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The Hand-Loom Weaver and the Power Loom: A Schumpeterian Perspective REVISED

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  • Robert C. Allen

    () (Division of Social Science)

Abstract

Schumpeter’s ‘perennial gale of creative destruction’ blew strongly through Britain during the Industrial Revolution, as the factory mode of production displaced the cottage mode in many industries. A famous example is the shift from hand loom weaving to the use of power looms in mills. As the use of power looms expanded, the price of cloth fell, and the ‘golden age of the hand loom weaver’ gave way to poverty and unemployment. This paper argues that the fates of the hand and machine processes were even more closely interwoven. With the expansion of factory spinning in the 1780s, the demand for hand loom weavers soared in order to process the newly available cheap yarn. The rise in demand raised the earnings of hand loom weavers, thereby, creating the ‘golden age’. The high earnings also increased the profitability of developing the power loom by raising the value of the labour that it saved. This meant that less efficient–hence, cheaper to develop--power looms could be brought into commercial use than would have been the case had the golden age not occurred. The counterfactual possibilities are explored with a model of the costs of weaving by hand and by power. The cottage mode of production was an efficient system of producing cloth, but it self-destructed as its expansion after 1780 raised the demand for sector-specific skills, thus providing the incentive for inventors to develop a power technology to replace it. The power loom, in turn, devalued the old skills, so poverty accompanied progress.

Suggested Citation

  • Robert C. Allen, 2017. "The Hand-Loom Weaver and the Power Loom: A Schumpeterian Perspective REVISED," Working Papers 20170004, New York University Abu Dhabi, Department of Social Science, revised May 2017.
  • Handle: RePEc:nad:wpaper:20170004
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    File URL: https://nyuad.nyu.edu/content/dam/nyuad/academics/divisions/social-science/working-papers/2017/0004.pdf
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    References listed on IDEAS

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    1. Robert C. Allen, 2015. "The high wage economy and the industrial revolution: a restatement," Economic History Review, Economic History Society, vol. 68(1), pages 1-22, February.
    2. Philippe Aghion & Antoine Dechezleprêtre & David Hémous & Ralf Martin & John Van Reenen, 2016. "Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 1-51.
    3. W. Walker Hanlon, 2015. "Necessity Is the Mother of Invention: Input Supplies and Directed Technical Change," Econometrica, Econometric Society, vol. 83, pages 67-100, January.
    4. Lyons, John Stephen, 1978. "The Lancashire Cotton Industry and the Introduction of the Powerloom, 1815–1850," The Journal of Economic History, Cambridge University Press, vol. 38(01), pages 283-284, March.
    5. David Popp, 2002. "Induced Innovation and Energy Prices," American Economic Review, American Economic Association, vol. 92(1), pages 160-180, March.
    6. Lyons, John S., 1987. "Powerloom profitability and steam power costs: Britain in the 1830s," Explorations in Economic History, Elsevier, vol. 24(4), pages 392-408, October.
    7. Gregory Clark, 2007. "Introduction to A Farewell to Alms: A Brief Economic History of the World," Introductory Chapters,in: A Farewell to Alms: A Brief Economic History of the World Princeton University Press.
    8. Harley, C. K., 1973. "On the Persistence of Old Techniques: The Case of North American Wooden Shipbuilding," The Journal of Economic History, Cambridge University Press, vol. 33(02), pages 372-398, June.
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