Economic Innovation • Changes in Structure and Performance: • Performance – measured by output; generally identified through per capita productivity. • Structure – characteristics that support performance (laws, tax policies, technology, population, etc.)
Adam Smith • Smith criticized both guild and mercantile-based economic systems as restraining. • Promoted liaise-faire (i.e. classical liberalism) ideology in The Wealth of Nations (1776). • Free market economy based on division of labor and the fewest government restrictions as possible
Why Britain? • Large supplies of coal and iron. • Navigable waterways and access to the sea. Expansion of roads. • Merchants had surplus capital from commercial revolution for investment. • Gov’t policies favorable to merchants (property rights, taxes, banking system) • Cultural innovation and free market ideas. • High standard of living; growing population driving demand.
Cotton • Demand for cheap cotton goods at home and abroad made textiles the first to industrialize. • Cotton was cheap (slave labor) and durable. • “Putting-out” system could not keep up with demand (lack of organization, distance between workers); this required new system
Factory System • The organization of labor in one location allowed for increased production. • The location of factories near rivers and/or seaports allowed for the transportation of goods to be easier and provided power supplies. • Location in urban areas provided cheap labor supply. • Introduction of machines increased per capita production.
Inventions • 1733, John Kay: flying shuttle • 1764, James Hargreaves: spinning jenny • 1769, Richard Arkwright: water frame, which improved thread spinning. • 1780s, Edmund Cartwright: steam engine to power looms; factory production of textiles. • 1793, Eli Whitney, cotton gin
The Steam Engine • 1700 – Thomas Savery invents steam pump. • 1712 – Thomas Newcomen built steam engine to pump water from mines. • 1769 – James Watt creates more efficient steam engine. • By 1800, steam power was being used to power looms in factories.