Tuesday, November 26, 2013

Dean and Cole vs. Crafts on the Industrial Revolution

My understanding of the debate on how fast, or revolutionary if you prefer (Rondo Cameron suggested it shouldn't be called a Revolution), was the Industrial Revolution is that a lot hinges on how much weight one puts on the cotton sector, in which most of the increase in productivity and growth took place in the early stages. Dean and Cole (review here) presented the traditional notion of a relatively fast growing economy, while Crafts and Harley argued for a gradualist transformation in which only a few sectors grew fast (cotton, iron and transportation) and the transformations were slow at best. The graph below by Wrigley shows nicely the difference in both views.
Note that Wrigley assumes that the estimates for GNP and GNP per head for the early 1830s are accurate, hence the differences in rates of growth imply diverse initial levels. Wrigley does not challenge the consensus view that is increasingly dominated by Crafts and Harley's numbers, but the graph below, also from his book, provides surprising evidence for a very large expansion of income.
Note that energy consumption per capita in England increases at a very fast pace all through the 18th century. It is well known that, particularly in periods of transformation of the structure of production, energy consumption per capita is closely correlated with income growth.

PS: Total factor productivity (TFP) is the measure used by Crafts and others to conclude that productivity was slow to grow in the period. On the problems with TFP go here.

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