Science, Economics, and the British Industrial Revolution

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Science, Economics, and theBritish Industrial
Revolution

• Bob Allen
• Nuffield College, Oxford
• 2004

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The Industrial Revolution raises big questions

• Was the new technology the result of the
  Scientific Revolution of the 17th Century?
• Was the Industrial Revolution a British or a
  European phenomenon?
• What are the roles of economics and culture in
  explaining economic growth?

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I will pursue the role of economic incentives in
explaining 18th century technology.

• Wage and price history is the key to those
  incentives.
• Wages and prices emphasize the uniqueness of
  Britain vis-à-vis Asia and Europe.
• There were also important institutional
  changesnamely the invention of RD.
• It had economic--and possibly cultural-- roots.

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Part I

• The Scientific Revolution and Technology

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Was the Industrial Revolution caused by the
Scientific Revolution? The are two ways in
which Science might have influenced 18th century
technology.

• Scientists discovered new knowledge that was
  applied to technology.
• Science created new attitudes, methods, or
  culture that increased inventiveness.

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The only important example of scientific
knowledge leading to new technology was the
atmospheric steam engine.
In 1672 von Guericke found that if air was pumped
out of cyclinder A, the weights D rose as the
weight of the atmosphere pushed down the piston
in cylinder A. In 1675 Papin found that filling
the cylinder with steam and then condensing it
accomplished the same purpose.
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In 1712 Newcomen invented an atmospheric steam
engine that pumped water from a mine.
Steam from the boiler filled the cylinder.
When water was injected into the cylinder, the
steam condensed, and the weight of
the atmosphere depressed the piston raising the
pump.
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Aside from the atmospheric engine, there was no
connection between the knowledge discovered in
the scientific revolution and the inventions of
the industrial revolution. The link from new
scientific knowledge to new technology becomes
important only after 1850.
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Where did new technological ideas come from if
not from Science?

• Adapting ideas from other activities.
• Copying Asian goods.
• Substituting coal for charcoal.
• clockwork to control machines.

Coal and clockwork are examples of the first
point. They were general purpose technologies.
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First Source of IdeasAdapting Ideas from Other
Uses
In rolling and slitting mills, it was the rollers
that pulled the length of hot metal between them.
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This was copied in roller spinning where the
rollers pull the thread between them.
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Second Source of IdeasImitating Asian imports.
This is a copy of a Chinese Tea set. It was
produced in Staffordshire around 1775.
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Imitation of imports occurred in many other
industries.

• Cotton textiles was the most important. India
  was the worlds largest producer in the 18th
  century. The famous spinning and weaving
  machines of the industrial revolution were
  invented so that Britain could compete with
  India.
• Many mundane products were also imitatedwhite
  lead, for instance.

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Third Source of IdeasSubstituting Coal for Wood

• Coal was a cheaper energy source than wood, so
  why not use coal instead?
• Coal was more polluting, so techniques had to be
  developed to control the contaminates.
• New designs for furnaces, flues, and chimneys
  were needed.
• New skills were required to stoke and control
  coal fires.

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Fourth source of ideasClock Work

• Mechanical clocks--with gearswere first made at
  the end of the middle ages.
• They took a giant step forward with the invention
  of the pendulum clock in 1656.
• Making more accurate clocks depended on more
  refined gearing and metal work.
• These techniques and skills were applied to
  industrial machines in the 18th century.

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The fine gearing can be seen in the late 18th
century clock.
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Eighteenth century mechanics applied gearing to
automatons that replicated human and animal
movement. This dulcimer player was fully
operational. It was a toy of Marie
Antoinette. Notice the gearing that controlled
the movements of the figure.
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Gearing that was developed for clocks and toys
was essential for machinery
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Aside from new knowledge, the Scientific
Revolution may have influenced production as the
scientific method was applied to technology and
interest in science spread.
The Scientific method includes the ideas

• that there are natural laws.
• that these laws are mathematical.
• that they can be discovered by studying facts.
• that they can be used to improving the world.

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There are certainly examples of technology being
studied with the Scientific Method in the 18th
century.

• Josiah Wedgewood collected and tested 5000
  materials to create the recipe for cream ware.
• John Smeaton carried out systematic experiments
  on models of water wheels to improve their design.

The question is Were the generality of
inventors influenced by modern science, and, if
so, how?
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Did the Scientific Revolution foster technology
by creating a Scientific culture?

• New attitudes spread among the upper classes in
  the 17th and 18th centuries.
• Knowledge of Science was stimulated by courses
  and books.
• Activities from gardening to collecting were
  transformed.
• But what was happening with the artisans?

