Industrial revolutions and consumption: a common model to the various periods of industrialisation

"The literature on the link between household consumption and the emergence of the First Industrial Revolution has led to numerous and still living debates (Ramos (2003)). We may distinguish between those suggesting that the revolution was demand driven (McKendrick et al. (1982), Brewer & Porter (1993)), those privileging a supply driven revolution (Mokyr (1993)) and finally others which partly reconcile these two approaches (de Vries (1994)). Most of these historical conceptions are however generally considered from the only point of view of the First Industrialization and thus give up proposing a unifying approach of the various phases of industrialization. However, history shows that three ruptures, all being both qualitative and quantitative, can be identified in household consumption since the eighteenth century: the “consumer revolution” in the eighteenth century, the “consumption goods revolution” during at least the second half of the nineteenth century, and the “mass consumption” during the second part of the twentieth century. These ruptures have been partly permitted (and maybe caused) by deep transformations of trading habits, especially in transportation and distribution. They are also linked to the various phases of industrialization, even if the causality is debatable, as can be seen in the discussion on this question. After having briefly presented certain hypothesis on those questions, based on the economic history literature (Flacher (2003)), this article proposes a model that allows us to provide an explanation about the link between industrial revolution and the evolution of consumption structure. We introduce an original consumption function that depends, for each product, on the evolution of the number of created and suppressed jobs, on the one of the wage rate and on the one of profits. The components of this function are supposed to reflect the specific behaviours of the different agents on the employment market (the agents that loose or find a job, the agents that have one and that benefit from the growth of wage rate, and the agents whose income is obtained from the capital). Then, the hypothesis on the consumers’ behaviours during the various periods of industrialization allows us to define the products integrating new techniques (at the considered time) and to establish the link between the evolution of consumption structure and economy growth regime. We conclude by showing that an industrial revolution (in a sense we define) can only happen if the consumption structure is enriched with products integrating new techniques in such a way that the ratio between the growth rate of these products and the growth rate of the economy reaches a minimal value."