The Technology Trap

by Carl Benedikt Frey

  —PAUL MANTOUX, THE INDUSTRIAL REVOLUTION IN THE EIGHTEENTH CENTURY

  The rise of the machines caused workers to rebel against technological progress. As we shall see, the technologies that made the Industrial Revolution were primarily worker replacing (chapter 4), which explains the widespread resistance to them (chapter 5). This time, however, political power was firmly with those who stood to gain from mechanization. For the most part, workers lacked political power, so their case was hopeless.

  Industrialization began with what to the modern eye seem to be a few minor inventions that enabled the establishment of the factory system and inaugurated an era of sustained industrial expansion that created the modern world. The story of the factory is much like that of science. Though it would be absurd to attribute modern science to Galileo Galilei, Francis Bacon, or René Descartes, they can justly be seen as founding fathers. In a similar fashion, it was only in the age of Richard Arkwright, Samuel Crompton, and James Watt that the technological foundations of the factory system emerged. Factories existed long before the Industrial Revolution, but they must be distinguished from the modern factory system—whose distinctive feature, as Karl Marx noted, was the introduction of machines.1 The inventors of these machines can therefore equally be regarded as the inventors of modern industry.

  Like the evolution of science, the rise of the factory system was a gradual and uneven process. The proposition of the economist Walt Rostow, that the Industrial Revolution constituted a “take-off” into self-sustained growth has been decisively disproved by subsequent empirical analyses, which indicates a more gradualist interpretation.2 Not only was overall growth slow during the Industrial Revolution, but even industrial output didn’t experience the kind of sudden surge that would suggest a revolution.3 Per capita income growth between 1750 and 1800 was barely faster than in the early part of the century, but by 1870 per capita income in Britain was 82 percent higher than it had been in 1750. The corresponding annual growth rate of 0.53 percent was slow by modern standards. However, it was significantly faster than the growth rates achieved by preindustrial economies.

  The macroeconomic impact of the Industrial Revolution was not large enough to be called an economic revolution, yet there are variables that suggest there was a technological revolution after 1750. The average annual number of granted patents more than doubled in the 1760s relative to the previous decade and continued to grow rapidly thereafter.4 One might surely call into question the economic relevance of some patents, but the timing of the patent surge supports the historian T. S. Ashton’s memorable phrase: “About 1760 a wave of gadgets swept over England.”5 Around that time, many of the defining inventions of the Industrial Revolution emerged, including Arkwright’s water frame and Watt’s separate condenser for the steam engine, both of which were patented in 1769.

  The absence of an economic revolution is no mystery. The simple existence of better technology does not inevitably translate into faster economic growth. For that, widespread adoption is required, but the Industrial Revolution was initially confined to a small number of sectors that collectively constituted a fraction of the overall economy. Thus, in its early days, the Industrial Revolution was not an aggregate phenomenon. As the economic historian Michael Flinn explains, “The lesson to be learnt from the statistics appears to be one of the superimposition upon a steadily growing economy of a small group of extremely dynamic sectors. Statistically they represented, even by the end of the [eighteenth] century, a very small share of the national product, but the growth in them was sufficient to double the existing rate of overall growth in the economy.”6 The Industrial Revolution began in the textile industry, and that is where workers most keenly felt the force of the mechanized factory. This mechanization, as we shall see, set the wheels in motion for what economic historians have called the Great Divergence—the period after the Industrial Revolution, when the West grew much wealthier than the rest of the world. But in the early days of industrialization, a great divergence happened within Britain, too: wages stagnated, profits surged, and income inequality skyrocketed.

