Charles Babbage has recently been rediscovered as the “pioneer of the computer.” He needs to be rediscovered a second time for his contribution to the understanding of economics, especially for his penetrating and original insights into the economic role played by technological change in the course of industrial development. Indeed, it is fair to say that it was Babbage's book which first introduced the factory into the realm of economic analysis.

Babbage has lived a furtive, almost fugitive existence in the literature of economics. Joseph Schumpeter, in his magisterial History of Economic Analysis, refers to Babbage's book, On the Economy of Machinery and Manufactures, as “a remarkable performance of a remarkable man.” Nevertheless, although Schumpeter's well-known book is more than 1,200 dense pages long, the treatment of Babbage is confined to a single footnote. Mark Blaug, in his Economic Theory in Retrospect, uses the same adjective as Schumpeter. He cites Babbage's book only to point out its influence on John Stuart Mill's discussion of increasing returns to scale in chapter 9 of book I of Mill's Principles of Political Economy. Mill's treatment of that subject, Blaug states, “is heavily indebted to a remarkable book, On the Economy of Machinery and Manufactures (1833) by Charles Babbage.”