Europe starting in the 1600s with the scientific revolution and, later with the enlightenment of the 1700s was immersed in an atmosphere of curiosity and tinkering. This new attitude caused many Europeans to start looking for ways to improve their lives. Over a period of a hundred years (1750s -1850s) the result came to be known as the Industrial Revolution, an era of fundamental change for society and economics.

At the heart of the revolution is the idea of producing goods for a market. To do so more effectively, machine technology was applied at first to the production process and later to transportation of the produced goods. The first major area to receive attention was traditional products, specifically textiles. This industry produced products that had an existing demanding market, this meant that the more that could be produced the more that could be sold. Scientists and enlightenment thinkers saw this potential and started generating simple advances for existing technologies.    

Traditionally cottage industry production, the making of goods in local homes, was small scale for textiles. In these Cottage Industries the production of thread was done through a labor intensive process utilizing a spinning wheel. A man by the name of James Hargraves forever changed thread production. Seeing his wife laboring over her spinning wheel one night, he took to tinkering with the idea of a machine to produce multiple spools of thread. The result was his “Spinning Jenny” named in honor of his wife. This simple machine took the same input of labor and produced six spools of thread instead of the spinning wheel's one. This invention maintained labor input and increased output which meant an increase in productivity. The increase in productivity became the hallmark of the Industrial Revolution.

At first the Spinning Jenny was used strictly in homes. Quickly though people realized human power had its limitations. The race was on to generate a larger labor input so that productivity could be increased further. Once water power was harnessed and later the major break through of the era steam power was implemented; a new economic unit was created, the factory. This institution centralized all production activity. People went to their work instead of work going to the people in the Cottage System. Thus more and more people needed to work in factories factory towns, which can be seen as the infant stages of the industrial city. Such a massive unit clearly was in need of capital.

The ways of finance used up to the Industrial Revolution were not capable of supporting giant factories. To deal with this, what can be seen as the modern cooperation started to form. This new devise was used to bring together capital form a variety of sources.

The journey from the Spinning Jenny to the giant factories may read as an almost instantaneous process.  The change though was gradual especially in the beginning when change came about slowly and subtly. The period therefore, should be seen more as an a evolution as opposed to a revolution. Besides the increase in productivity there also were other products of the revolution.

In England, conditions were perfect for this type of a shift in economic policy, thanks in part to the glorious revolution as well as domestic peace. Another large factor of the period was the agriculture revolution. This revolution shares little with the industrial one as it was not machine based. Rather for farmers the revolution meant changes in the way agriculture was done, for example crop rotation and stock breeding, which meant a greater amount of food produced with a reduction of labor input.

Such changes created a displacement of small farmers, which in the long run meant the development of a landless often unemployed class. By the 1800s this class started finding employment and housing in growing factories and factory towns. Due to the grater availability of goods it meant cheaper priced goods which lead to a increase in the standard of living.

They were down sides to all of this though. Working conditions were terrible. A worker could expect to work six to six and half days a week, often with twelve or more hour shifts. Due to the availability of labor due  to the displacement of farmers, wages were low and safety was non-existent for workers, as complainers, and workers who were injured or killed on the job were easily replaced. Not to mention the constant threat of unemployment and the utilization of child labor. After a long days work workers would find no conditional improvements at home. Factory towns were crowded, unsanitary and disease prone. In general the life of a factory worker was dangerous, un-healthy and therefore in many cases un-happy and short.

When the plight of these factory workers came to light though investigations such as the English Parliament’s Sadler Commission some people started to question the new economic system. England’s overarch economic theme was that of a free market place. Supporters of this theory were know as Liberals. One subset of this group would come to be known of as Classical Liberals. They were headstrong believers of the free market economy. The group looked at hardship and difficulty and came to the conclusion that both must be accepted.

Thomas Malthus wrote in 1798 an essay called “Principles of Population.” Here he asked the prevailing question of the time; why do people continue to experience hardships and suffering? Why has not the enlightenment promise of continual improvement been fulfilled? Is such an idea a realistic possibility? Malthus answered with typical of the loss of optimism which the Classical Liberals expressed:

I ardently wish for such happy improvements. But I see great,

and to my understanding unconquerable difficulties in the way to

them… I say that the power of population is indefinitely greater than

the power in the earth to produce subsistence for man.

Such a dramatic statement Malthus backed up by arguing that food supply grew at a arithmetical ratio while population grew at grew at geometrical rate. With such a large difference in growth rates food shortages in his mind were inevitable. A course such as this one does not improve as the situation becomes more dire as population grows. Food shortages naturally lead to misery, disease, and inevitability death. A integral part of his theory was that this process was the way nature intended it to be. Malthus wrote

The positive checks to population are extremely various, and include

 every cause whether arising from vice or misery, which in any degree

contributes to shorten the natural duration of human life.

