Was technological change in the early Industrial Revolution Schumpeterian? Evidence of cotton textile profitability
Price and profit data between the 1770s and the 1820s from accounting records of three Lancashire cotton firms help to illumine the nature of the economic processes at work in early industrialization. Many historians have seen the Industrial Revolution as a Schumpeterian process in which discontinuous technological change led by the mechanized factories of the cotton industry created large profits for innovators that persisted in succeeding decades while technology slowly diffused. In this view imperfect capital markets limited the use of the new technology, keeping profits high. Reinvestment of these profits gradually financed expansion of innovating firms. The new technology dominated only after a long diffusion process. The evidence here, however, supports a more equilibrium view in which the industry expanded rapidly and prices fell in response to technological change. Expansion of the industry led to dramatic declines in the prices of cotton goods as early as the 1780s. There is no evidence of super-normal profits thereafter. Prices continued to fall and output expand thereafter as cost-reducing technological change continued.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Harberger, Arnold C, 1998. "A Vision of the Growth Process," American Economic Review, American Economic Association, vol. 88(1), pages 1-32, March.
- C. Knick Harley, 2010.
"Prices and Profits in Cotton Textiles During the Industrial Revolution,"
Economics Series Working Papers
Number 81, University of Oxford, Department of Economics.
- C. Knick Harley, 2010. "Prices and Profits in Cotton Textiles During the Industrial Revolution," Oxford University Economic and Social History Series _081, Economics Group, Nuffield College, University of Oxford.
- N. F. R. Crafts & C. Knick Harley, 2002.
"Precocious British Industrialization: A General Equilibrium Perspective,"
UWO Department of Economics Working Papers
200213, University of Western Ontario, Department of Economics.
- Nicholas Crafts & C. Knick Harley, 2002. "Precocious British industrialization: a general equilibrium perspective," Economic History Working Papers 22368, London School of Economics and Political Science, Department of Economic History.
- Gregory Clark, 2009. "The Macroeconomic Aggregates for England, 1209-2008," Working Papers 919, University of California, Davis, Department of Economics.
- Stanley D. Chapman, 1970. "Fixed Capital Formation in the British Cotton Industry, 1770–1815," Economic History Review, Economic History Society, vol. 23(2), pages 235-253, 08.
- Lyons, John S., 1985. "Vertical Integration in the British Cotton Industry, 1825–1850: a Revision," The Journal of Economic History, Cambridge University Press, vol. 45(02), pages 419-425, June.
- N. F. R. Crafts & C. K. Harley, 1992. "Output growth and the British industrial revolution: a restatement of the Crafts-Harley view," Economic History Review, Economic History Society, vol. 45(4), pages 703-730, November.
- Mokyr, Joel, 1976. "Growing-up and the industrial revolution in Europe," Explorations in Economic History, Elsevier, vol. 13(4), pages 371-396, November.
- C. Knick Harley, 1998. "Cotton Textile Prices and the Industrial Revolution," Economic History Review, Economic History Society, vol. 51(1), pages 49-83, 02.
- Allen, Robert C., 2009. "Engels' pause: Technical change, capital accumulation, and inequality in the british industrial revolution," Explorations in Economic History, Elsevier, vol. 46(4), pages 418-435, October.
- Pollard, Sidney, 1964. "Fixed Capital in the Industrial Revolution in Britain," The Journal of Economic History, Cambridge University Press, vol. 24(03), pages 299-314, September.
- Harley, C. Knick & Crafts, N.F.R., 2000. "Simulating the Two Views of the British Industrial Revolution," The Journal of Economic History, Cambridge University Press, vol. 60(03), pages 819-841, September.
When requesting a correction, please mention this item's handle: RePEc:eee:exehis:v:49:y:2012:i:4:p:516-527. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.