The Revolution that Never Was

A few weeks ago, Prof. Sudha Shenoy visited the department of economics at GMU. A native of India, Sudha lives in Australia and has recently retired from teaching economic history at the University of Newcastle. She gave several talks ranging from the battle between Hayek and Keynes, the role of Austrian economics in historical analysis of capitalism, capital theory, and economic growth and development. Sudha is one of the teachers and representatives of the traditional Austrian school of economics (see here and here). She got into economics because she was inspired by her father who went to England during the inter-war period and took classes with F. A. Hayek at the London School of Economics.

There is no nonsense in her economics; it is solidly rooted in the Austrian tradition, especially capital theory. Here are two examples. First, she believes there was no Industrial Revolution in the late 18th and early 19th century. Second, echoing Mises, she is appalled by how bad most economists are when it comes to history. While this is probably the result of modern training in economics, it does not excuse our amateurish approach of the discipline.

As far as the Industrial Revolution is concerned, her basic view is that there never was any. To be more specific, the idea is that there never was any discontinuity in the development of Western economies. A revolution is a discontinuity; it is a clean break from a former state of affairs. The French and Russian Revolutions were clear, unpredictable changes that replaced one political system by another. According to Sudha, it would be far fetched to say that the Industrial Revolution replaced a state of affairs by another one in the space of a very short time. Instead, European economies, especially Britain, France, and Germany experienced gradual changes that were the results of growing markets, the deepening of the capital structure, and more freedom.

Sudha is not alone in claiming this. Mises for a start said the same in his work, especially in Human Action (see here):

The attribution of the phrase "the Industrial Revolution" to the reigns of the two last Hanoverian Georges was the outcome of deliberate attempts to melodramatize economic history in order to fit it into the Procrustean Marxian schemes. The transition from medieval methods of production to those of the free enterprise system was a long process that started centuries before 1760 and, even in England, was not finished in 1830.

Sudha carefully explained how economists trained in the Austrian tradition and who understand capital as an interwoven structure of complementary (to various degrees) capital goods, have better tools to understand industrial development. The British economy was already extremely complex in medieval times and this level of complexity never ceased to increase in spite of the political turmoil England went through. By the time we reached the Glorious Revolution in 1688, the economy was already phenomenally complex. What may have misled historians and economists is the fact that industrial development accelerated in the 18th century, but this was the result of centuries of capital accumulation. Or was it?

Some historians have written on the lack of substantial discontinuity. For instance, N F R Crafts’s British Growth during the Industrial Revolution, published in 1985, and Maxine Berg’s The Age of Manufacturers, published in 1994. However, the majority still subscribes to the idea of Industrial Revolution because major innovations took place at the end of the 18th and in the early 19th century (e.g. the steam engine and the telegraph). What is your view?

Comments

[Rafe]

Maybe the genuine French Revolution infected both progressive and reactionary people with an obsession with revolutions, certainly that has been the subtext of all radical thinking since that time. Writers like Charles Dickens did huge damage with their unreflective impressions of the industrial system.

The case of Charles Dickens is instructive because he has lent his name to the “Dickensian horrors” of the time and because he actually experienced some manual work, unlike most of the educated commentators.

Dickens spent 6 months at the age of 12 in a small blacking (boot polish) factory, owned by a relative, where he earned six shillings a week, working with a team of boys pasting labels on tins. This was a tragic decline for Dickens who had been living in ease and comfort because his father (John) enjoyed an income of 350 pounds per annum in the Navy Pay Office. Dickens senior had ideas above his station, possibly because he grew up in contact with the grand house of Lord Crewe where his father was the head butler. John Dickens and his wife habitually lived beyond their means and they spent almost six months in Marshalsea debtors prison until a relative left a legacy that paid off the creditors. For some reason Charles was not immediately released from the job and he believed that his mother actually wanted him to stay on.

During those months Charles visited his parents daily but he lived in desperate uncertainty about his future. The experience was so traumatic that the theme of the abandoned child is a recurring motif in his books. The horror of the experience had nothing to do with the work itself which was light, safe, and indoors. It was the violent reaction of a highly imaginative child to the sense of being betrayed by his mother and father, and “cast down” from his proper station in life. This was entirely the fault of his parents and it had nothing to do with his own working conditions or the industrial system at large.

Quite likely he supported himself with his six shillings a week and a system that enables a 12 year old to do that has got something going for it.

[Šimun]

I think it's rather pointless to argue against the term "industrial revolution". I don't think anyone would disagree that the process was long, gradual and a result of centuries of slow development.

For comparison, the term "neolithic revolution" is used to describe a vague period of centuries or even millenia.

One can argue forever about the proper use for the world "revolution" but I think it's beside the point. Anyone who has ever tried to find the year of the industrial revolution soon found out that it was a period, and a loose one at that. It's not as if someone was (or is) trying to decieve the public.