European monarchs did not just fail to encourage industrial development, they actively blocked it. Francis I—the last emperor of the Holy Roman Empire, and then emperor of Austria-Hungary until 1835—clearly feared the political consequences of technological progress and did his utmost to keep the economy agrarian. The primary concern was that the establishment of factories would replace workers in the domestic system and concentrate the poor in cities, where they could organize and rebel against the government. To avoid the threat from below, Francis I blocked the construction of new factories in Vienna in 1802 and banned the importation and adoption of new machinery until 1811. When plans were put before him for the construction of a steam railroad, he responded: “No, no, I will have nothing to do with it, lest the revolution might come into the country.”40 Consequently, railroad carriages in the Habsburg Empire were long drawn by horses.
Tsar Nicholas I similarly feared that the spread of the mechanized factory in Russia could undermine his leadership. To slow down the pace of progress, industrial exhibitions were banned. And after a series of revolutionary outbursts across Europe in 1848, a new law was enacted to limit the number of factories in Moscow, explicitly banning any new textile mills and iron foundries.41 As in the Holy Roman Empire, railroads were not considered just a revolutionary technology, but also an enabling technology for revolutions. Thus, the only railroad built before 1842 ran between Saint Petersburg and the imperial residences at Tsarskoe Selo and Pavlovsk; information about railroads was even censored in Russian newspapers. Worker mobility and the spread of information was not in the interest of the ruling classes. And the Russian elites were surely right to fear the mechanized factory. The New York Times correspondent in Saint Petersburg in 1895 reported: “The introduction of machinery in La Ferme cigarette factory led to a serious riot on Saturday. The employees, who believed that the use of machines would throw many of them out of work, smashed the machines and hurled the fragments out the windows.”42
For a long time, as noted in chapter 1, British governments tried to block the spread of replacing technologies, too. Even in the seventeenth century, Charles I issued a proclamation against the diffusion of gig mills. But things changed after the Glorious Revolution. As Acemoglu and Robinson write, “In Tudor or Stuart England, Papin [whose steam digester was smashed by Fulda boatmen] might have received similar hostile treatment, but this all changed after 1688. Indeed, Papin was intending to sail his boat to London before it was destroyed.”43 It is undeniably noteworthy that even though examples of British monarchs blocking worker-replacing technologies were plentiful before 1688, such examples are hard to find thereafter. Part of the reason is that the guilds were weakened by Parliament and intensifying competition after the Glorious Revolution. Although they were abolished officially in England only by the Municipal Corporations Act of 1835, they had begun to lose members and power much earlier. As discussed above, the guilds did not resist technological progress when it enhanced their members’ skills, but they did when it threatened to make their members obsolete. It was therefore a prerequisite for the Industrial Revolution, which rested upon worker-replacing machines, that the power of the guilds be reduced.
This happened naturally as markets became more integrated: the influence of the guilds didn’t extend beyond their own cities, so as competition between cities grew, their political power declined. The shearers’ guild, for example, was one of the strongest in the woollen industry and had been successful in securing good pay for its members. Through petitions and violence, they managed to block the introduction of the gig mill in the west of England for decades. But cascading competition changed the rules of the game. In Wiltshire and Somerset, where the guilds had violently opposed the gig mill for a long time, resistance ended as the region began to lose business to Gloucester—where shearers had figured out that they could produce at a lower cost and expand their business by using the mills.44 New towns like Birmingham and Manchester, which emerged in formerly rural areas, were also free from guild regulations and naturally became the engines of the Industrial Revolution.45 More broadly, a statistical analysis of 4,212 patents filed in the period 1620–1823 shows that areas in England that became more exposed to outside competition invested more in the invention of new technologies.46 And crucially, the nature of technological progress changed as well. When the economic historian Christine MacLeod examined 505 patents filed in the period 1663–1750, she found that very few technologies were invented to replace workers. Forty-five percent of the patents were said to augment workers’ skills. Another 37 percent were claimed to save capital. Only 2 percent were said to save labor. Between 1750 and 1800, however, the percentage of labor-saving technologies increased fourfold.47 To be sure, inventors consistently underreported any labor-saving motives due to fear of opposition. But the upsurge in replacing technologies provides additional evidence of the fading power of the English craft guilds.
