Lecture 41: Breakthrough—The Industrial Revolution
mid-19th century. By 1860, each region produced about 28% of global gross
domestic product. Then India and China started to fall behind rapidly. By
1900 the U.S. and UK produced about 42% of global output, and India and
China produced merely 8%. By 1950, the U.S. and UK produced 53%, and
India and China a mere 4%. Of course, that’s not the end of the story. From
the mid-20th century, the tide has started to turn once more.The breakthrough to modernity can be seen most easily in Britain. Many
historians argue that Britain was the ¿ rst country to experience the sustained
growth rates typical of the Modern Revolution. Patrick O’Brien writes,
“Between 1750 and 1850, the long-term rate of growth of the British
economy became historically unique and internationally remarkable”
(Christian, Maps of Time, p. 411). In 18th-century Britain we can see three
interrelated revolutions: a transformation in social structures that created
a more capitalistic society, a revolution in the agricultural sector, and a
revolution in manufacturing.By 1700 Britain was probably the most capitalistic and highly commercialized
country in the world. It was also one of the best connected, being at the
center of global exchange networks. Our model suggests that in such an
environment rates of innovation ought to have accelerated as entrepreneurs
competed to raise output and as markets expanded, with increasing numbers
of wage earners who had to purchase both basic food and clothing with cash.
That is exactly what we observe. Agriculture was the fundamental economic
sector in all Agrarian societies. Productivity ¿ rst began to rise in this sector
from the 17th century. By 1700 many British peasants had become wage
earners. This rapidly growing class provided a source of cheap labor and
also a rising source of demand for basic consumer goods. Much of the land
vacated by peasants was taken over by large landowners who farmed for
pro¿ t. Often, they were helped by Parliament, which passed “Enclosure
Acts,” granting them full possession of land that had once been available for
communal use. On these large, consolidated plots of land, the new owners
could introduce commercial farming methods, producing goods for sale
rather than subsistence. Agriculture became a business.