calculating productivity is inappropriate for a period of revolutionary indus-
trial change that included changes in science, economic organization, new
products and processes, market creativity and skills (Berg and Hudson, 1992).
The British Industrial Revolution: deeper determinants
Each of the key deeper determinants of economic growth has found support
among scholars as being thekey driver of the British Industrial Revolution,
although comparative assessment of these arguments is difficult. The impact of
deep determinants is rarely quantified and the explanations rely on different
evidence and different historical time frames.
Colonialism
According to some scholars, profits and plunder from the colonization of much
of the rest of the world by countries mainly in Western Europe provided the
source of savings that funded the investment that drove in turn the Industrial
Revolution. The perceived immorality of colonization often gives such argu-
ments a fierce passion:‘from all these continents under whose eyes Europe
today raises up her tower of opulence, there has flowed out for centuries
towards that same Europe diamonds and oil, silk and cotton, wood and exotic
products. Europe is literally the creation of the Third World’ (Fanon, 2001: 81).
Anecdotal evidence offers many examples. The combined profits for 1954 and
1955 of the Diamang Diamond Company in Angola (mainly Portuguese
investment) came to 40 per cent more than the total of invested capital
(Rodney, 1972: 212). David and Alexander Barclay engaged in slave trading
and in the 1730s used their profits to set up Barclays Bank in London. The
owners of West Indian slave plantations financed the English steam engine
developed by James Watt. The famous insurance firm Lloyds of London
started as a small London coffee house and expanded into banking and insur-
ance through profits from the slave trade.
Moving beyond examples to the aggregate data leaves us with a ‘small
numbers’ problem. In 1800 commodity trade between Western Europe and the
whole developing world accounted for only 4 per cent of aggregate gross
national product (GNP) so it could not have generated sufficient profits for the
investment of the Industrial Revolution. The evidence of declining prices of
sugar, pepper, coffee, tobacco and tea on the London commodity market over
the second half of the seventeenth century does not suggest that abnormal prof-
its were sustained in these colonial trades. Finally, the domestic savings rate in
Britain between 1760 and 1860 (about 12–14 per cent of GDP) was more than
enough to fund the modest capital requirements of the early industrialization.
Institutions
It has been suggested by Douglass North that the establishment of property
rights accounted for ‘the rise of the West’ and of England in particular. The
British monarchy, argues North, was defeated by Parliament (with its strong
Introduction 17