  4

  THE FACTORY ARRIVES

  The annus mirabilis of 1769, as Donald Cardwell has called it, is often seen as the symbolic beginning of the Industrial Revolution.1 As noted, it was the year when Richard Arkwright and James Watt patented their defining inventions. But the origins of the Industrial Revolution can actually be traced much farther back and largely occurred simultaneously with the evolution of the factory system. Exactly when the factory system first emerged is uncertain. It was first defined in Andrew Ure’s 1835 Philosophy of Manufactures as something designating “the combined operations of many orders of workpeople, adult and young, in tending with assiduous skill a series of productive machines, continuously impelled by a central power.”2 The first legal definition dates from 1844, where it shall be taken to mean “all buildings and premises … where-in or within the close or curtilage of which steam or any other mechanical power shall be used to move or work any machinery.”3 Tracing the beginning of the factory system, in other words, requires tracing the application of machines powered by mechanical force in production. It was with the rise of worker-replacing machines that modern industry arrived at last.

  The factory system is best understood in contrast to earlier modes of production. By the early eighteenth century, the domestic system was still predominant in Britain. The economic historian Paul Mantoux’s descriptions of life and work before the ascent of the factory are instructive in illustrating just how transformative the Industrial Revolution was. In the domestic system, the typical artisan lived in a cottage with windows that were few and small. There was often only one room, which served as both living space and workshop. There was little furniture so that there was room, for example, for the loom of the weaver. The organization of labor was simple. If the artisan’s family was large enough it did everything, with the minor operations divided up. For example, the wife and daughters might be at the spinning wheel, the boys carding the wool, and the husband working the shuttle. While some artisans employed other craftsmen, these workers ate and slept in the same house as their artisan master and did not regard him as belonging to a different social class. The artisan master controlled production and didn’t depend on any financier, since he owned both the raw materials and the required tools. Part of his living was derived from the land, with industry often no more than an additional occupation. Production had barely changed since the Middle Ages.

  Output growth in domestic industry was slow but steady. As markets became more integrated, the merchant became an indispensable middleman for some artisans, allowing them to sell their goods across Britain and abroad. Because the cloth produced by the artisan was typically not dressed or dyed, the merchant needed to take part in the process of finishing the goods before they could be sold in the market. For this purpose, the merchant had to employ workers, and thus he became a merchant manufacturer. These workers still lived in the countryside, where they were independent contractors, but their livelihoods increasingly came to depend on the merchant manufacturer. If the harvest was bad, they might lack the means to replace some of their tools and equipment. Aware of this dilemma, merchant manufacturers began to provide the tools for production. The independent contractors who had lived in the countryside now became employed and waged and were gathered under one roof in the town where the merchant manufacturer resided. In other words, people gradually lost ownership of the means of production and their autonomy over the pace of work, leading to the creation of what Karl Marx would call a working class. The slow but relentless divorce between capital and labor that characterizes the process of industrialization had begun. From the late seventeenth century onward, this process of alienation swept across the country, although in an uneven manner. In Yorkshire the independence of the artisan remained almost untouched, while in the district of Bradford, wealthy merchants controlled industry. But nowhere had the means of production changed. There was no mec
hanization.4

  Why did the factory system emerge when it did? As noted above, the rise of international trade and growing competition among nation-states made it harder to align technological conservatism with political stability. In Britain, growth in wages meant that mechanization was necessary for the country to remain competitive in trade. Manufacturers selling abroad were incentivized to find ways of reducing labor costs due to growing market size, and increasing competition fueled political willingness to allow them to mechanize. What’s more, manufacturers had the financial means to adopt expensive machines to replace workers, which for the most part, was economically and technically feasible only in a factory setting. Some equipment required large plants and thus was simply too large and complicated to fit into the living rooms of workers’ cottages. Steam engines, iron-puddling furnaces, silk-throwing mills, and so on all required factories.5 The development of the factory system was therefore a process of technological evolution, driven by economic and political incentives to mechanize. And while as indicated above its arrival is typically dated to the late 1760s, there were earlier factories: by 1718, the silk factory in Derby employed some three hundred workers in a five-story building.