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This apparatus was used by King George III when
he studied pneumatics and mechanics.
This measures elasticity.
This is an air pump.
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Collecting was changed. The 17th century
cabinet of curiosities in which a Greek vase, a
beautiful stone, and a piece of the true cross
were mixed together...
Notice the intermixture of artifacts, fish,
reptiles, and so forth.
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gave way in the 18th century to specialized
collections of minerals, plants, etc. that could
be analyzed to abstract laws of nature.
Notice Birds together, Shells together, And so
forth
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The popularization of science and the
descriptions of technology sparked an upper class
interest in craft hobbies in the 18th century.
Here is a gentleman with his lathe and drill
press.
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This is a close-up of Louis 16ths lathe.
The ruling ideas of the age are the hobbies of
the ruling class?
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Interest in science and technology was widespread
among the upper classes across Europe, but it was
particularly intenseand practicalin Britain.
Was British interest cultural or did it reflect
economic motives?

• New agricultural, mining, and transport
  technology raised the value of land.
• English land law and the rise of the great estate
  meant that the English gentry and aristocracy
  were unusually well placed to profit from
  improvement.
• Is that why the English had a more pragmatic
  culture than the French?

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Part II

• Prices
• The Background to Invention

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The inventions of the industrial revolution were
the result of four factors that created a unique
price environment in Britain.

• Globalizaton was the prime mover.
• Britains coal resources were a necessary (but
  not sufficient) factor.
• The accumulation of human capital.
• The increase in technical knowledge and skills
  since the renaissance.

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British Prices were unique

• High wages
• Cheap coal
• Low skill premium

These created a demand for labour-saving,
energy-using technology and increased the
capacity to respond to that challenge.
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British Wages were high in four senses

• At the exchange rate, British wages were high
  relative to those in its competitors.
• High British silver wages translated into high
  living standards compared to the rest of the
  world.
• British wages were high relative to capital
  prices.
• British wages were exceptionally high relative to
  the price of energy.

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British wages were exceptionally high at the
exchange rate (grams of silver per day).
Asian wages were lower even than Krakow.
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Annual Income relative to Poverty Line for
Craftsmen
High British wages meant a high standard of
living.
Asian living standards were similar to those in
Europe.
34
British wages rose sharply relative to capital
costs after 1640.
Builders wage rate relative to the user cost of
capital inputs wood, iron, nonferrous metals,
and bricks.
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The high wage economy was caused by Britains
foreign trade boom.

• This began with the new draperies and was
  consolidated by the creation of a world empire.
• The trade boom pushed the urbanization rate from
  7 in 1500 to 29 in 1800.
• Tight labour markets meant high wages.

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Coal was cheap in Britain.

• In 1800, Britain mined 90 of the coal in Europe.
• Coal mining on the continent was concentrated in
  southern Belgium.
• The rest of the great coal field running from
  north eastern France to Germanys Ruhr was
  unexploited.
• Why wasnt German coal mined in 1800?

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Energy was very cheap in northern and western
England where the coal was mined and the
Industrial Revolution happened.
Coal in Northern England was also cheap relative
to wages.
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Cheap coal did not simply reflect natural
reserves. Cheap coal resulted from the
urbanization of the 17th 18th centuries.

• Britains coal resources were not intrinsically
  superior to those of Germany, Belgium, and
  northeastern France.
• Growth of London meant higher wood prices, which
  induced the development of English coal fields.
• Dutch urbanization led to exploitation of peat
  and, later, importing English coal since those
  fuels were cheaper than German coal.
• Paris grew enormously by using wood--whose price
  rose but not exorbitantly.

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The rise in the price of wood in London after
1550 raised the demand price of coal in Newcastle
above the price prevailing in the late middle
ages.
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High British wages and cheap coal underpinned the
Industrial Revolution

• mechanize production and substitute coal for
  labour
• mass market for new products
• greater supply of savings and inventive activity
• accumulation of human capital
• literacy
• Mathematical
• Craft and industrial skills
• experimentation

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The Economic Environment and the Industrial
Revolution
Cheap coal
Commercial imperial expansion
New technology
High wages
Growing output incomes
Human capital
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Part III

• Invention outside
• the Core Industries

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Historians have debated the breadth of technical
change in the IR.

• Crafts and Harley contend it was confined to the
  famous core industries.
• Temin, Berg, and Hudson believe it affected the
  other industries as well.
• TFP calculations show that progress was
  widespread but not universal.

