorable balance of trade; exclusion of foreign
competitors rather than attempt to gain competitive strength;
•Primary economic aim of merchants and conquerors was to create protected niche in world market
without competition from other Europeans (Estado da India, EIC, VOC);
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•
•
•18th cent. series of inventions transformed the British cotton manufacture: new mode of production
– the factory system;
•
•Principles: (Landes)
–The substitution of machines (rapid, regular, precise, tireless) for human skill and effort
(converting heat into work);
–Use of new and more abundant raw materials (substitution of coal for wood and animal);
•
•In past – better living standards had always been followed by a rise in population-> eventually
consumed the gains (Malthusian trap) (Clark);
•
•IR: for the first time in history – both the economy and knowledge were growing fast enough to
generate a continuing flow of improvements -> considerably rising standard of living;
•
•
Industrial Revolution

•Steam power
–Vacuum pump (Savery 1698);
–First steam engine Newcomen (1705);
–Watt (1768) engine with separated condenser (profitable away from the mines);
–15 years to adapt for rotary motions;
–High pressure engines more compact and used to drive ships and land vehicles (another 25 years);
–Parsons (1884) replacing the piston with a steam turbine;
•Darby (1709) coke smelt of iron;
•Cast iron –> pots and pans, pipes; moving parts require resilience and elasticity - steel;
•Cheap steel – Bessemer 1856;
–transformed industry and transportation (arms, razors vs. rails and ships);
•
•Powered machinery
–Device to move a tool – to do the work of the hand;
–Enhance speed and force (printing press, drill, spinning wheel);
–Battery of tools – multiply the work performed by a single motion;
•
•Next step – simplifying by dividing, breaking up the task into a succession of repeatable
processes;
•

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•
•(Landes)
•14th Italy –water powered silk spinning– industry prospered for centuries;
•
•England built a large water powered mill employing hundreds workers;
–comparable to the cotton mills of later era –
–more than enough to accommodate England’s demand for silk yarn – costly material, small clientele;
–No industrial revolution of silk;
–
–
•Wool much more important in Europe - role of cotton accident;
•

•
•
•System of rural manufactures (dispersion of activity - costs of distribution and collection);
–Idea of large workshops where spinners and weavers under supervision;
–
•Manufacturers had to pay to persuade people out of cottages and into mills –
–So long as the equipment in the mill was the same as in the cottage, mill production cost more;
•
•It took power machinery to make the factory competitive
–In spite higher wages mills still seemed a prison;
–Where to get labor force? Children, often conscripted from the poorhouses and woman, especially
unmarried;
•
•Wool fibers troublesome - cotton docile, investor turned attention;
•

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