  The Rise of Machines

  The silk industry began in Britain after a colony of skilled workers left France after the revocation of the Edict of Nantes and settled in the outskirts of London. In its early days, the British silk industry struggled, as smugglers brought cheap imported silk onto the market. The relatively high wages in Britain left domestic manufacturers unable to compete. Finding ways to reduce labor costs was thus a priority. Serious efforts were made to develop silk-throwing machines for this purpose, but they were unsuccessful. All the same, rumors spread that such machines already existed in Italy. In 1716, John Lombe undertook a risky journey to discover the Italian secret. Together with an Italian priest who was the confessor of the proprietor of a silk factory, Lombe devised a plan that gave him access to the machines, and he secretly managed to make drawings of them. These were then sent back to Britain hidden in pieces of silk. After his return a year later, John and his brother, Thomas—who supplied the necessary capital—set up the first silk factory near Derby. The silk-throwing machines were built based on the drawings from Italy, and Thomas Lombe made a fortune. Besides the wealth he accumulated through this piece of industrial espionage, he received a knighthood for his services to Britain. The mechanized silk factories of Derby were surely impressive. But even though vast industrial undertakings existed in Derby and Stockport, they were too small to have any meaningful impact on aggregate economic activity. The silk factories were “giants in an age of pygmies.”6

  The Industrial Revolution was heralded by developments in the silk industry, but it had its true beginnings in cotton. Only a marginal industry in 1750, the cotton industry rapidly expanded and eventually became the largest in Britain, accounting for as much as 8 percent of the gross domestic product (GDP) by 1830. The rise of industrial centers like the city of Manchester was just one consequence of its expansion, which came as British cotton manufactures outcompeted China and India—the leading cotton producers in the seventeenth century. Even in 1750, about eighty-five million pounds of cotton was spun annually in Bengal, while British producers churned out a mere three million.7 One reason that Britain struggled to compete was that labor in Asia was cheaper. But its cost disadvantage was soon to become an advantage, as international competition spurred efforts to mechanize production.

  Before the age of machines, cotton spinning was a laborious process. The whorl and spindle were still used to make fine yarn, while the spinning wheel made coarse yarn. At the dawn of the Industrial Revolution, cotton yarn was manufactured in three stages. In the first stage, packages of raw cotton were opened and any dirt removed. The cotton was then carded—a process in which strands of cotton were aligned into a roving. In the final stage, the roving was then spun into yarn. In a factory setting, each of these stages were mechanized. The pioneer of the modern cotton industry, and thus the Industrial Revolution, was Arkwright. As Mantoux writes, with “Arkwright machine industry ceased to belong solely to the realms of technical history and became an economic fact, in the widest sense of the word.”8 Though Arkwright was responsible for several inventions, his greatest achievement was surely the second Cromford mill, which was opened in 1776. In the mill, water-powered machines were set up in the sequence of production, which became a blueprint for other early cotton factories.9

  To be sure, Arkwright did not single-handedly transform cotton. He just happened to be the first successful cotton industrialist. Decades earlier, in the 1740s and 1750s, Lewis Paul and John Wyatt developed a promising system of roller spinning. Wyatt was early to realize the potential of the factory system, but he failed to make it work in practice. According to his own estimates, roller spinning could reduce labor requirements by one-third, thereby increasing the profitability of British industry. Before the Glorious Revolution, he would probably have been more careful in masking any labor-saving effects, and the fact that he didn’t suggests a greater acceptance for replacing technologies. Still, it would be a mistake to think that the subject had become uncontroversial. As will be discussed in chapter 5, workers in the eighteenth century often smashed machines that they perceived to threaten their jobs. This is probably why Wyatt felt the need to suggest that displaced workers would soon find new and better-paying jobs elsewhere: “An additional gain to the clothier’s trade naturally excites his industry as well as enables him to extend his trade in proportion to his gain by the machines. By the extension of his trade he will likewise take in some men of the 33 per cent left unemployed.… Then he wants more hands in every other branch of the trade, viz. weavers, shearmen, scourers, combers, etc.… These workmen now having full employ will be able to get more money in their families than they all could before.”10 Worker-replacing machines, Wyatt argued, would not enrich only a few industrialists, but Britain as a whole. Though he was right in thinking that machines would eventually enrich Britain, his system of roller spinning did not even succeed in enriching himself and his companion. Lewis Paul was imprisoned for debt, and the machine was seized together with Paul’s other belongings. After the two men went bankrupt in 1742, their invention was sold to Edward Cave—editor of the Gentleman’s Magazine—who set up a small factory in Northampton with five water-powered machines, and eventually the Northampton factory ended up in the hands of Arkwright.11