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TFP was constant in Bread making(a point for
Crafts and Harley).
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TFP rose in hats (Temins example).

• British exports of hats increased dramatically.
• Temin could point to the adoption of some simple
  machines by the industry.
• The adjoining graph shows an index of total
  factor productivity, which more than doubled.

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TFP also rose in nail making.
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Rising wages stimulated the development of simple
ways of raising the capital-labour ratio.
The oliver was a treadle- operated sledge
hammer that formed the heads of nails. Output
per worker rose, as more capital was used.
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A similar process occurred in Needle-making where
the Nail-making tools were copied.
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These inventions were responses to the rise in
wages relative to capital costs.
Builders wage rate relative to the user cost of
capital inputs wood, iron, nonferrous metals,
and bricks.
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Heres the modelIt starts with a single
technique.
C A P I T A L
Isoquant for single technique
K
low wage cost line
high wage cost line
Labour
L
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The High Wage Firm or Country Can Improve its
Profits and Competitiveness byInventing a
Technique that

• Uses more capital
• Uses less labour
• Cuts Its costs
• Does not cut the costs of its low wage competitor

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Only the high wage competitor changes technique.
C A P I T A L
Isoquant of new technique
Isoquant for single technique
K
K
low wage cost line
high wage cost lines
Labour
L
L
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Higher British wages meant a higher
capital-labour ratio in Britain than in France.
There was no oliver hammer in the French nail
shop!
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Wages and Pricesnot Scienceseem to explain the
productivity growth in hat and nail-making.

• Ideas were practical and involved copying other
  activities.
• Development problems were not great.
• Artisan tinkering and Collective Invention were
  sufficient to generate them.
• These institutions were animated by the rise in
  the wage rate.

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Collective Invention was an important source of
new technology before and during the IR.

• In collective invention, firms share design
  informationeither from necessity or compact.
• When new capacity is built, the investing firm
  may vary the design to improve on best practice.
• If the variation cuts costs, the next investing
  firm can extended the change.
• The cost of the experiment is the chance that the
  new design will be inferior to best practice.
• By making the changes small, the cost to each
  firm can be kept low.
• Collective invention produces a technology
  adapted to the natural conditions and factor
  prices of a region.

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Part IV The RD revolution

• The Industrial Revolution was based on little
  ideas.
• Realizing their potential required RD to solve
  engineering problems.
• Edison Invention is 1 inspiration and 99
  perspiration.
• Targeted RD was an innovation of the 17th and
  18th centuries.
• RD was undertaken in response to the extreme
  profits implied by Britains unusual prices.

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Invention proceeded differently in the famous
industries--

• Cotton spinning and weaving
• Coke smelting and puddling iron
• Steam engine
• Non-ferrous metal smelting
• Porcelain
• Railroad

In all, invention involved Research Development
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RD was an investment, and that provides a link
between prices and technology.

• Costs were incurred initially in the hope of
  future gain.
• Paying these costs gave rise to the problem of
  finance.
• Patents were used to capture the benefits of new
  products or cheaper processes.

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Allocating resources to RD was rare before the
17th century.

• Many key breakthroughs were inadvertent spin-offs
  of other activities.
• Domestication of grain
• Use of legumes as nitrogen fixing crops
• Others were collectively invented as firms
  learned from each other by modifying designs and
  extending useful improvements.
• sailing shop
• blast furnace

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The effectiveness of the Renaissance savants and
the tinkering artisans was limited.

• The problem was that they did not do RD.
• Their inventions were rarely put into practice.
  Much of this inventive effort was dissipated
  owing to absence of capital support or
  sufficiently sustained research. (Webster,
  Great Instauration, p. 348.)
• While Leonardo is regarded as a marvellous
  engineer, his designs cannot be constructed
  successfully without doing the RD work that he
  did not undertake.

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This changed in the 18th century with the
invention of private RD.

• The key innovations of the eighteenth century
  were all preceded by RD projects.
• RD started in the 17th century.
• The earliest examples involve figuring out how to
  use coal in more and more activities.

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Why did RD start in the 17th century?

• The high returns involved in extending the use of
  coal.
• The scientific revolution and the application of
  its method to technology.
• This was part of a very broad reorganization of
  information organization and processing.

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Locke averred that from Experienceall our
Knowledge is founded. Our ability to extract
knowledge from experience depends on our
intellectual tools, and they improved in the 18th
century.

• from cabinets of curiosities to organized
  collections
• systematic classification of plants, animals,
  rocks, etc.
• first graph
• first statistical analysis of a data base
• testing of scale engineering models
• Isaac Newtons present value tables
• ready reckoners

Applying the Lockean program to technology was
the cognitive component of RD.
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The investment model of RD maintains that RD
will occur if its expected rate of return is high.

