The Economics Book

179

The steam hammer, invented in

1837, was one of the machine tools that

increased the pace of industrialization,

allowing machines to build machines.

See also: Agriculture in the economy 39 ■ Demographics and economics 68–69 ■ Economies of scale 132 ■ Market
integration 226–31 ■ Technological leaps 313

WAR AND DEPRESSIONS

improvements in the living

standards of a growing population.

The spread of true modern

economic growth has been limited.

Among the rich nations, including

the US, Australia, and Japan, the

process continues today. After a first

wave of industrialization these

economies have typically evolved

Simon Kuznets Simon Kuznets was born in Pinsk,

in present-day Belarus, in 1901.

His involvement with economics

began early—he became head of a

Russian statistical office while

still only a student. After the

Russian Revolution Kuznets’

family left for Turkey, then the US;

he followed them in 1922.

Kuznets enrolled at Columbia

University in New York, earning a

PhD in 1926. He then worked at

the National Bureau of Economic

Research, where he developed the

modern system of national income

accounting used to this day by

governments worldwide. In 1947,

Kuznets helped set up the

International Association for

Research in Income and Wealth,

advising many governments. He

taught widely, and in 1971 won

the Nobel Prize for his analysis

of Modern Economic Growth.

He died in 1985, aged 84.

Key works

1941 National Income and Its

Composition, 1919–1938

1942 Uses of National Income in

Peace and War

1967 Population and Economic

Growth

away from heavy industry and

toward the service sector, which

will inevitably involve further kinds

of social change. ■

With an increase in capital to
sustain industrial growth, workers
are redeployed out of small family
enterprises into impersonal firms
and factories. Yet new technologies
and large-scale production methods
cannot be exploited if people are
illiterate, superstitious, or tied to the
village. For Kuznets this growth
causes profound social changes,
with an increase in urbanization
and a weakening of religion.

Industrial Revolution
Britain was the first country to
achieve modern economic growth.
The Industrial Revolution of the 18th
century put Britain on the path to
becoming an advanced industrialized
nation. Steam power and inventions
reshaped production. Workers left
the fields and entered the factories.
Cities grew. New means of transport
and communication technologies
allowed British firms to penetrate
the global economy. Its own
economy did not transform overnight,
but the changes—technological,
social, and institutional—kept
going. They led to unprecedented