  Arkwright’s success wasn’t that of a brilliant innovator. His achievements rested instead in overcoming a number of engineering bottlenecks that allowed roller spinning to be put to practical use. Unlike the technologies of the Renaissance, the inventions that emerged in eighteenth-century Britain were actually 1 percent inspiration and 99 percent perspiration. And they were all developed with the same objective: cutting labor costs in production. Arkwright’s water frame, which put roller spinning into practice, is estimated to have cut the cost of labor for spinning by two-thirds and overall costs of coarse cotton production by 20 percent. The economics of Arkwright’s second invention, the carding machine, were similar. And like the water frame it was not an invention of staggering novelty. Indeed, the novelty of his invention was called into question, as his patent was challenged.12

  The other key invention was James Hargreaves’s spinning jenny. Hargreaves is said to have conceived it when he watched a spinning wheel fall to the floor and, while revolving, seem to do the spinning by itself. What is certain is that the machine was very simple. It was a rectangular frame on four legs with a row of vertical spindles on one end. Like the water frame, it was an invention that required no scientific breakthroughs. Its great advantage over the spinning wheel it replaced was that it allowed a single worker to spin several threads simultaneously. Although the spinning jenny was around seventy times more expensive than a spinning wheel, it was still much cheaper than building an Arkwright mill; it took up little space and did not require a factory setting.13 The fact
that it didn’t require much alteration to the production process was probably one reason for its rapid adoption.

  Though the spinning jenny did not facilitate the rise of the factory system directly, it did so indirectly. Samuel Crompton, who began spinning with a jenny as a boy, was among those who set out to improve it. The result was the Crompton mule, invented in 1779, which combined the draw bars of Hargreaves’ jenny with the rollers of Arkwright’s water frame. The mule was first adopted in domestic industry, but it was soon applied in a factory setting, where its original wooden rollers were replaced with steel rollers like those used by Arkwright.

  As spinning machines ousted the spinning wheel, hand spinners were also ousted. It is thus unsurprising that few workers welcomed it. When rumors spread that Hargreaves had developed such a machine, residents of Blackburn broke into his house and smashed it. Indeed, incidents of workers smashing machinery regularly occurred during the classic years of British industrialization. Hence, even though political power had shifted to those who stood to gain from mechanization, inventors were still unlikely to describe their technologies as worker displacing or even labor saving. Jane Humphries, an economic historian, explains:

  Early eighteenth-century inventors rarely claimed that their innovations saved labour, inventors probably judging it unwise to publicise any adverse effects on local employment. Interestingly, they were more likely to promise employment creation, particularly of jobs for women and children, who by implication would otherwise be a burden on the rates. However, over time it became more acceptable to claim that an invention replaced labour, and by the 1790s patentees had lost all inhibition, with inventors in textiles, metal and leather trades, agriculture, ropemaking, docking and brewing all claiming such an advantage. Even then, savings were not of all labour but mainly the labour of skilled adults. Inventions were often advertised as reducing the need for strength or skill and so facilitating the substitution of unskilled women and children for adult trained operatives. The calculations by John Wyatt in defence of his (and Lewis Paul’s) spinning engine are instructive, not least for the alertness shown to the interest of the poor law authorities in creating work for women and children. Wyatt claimed that a clothier who employed a hundred workers might turn off thirty “of the best of them” but take in ten children or disabled persons and thereby be 35 per cent richer, while the parish would save £5 in forgone poor relief. Since such substitution was at the heart of worker resistance to new technology, it required a certain boldness to make such claims, and probably suggests that more inventions than announced were directed to this end.14