• The expected return depends on objective
  circumstances and subjective projections.
• Did the Scientific method make RD more effective
  (changing the objective factors)?
• Did belief in scientific laws make subjective
  projections more optimistic?

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Part V Example Roller Spinning

• Arkwrights perfection of roller spinning (the
  water frame) is one of the most famous inventions
  of the industrial revolution
• Its invention illustrates the basic principles
• the incentives created by the economic
  environment
• the simplicity of the basic idea
• the important role of RD

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Heres Arkwrights cotton spinning machine
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Competition with the Indian cotton industry posed
the economic problem.

• The Indian industry was the largest in the world
  and exported to Europe and Africa.
• Indian wages were one fourth English.
• The English industry was on the margin.
• Inventing a way to cut labour costs would allow a
  vast increase in output at the expense of Indian
  producers.

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Spinning includes two elements that define the
technical problem

• Drawing out the roving to make the thread thin
• Twisting the thread (as it is wound on the
  spindle) to give it strength.

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The ideas Arkwright used were simple.

• Surely if an automaton could play the dulcimer, a
  machine could mimic spinning!
• The thread was wound and twisted by a flyer--an
  old device.
• Trains of rollers were used to stretch out the
  roving.
• Rollers were a general purpose technology of the
  period.
• Arkwright stole the idea from Paul and Wyatt.

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Arkwrights use of rollers was a creative
application of a 17th century General Purpose
Technology--the use of gears was to control sets
of opposed, revolving cylinders (mangels)
This invention had wide application

• Rolling mills for copper, brass, iron
• Flattening paper sheets
• Crushing rock
• Drawing out the cotton fibres in roller spinning.

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Drawings of a puddling furnaces, which separated
burning coal from the iron being refined, and a
train of rolls.
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• The hard part was making the thing work. Note
• The thick roving at the top
• The thin thread at the bottom
• The flyer that winds the thread
• The three trains of rollers
• The clockwork gearing
• The weights

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Notice how far the design has been improved over
Lewis Pauls patents of 1738 and 1758.
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Key changes included

• Three sets of rollers
• Wood rollers on top
• Fluted metal rollers on bottom
• Spacing between them
• Speed doubling from one roller to the next
• Weights setting the tension on the thread

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Arkwrights RD project

• Several clockmakers were employed over five years
  to perfect the machine.
• By trail and error, they worked out the number of
  trains of rolls, their speed, materials, spacing,
  and weighting.
• Jedediah Strutt was the venture capitalist who
  financed most of the RD.
• Patents were used to capture the returns.
• A carding machine was also invented to make the
  roving.
• Mill lay-out was perfected with Cromford 2.

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The key question

• Was there any relationship between the
  clockmakers trials and the scientific
  revolution?
• Was Arkwrights RD program the Scientific
  Revolution in action?

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A Sceptical Answer

• It used to be said that primitive people and
  peasant farmers were unscientific and
  irrational.
• This view has been refuted by many studies.
• One survey postulated the likely universality of
  what might best be described as the experimental
  mentality.

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More questions

• If Bushmen and peasants do experiments, is it
  necessary to invoke the Scientific Revolution to
  explain Arkwrights RD program?
• Isnt the real question what circumstances
  allow the universal experimental impulse to
  flourish?
• Werent those circumstances the unusual
  pricesand the resulting chance to get richthat
  marked eighteenth century England?
• Wouldnt Arkwrights RD program have happened in
  the absence of the Scientific Revolution?

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The RD Revolution was a discontinuity in
economic history.

• It took high expected rates of return to prompt
  18th century RD.
• The success of these programs led to upward
  revisions in the chances of success with RD, so
  it was later undertaken under less auspicious
  objective circumstances.
• Consequently, the rate of invention jumped to a
  higher level in the 18th century.
• The result is a higher rate of economic growth.

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Part VI Conclusion

• New Scientific knowledge does not explain the
  Industrial Revolution.
• The key to the Industrial Revolution was the
  improvement of technology by simple engineering.
• Possibly the Scientific Method improved RD, but
  experimenting is universal among humans.

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• Britains unusual wages and prices created the
  profit opportunities that animated the impulse to
  invent.
• Britains success in the global economy between
  1500 and 1800 lay behind these prices and wages.
• Success in the global economy, therefore, was the
  main cause of the technological breakthroughs of
  the Industrial Revolution.