Contrast this with the experience of China, where the guilds (gongsuo) persisted much longer and had almost unrestrained control over their crafts.48 They were more powerful than their European counterparts, and they used their power to forcefully restrain the introduction of worker-replacing technologies on a regular basis. One contemporary observer, Daniel J. Macgowan, wrote in 1886:
Native merchants imported from Birmingham a quantity of thin sheet-brass for manufacturers of brass utensils at Fatshan, throwing out of employment a class of coppersmiths whose business consisted in hammering out the sheets heretofore imported in a thick form; but the trade struck to a man, would have none of the unclean thing, and to prevent a riot among the rowdiest class of the rowdiest city in the empire, the offending metal was returned to Hongkong. Further, a Chinese from America the other day imported thence some powerful sewing machines for sewing the felt soles of Chinese shoes to the uppers, but the native sons of St. Crispin destroyed the machines, preferring to go on as their fathers did, while the enterprising Chinaman returned to Hongkong, a poorer and sadder man. Again, some years ago a progressive Chinaman set up a steam-power cotton mill, only to be made useless by the very simple plan of the growers refusing to send in a pound of cotton. Filatures from France, effecting not only a wonderful saving in time and money but improving the quantity and quality of the output of silk, succeeded at Canton for a while, and were introduced latterly by Chinese capitalists into the silk-rearing districts, only to be destroyed and wrecked by the country-folk.49
Fearing social unrest, Chinese authorities sided with the guilds. An 1876 report to the London Foreign Office highlights this:
During the past year [1875–76] an attempt was made to launch a Steam Cotton-Mill Company at this port [Shanghai], for the purpose of manufacturing cotton piece-goods from native-grown cotton … similar … to the goods at present made by Chinese … but with the advantages of English machinery and steam-power.… When the enterprise came to be generally known to the Chinese newspapers, the attitude of the Cotton Cloth guild became so alarming that the native supporters [of the project] drew back. An idea was unfortunately circulated among the natives, and more particularly amongst the workers of native hand-made cloth, that the trade would be immediately put an end to if such a scheme were put into operation, whereupon the guild passed a resolution to the effect that no clothes made by machinery should be permitted to be purchased.… The local officials refused their support or [to] countenance the scheme through fear of causing riots amongst the people.50
Such opposition to replacing technologies and the long persistence of the gongsuo also help explain delayed industrialization in China. Chinese cities were much farther apart than their English counterparts, meaning that there was less competition between them and less threat to the power of the gongsuo. Thus, while competition between cities in England weakened the guilds in the eighteenth century, the economists Klaus Desmet, Avner Greif, and Stephen Parente argue that the lack of competition in China meant that industrialization had to wait another two hundred years, until China beca
me integrated into the world economy. At the conclusion of the First Opium War in 1842, the British opened five so-called treaty ports for carrying out foreign trade in China. By the closing years of World War I, their numbers had increased to almost one hundred. The competition introduced by foreign trade made China’s technological backwardness only too apparent, and in the early twentieth century many labor-saving technologies from the West were imported.51
However, the weakening of the guilds in Britain was not merely because of competition between cities, which undercut the guilds’ power. It was also a political choice, spurred by the rise of the new so-called chimney aristocracy and intensifying competition among nation-states. In eighteenth-century England, the polity and judiciary, which had previously supported the cause of workers and guilds and opposed replacing technologies, began to side with the innovators. Parliament ruled on a number of occasions against spinners, combers, and shearers who petitioned against cotton-spinning machinery, wool-combing machines, and gig mills. As mentioned above, the shift in the British government’s stance on mechanization was due in part to the merchant manufacturers’ becoming a more politically powerful force. Their fortunes depended on the success of the British Empire’s trade, which in turn depended on mechanization to remain competitive internationally. And more broadly, Britain’s dependence on trade made economic conservativism harder to align with the political status quo. The external threat of political replacement due to foreign invasion gradually became greater than the threat from below, as competition between nation-states intensified. The ruling elites were well aware that their military strength depended on their economic muscle.
The strong commitment of the government to supporting innovators is further underlined by legislation passed in 1769 that made the destruction of machinery punishable by death.52 Of course, as we shall see in chapter 5, workers still did their best to oppose the introduction of labor-saving machinery. The Luddite riots in the period 1811–16 were due to the fear of replacing technological change among laborers, as Parliament revoked a 1551 law prohibiting the use of gig mills. However, the British government took an increasingly stern view of any attempt to halt the force of technology and deployed troops against the rioters. The sentiment of the government toward people’s smashing of machines was made clear by a resolution passed after the Lancashire riots of 1779, which read as follows: “The sole cause of great riots was the new machines employed in cotton manufacture; the country notwithstanding has greatly benefited from their erection [and] destroying them in this country would only be the means of transferring them to another … to the detriment of the trade of Britain.”53
