The Cambridge Economic History of Modern Britain

INTRODUCTION

History is a series of connected pasts; events and choices influence subsequent opportunities and choices. Path dependency appears in many guises. Technological events, like the innovations of the Industrial Revolution, set off processes of continuing technological improvement, firm capacity building and labour force experience that provide first-mover advantages to pioneers. First-mover advantage generates technology-based comparative advantage that fuels export growth with accompanying general equilibrium adjustments. Economic institutions – firms, product and labour markets, supply chains – develop and influence the future in ways that can be both positive and negative. Political economy and government policy develop their own persistence. When these dynamics are reinforced by major historical disruptions such as the Revolutionary and Napoleonic Wars and the World Wars of the twentieth century, legacies are often intensified.

British economic history of the past two and a half centuries falls into three broad eras. The Industrial Revolution saw British industry triumph. At the time of the great Crystal Palace exposition in 1851, Britain was truly the workshop of the world and the great exporter of manufactured goods. In the half-century to the First World War, manufacturing in the United States and Germany grew faster and Britain lost that dominance. In addition, new technology emerged in lighter engineering, organic chemicals and even in steel but took root slowly in Britain. In the half-century or more after the First World War, Britain's industrial and social history revolved around the decline of industries that had been the basis of historic success, unemployment and regional decline. This history invites speculation that the success of the Industrial Revolution carried with it the seeds of failure.

This chapter explores the legacy of the early start. The material falls into four sections. First, the Industrial Revolution in textiles, engineering and iron created technological advantage and resulted in locally concentrated export industries that had within them dynamics of continued technological change. Second, Britain committed to the international economy and that commitment became broader and deeper in the globalisation of the half-century before the First World War.