Interesting article, but I am not sure the economics profession has the best explanation for why nations suddenly transform from a state of enduring poverty to a state of long-term economic growth. I think this is a better theory:
I thhink that one additional thing that needs to be considered is the importance, and the relative effect, of the development of capital markets. e.g. Importance of domestic savings to foreign capital availability (e.g. Soviet Russia v Communist China) and the development of the topology of internal capital markets.
It seems to me that China was doing more than one thing which is why structural transformation might best describe it. There were other legal innovation or reforms around labour laws, contracts, markets etc. The push or pull thing might not be as confusing if we look at it as a top down approach rather than organic as it was in the West.
This is an interesting piece Oliver, attempting to divine the causes of the Industrial Revolution. This is no easy task; the “push” and/or “pull” of labor from the farms to the cities is a complex mechanism. Economics may not be best suited to examine this.
I suggest we look at the Industrial Revolution from an “accumulated knowledge” viewpoint. We had several smaller agricultural revolutions in the proceeding millennia. These breakthroughs increased the availability of food.
Consequently, our population grew, and we had just enough food such that ~10 percent of humans could live in cities. From there, what I call the “social supercomputer” took hold.
No longer in isolation, ideas produced in the brains of these urbanites, bounced off each other, melded and molded in ways that they couldn’t before. This information exchange led to the development of heat engines.
Namely, the Newcomen steam engine, which allowed humans, for the first time, to use fossil fuels to do work. We developed an energy source far more dense, and more capable, and that didn’t compete with us. This was the key breakthrough.
We simply crossed a knowledge threshold where we unlocked a new “higher” form of energy for human benefit.
Good stuff. Love those final paragraphs.
Interesting article, but I am not sure the economics profession has the best explanation for why nations suddenly transform from a state of enduring poverty to a state of long-term economic growth. I think this is a better theory:
https://frompovertytoprogress.substack.com/p/the-five-keys-to-progress
Interesting, you might be interested by this way of endogenising technological progress:https://www.cambridge.org/core/services/aop-cambridge-core/content/view/6CBACB4C2DFB11F5A13D3B4A5E9E2EB4/S0140525X1800211Xa.pdf/div-class-title-psychological-origins-of-the-industrial-revolution-div.pdf
I thhink that one additional thing that needs to be considered is the importance, and the relative effect, of the development of capital markets. e.g. Importance of domestic savings to foreign capital availability (e.g. Soviet Russia v Communist China) and the development of the topology of internal capital markets.
For the best account of what the Industrial Revolution was, why it happened, and why it happened in England and not elsewhere, see:
Rick Szostak "The Role of Transportation in the Industrial Revolution: A Comparison of England and France"
It seems to me that China was doing more than one thing which is why structural transformation might best describe it. There were other legal innovation or reforms around labour laws, contracts, markets etc. The push or pull thing might not be as confusing if we look at it as a top down approach rather than organic as it was in the West.
This is an interesting piece Oliver, attempting to divine the causes of the Industrial Revolution. This is no easy task; the “push” and/or “pull” of labor from the farms to the cities is a complex mechanism. Economics may not be best suited to examine this.
I suggest we look at the Industrial Revolution from an “accumulated knowledge” viewpoint. We had several smaller agricultural revolutions in the proceeding millennia. These breakthroughs increased the availability of food.
Consequently, our population grew, and we had just enough food such that ~10 percent of humans could live in cities. From there, what I call the “social supercomputer” took hold.
No longer in isolation, ideas produced in the brains of these urbanites, bounced off each other, melded and molded in ways that they couldn’t before. This information exchange led to the development of heat engines.
Namely, the Newcomen steam engine, which allowed humans, for the first time, to use fossil fuels to do work. We developed an energy source far more dense, and more capable, and that didn’t compete with us. This was the key breakthrough.
We simply crossed a knowledge threshold where we unlocked a new “higher” form of energy for human benefit.