Therefore, if someone were to step in and help a person in dire need of food the assistance would keep alive an individual which nature was tying to kill off. This person then would procreate causing a greater need for food. This chain of events was one Malthus believed society should not step in to alter. He wrote in his essay the poor man “accuses the partial and unjust institutions of society … the last person he would think to accus[e] … himself,” Malthus argued instead that that the pour should help should be the ones to help themselves.

A philosophical match for Malthus can be seen in David Riccardo, who was concerned with wages. His question, why do wages exist at bare minimum? He believed that wages tended towards substance. If there was a shortage of workers wages went up because there was a great demand for workers. A result of this workers are able to provide for larger families which causes the labor pool to rise. A lager labor class means labor consumers can lower wages as it is easier to replace disgruntled workers. If  there was an artificially high pay rate set laborers would produce larger families which the wage system, could not support placing more strain on wages. Riccardo argued that wages like Malthus food should be left untouched as both are natural cycles.

This attitude of non-intervention was not held by all Europeans. In fact as conditions worsened new ideas immerged such as reform liberalism as well as new political ideologies such as socialism and communism. With out a doubt this period of Industrial Revolution was a time of dazzling technological advances, immense wealth and amazing human suffering by those who toiled in these money producing advanced halls of industry.       

The question remains though, why did England take such a large leap in front of other European nations in the area of industrialization? Author Eric Hobsbawm in his book Industry and Empire argued that the main reason why Britain took such a large lead in industrialization is because it defeated its rivals in war. Britain in other words became the workshop of the world because it blew away all of its enemies. This was especially indicative of the Napoleonic era when Britain closed off Europe from the rest of the world.  Europe was forced to trade among it self during the Napoleonic wars, while the British traded with the rest of the world.

One though begins to realize after looking at this theory that it is incomplete. Granted it is a very good foundation, nonetheless what it does not take into account is why continental Europe did not catch up to Britain after war had ended. In other words if the key advantage for Britain had been just its dominance thanks to war, once the war was over continental Europeans should have been able to reopen their industry and over a period of time come to rival the British. This was not the case as continental Europe would not rival the British for many years to come. So Hobsbawm’s theory can be seen as a necessary, but not sufficient to have caused British dominance. 

Two key necessary components which add nicely to Hobsbawm’s foundation are economies of scale and external economies. During this period the British acquired a vast array of knowledge thanks to the principle of “learning by doing.” Due to this they were able to produce a product which was substantially lower in cost. This idea becomes clear when one looks at an example of output. If a producer is able to make five thousand units while another is able to make a million units, the producer who can turn out more units has the upper hand for he must have developed a method of making goods cheaper, as opposed to the maker of the five thousand units who has not had enough experience through learning by doing to make cheap goods through large numbers.

Another key is the idea of an external economy. By the wars end Britain had developed a network of suppliers. It can be thought of as a district organized around production. This was a major advantage as prospect industrialist were able to find all they needed to establish their production facility around or very close to where they were looking to open up shop. In turn this leads to a reduction of costs.

With the close of international war, continental Europe had comparatively to the British no experience by doing. This meant they could not develop an economy of scale. Without a high volume of production like the British continental Europe had little hope of establishing external economies. Yes the war was important to giving Britain a head start comparatively. Yet it was the lack of these key features after the war was over that really hurt Europe. They were trying to restart if not start their own industrialization on an un-level playing field to which their was little hope of leveling since Britain controlled a vast share in the world market thanks to their superior sea fairing abilities. 

Part of the reason that Britain developed in such a manner can be traced to the deterioration of early social structures. This is especially apparent in towns. Here the unit of organization was the guild, which was basically comprised of local producers who formed among other reasons to set standards for working operations as well as prices. In order to produce something in one of these town, an individual had to be a member of the guild which controlled that item. These rigid constraints made it very difficult for innovation.

Where new production techniques would be pioneered was in new towns. Here guilds were much weaker. This allowed over time for the appearance of factories. The removal of the guilds was a key element which allowed for the revolution of the British economy. Had the guild system been left in place as it was mass production which put Britain on the road to international dominance certainly would have been extremely difficult if not impossible.

The English Industrial Revolution served as a model for the Americans in the late 1800s. The American's took their revolution though to staggering highs, producing economic giants such as US Steel, which forever changed the economic fabric of the world.