Meanwhile, on the other side of the English Channel, matters unfolded very differently. As Britain was undergoing an Industrial Revolution, France was at the dawn of a political and social revolution. As the economic historian Jeff Horn has noted, the French Revolution made the threat from below very real for the French government.54 Unlike British governments, which deployed massive levels of coercion to repress machine breaking, French governments feared that mechanization would exacerbate social upheaval. While English innovators and industrialists could count on government support against machine-breaking craftsmen, the turbulent state of politics on the other side of the Channel meant that French entrepreneurs were unable to rely on the protection of their government. As is well known, the classic work of E. P. Thompson suggested that political upheaval was inherent in Luddism.55 But English machinery rioters were rebellious rather than revolutionary. In France, by contrast, the threat of revolution was real. The French machinery riots of 1789 had a much greater effect on delaying industrialization than their English counterparts. As Parisian crowds stormed the Bastille, angry woollen workers from the town of Darnetal broke through the line of royal troops guarding the bridges over the Seine. Arriving in the manufacturing suburb of Saint-Sever, they destroyed the machines that had been installed there. A long series of similar incidents followed, casting a long shadow over the country. At the newly established Calonne and Company, thirty machines were smashed by infuriated rioters. And in the suburbs of Rouen, more than seven hundred spinning jennies were destroyed. Some industrial pioneers, like George Garnett, tried to fight back, but the crowds were too large. And unlike in Britain, there were no troops to help. French industrialists and inventors could not put much faith in the willingness of the government to safeguard their interests, since it also feared that rebelling craftsmen would exacerbate the general state of unrest in the country.56 Such political uncertainty undermined the willingness to invest in machines and industrial pursuits, which stifled economic progress in France. As Horn explains, “The possibility of a thoroughgoing social and economic revolution by the laboring classes ensured that neither the French state nor Continental entrepreneurs could safely maximize profits or innovate in response to labor militancy, as in Britain.… Because machine-breaking in 1789 was an aspect of the emergence of revolutionary politics, the supposedly assertive French state proved nearly powerless in clamping it down. Throughout the revolutionary decade (1789–1799), French industrial entrepreneurs could not rely on the state to repress working-class militancy.”57
Conclusion
The slow rate of economic progress before 1750 cannot be explained by lack of inventiveness or curiosity. The preindustrial world gave rise to a host of important inventions, including the Antikythera mechanism, mechanical clock, printing press, telescope, barometer, and submarine. Some preindustrial inventions were arguably more sophisticated than the “wave of gadgets” that made the Industrial Revolution. The mere existence of technologically creative people, however, is evidently not a sufficient condition for economic progress. For that, technologies must find economic purpose and widespread use. As the economist Fritz Machlup has pointed out, “Hard work needs incentives, flashes of genius do not.”58 Flashes of genius clearly existed in preindustrial times, but incentives to invest in machinery were few.
Before the Industrial Revolution, political power was firmly held by the landed classes. The structure of power was shaped by the invention of agriculture, which meant that for the first time food could be stored, land could be owned, and individuals could accumulate a surplus of significance. This, in turn, led to the concept of property rights and a political structure to uphold those rights. The exchange of peasant labor for knightly protection created an unequal world, where rent seeking paid more handsomely than progress. The fear among the ruling classes that labor displacement would cause hardship, social unrest, and at worst a challenge to the political status quo meant that worker-replacing technologies frequently were resisted or even banned. This dynamic, in which the politically powerful had more to lose than they could gain from progress, kept the Western world in a technology trap where technologies that threatened people’s skills were forcefully resisted.
A number of events tipped the balance in favor of innovators. The rise of nation-states and growing competition among monarchs meant that the cost of restraining technical progress increased significantly. Backward nations would soon find themselves overtaken—at the worst, conquered—by progressive ones, which made it harder to align economic conservatism with the political status quo. The external threat, in other words, became greater than the threat from below. The craft guilds, which did their utmost to resist replacing technologies, were weakened by growing competition between cities. Their weakening made it easier for governments to side with entrepreneurs and inventors, to the detriment of the guilds. Desmet, Greif, and Parente write:
With less support from the judiciary and the polity, craft guilds started to resort to violent means when new technologies threatened jobs. These violent reactions, which took the form of riots, demonstrations and vandalism, became more frequent at the turn of the nineteenth century, culminating in the Luddite riots of 1811 to 1816. Rather than being a sign of a strength, these violent reactions were the death throes of a weakening guild system.… This is indeed what occurred, and with guilds bec
oming less effective in blocking the introduction of labor-saving technology, it was only a matter of time before England underwent a major industrialization and escaped its Malthusian trap.59
It was only after the ruling elites began to side with the innovators that British industry could mechanize.
PART II
THE GREAT DIVERGENCE
Between 1780 and 1850, in less than three generations, a far-reaching revolution, without precedent in the history of Mankind, changed the face of England. From then on, the world was no longer the same.… [N]o revolution has been as dramatically revolutionary as the Industrial Revolution, except perhaps the Neolithic Revolution.
—CARLO M. CIPOLLA, THE FONTANA ECONOMIC HISTORY OF EUROPE
Without this increased wealth appearing to benefit the bulk of the population in proportion to the effort it has supplied for its production; the opposition of two classes, of which the one increases in numbers and the other in wealth; of which the one earns, by increasing labour, only a precarious subsistence wage, whilst the other enjoys all the benefits of a refined civilization; these conditions are everywhere manifest, and are everywhere followed by the same movements of thought and feeling.
The Technology Trap Page 11