Abstract
Scale economies and demand, combined with the relative prices of input factors, can provide an economic explanation to the location and timing of the Industrial Revolution. Its labor-saving innovations were profitable only above a minimum output threshold, which allowed to cover the upfront cost of capital. In turn, the possibility to exceed such threshold depended on consumer demand, which was affected by the level and by the distribution of real income. The case of the spinning jenny and the cotton industry in England and France serves as a valuable case study to show how scale and demand considerations might have mattered even at the eve of the Industrial Revolution, thus implying also a potentially important role for income distribution.
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Notes
See Allen (2009b, p. 908).
See Baines (1835, pp. 109–112, 522–525).
Notice that, given that food is included in the subsistence basket, this structure of consumer utility is consistent with Engel’s law. Some recent works have resorted precisely to Engel’s Law in the attempt to make sense of transition out of the Malthusian regime (see Strulik and Weisdorf 2008; Voigtländer and Voth 2013).
The respectable subsistence basket of Table 1 corresponds to the one defined by Allen (2001) but for the addition of rent, which is here included since this datum is reliably available for each of the two countries taken into consideration. It is important to notice that the subsistence basket defined in Table 1 accounts for basic clothing necessities by including the consumption of linen, while the need for a finer textile like cotton is plausibly excluded from subsistence.
The fact that average real income per capita was higher in England than in France has been discussed at greater depth by Allen (2009a, pp. 25–26).
Notice that the difference between England and France in terms of income distribution is even more striking when the “inequality extraction ratio” (IER) is considered rather than the sole Gini coefficient, as discussed by Milanovic et al. (2011). The IER is computed by subtracting the cost of the subsistence basket from each income class to then compute the Gini coefficient on the remaining income levels. The computations made by Milanovic et al. (2011, pp. 263–264, Table 2) show that the IER amounted to 55.4 % in England and 76.1 % in France, respectively, in 1759 and 1788.
The fact that the share of people living above subsistence was at least twice as large in England relative to France is robust to the definition of the respectable subsistence basket and to the definition of the average household size proposed by Allen (2001). As discussed by Humpries (2012), both aspects are problematic since setting the daily adult consumption of calories to 1,941 and the average household size to four members might underestimate the actual cost of respectability. In the present case, however, the ratio between the share of people living above subsistence in England relative to France, R, remains above two for wide variations of the total cost of respectability. For instance, increasing by 50 % the cost of respectability both in England and France still determines a ratio R > 2. Moreover, the definition of the respectable subsistence basket adopted here already entails an higher cost relative to the one proposed by Allen (2001), as rent is included in the present definition.
Notice that the consumption model sketched here might well imply that the demand for "extreme luxury” goods was higher in France than in England, despite the fact that the former country had a lower average real income relative to the latter. In fact, the share of people who earned, for instance, four times the income necessary to attain subsistence was higher in France 1788 than it was in England 1759. Therefore, the very upper class in France was richer than its English counterpart, which might have led to a higher consumption of "extreme luxury” goods in France.
Notice that the focus of the present analysis on demand per spinner rather on the total market size represents a relevant difference with respect to the approach taken, for instance, by Daudin (2010).
Notice that assuming s = 1 % produces an estimate of the typical Q for England that is quite close to the one proposed by Allen (2009a, b), that is, 100lbs. As discussed by Bythell (1964), it is difficult to quantify the share of labor in the textile industry that was devoted to the processing of cotton throughout the eighteenth century. Precisely for this reason the present work has adopted a methodology that allows to largely prescind from that information. In any case, just to have a rough idea of the weight of cotton in terms of employment, also Bythell (1964, p. 344) reports multiple sources estimating the number of weavers in England to be between 200,000 and 250,000 before 1833 that corresponded approximately to 1 % of the population. Clearly, this percentage would grow if also spinners were included, but on the other hand, the cotton industry was already much bigger by 1833 than it was by the mid-eighteenth century.
To the contrary, Mokyr (1977, p. 995) claimed that "it is not an easy task to substantiate the case for increasing returns in manufacturing anywhere before, say, 1870”.
According to Allen (2009a, p. 193), by 1790 there were 900 jennies in France and 20,070 in England.
For instance, Chaptal (1819, p. 5) describes the technological state of the French cotton industry by 1819 as follows: “L’état actuel de nos filatures par les mécaniques dites mull-jennys et continues, nous permet de fournir par an à la fabrication des tissus ou de la bonneterie plus de 25 millions de livres de fil de coton, indépendamment de ce qui se file encore au rouet ou à la main dans les montagnes: la filature est aussi parfaite qu’on peut le désirer; et si jusqu’ici on a paru négliger de filer les numros les plus fins, c’est qu’on a préféré ceux dont le débit et la consommation étoient plus assurés et plus étendus”.
For an overview of the literature on the transition toward factory productions see Mokyr (2001).
In order to simplify the exposition, Fig. 5 was obtained under the assumption that all spinners used either the spinning wheel or the jenny, but not the two technologies contemporaneously.
The quantification of a full working year in 250 days comes from Allen (2009b, p. 916).
In this respect, it is worth noting that it was technically possible to build small cottage water frames that could be used as a domestic spinning machine rather than inside factories; yet, the Arkwright partnership decided to build only bigger frames in order to prevent losing control of the patent, since "everyone would have copied it and built their own machines in the privacy of their own homes” (Hills 1979, p. 123).
The reference is to Mokyr (1977, p. 1005): “[T]he traditional notion that supply and demand were somehow symmetric in the industrialization process is unfounded. The determination of ‘when’, ‘where’, and ‘how fast’ are to be sought first and foremost in supply, not demand related processes”.
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The authors are grateful to Alessandro Nuvolari for his suggestions and support.
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Gragnolati, U.M., Moschella, D. & Pugliese, E. The spinning jenny and the guillotine: technology diffusion at the time of revolutions. Cliometrica 8, 5–26 (2014). https://doi.org/10.1007/s11698-012-0092-9
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DOI: https://doi.org/10.1007/s11698-012-0092-9