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Requirements for the industrial Revolution

The Industrial Revolution in England

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Requirements for Industrial Revolution

1. Savings or surplus (S) require:

2. Savings have to turn into productive investment:a.  Capitalist = Businessman. A market is needed, so we

need: * Reliable Demand (10)

* Transport and Communication Revolution

b. Capitalist Businessman. Besides the market, we need:

* Credit Revolution (bank development…)

* Legal – corporative revolution (stockmarket, joint stock companies, bankruptcy…)

a. Agricultural revolution

b. Commercial revolutionand/or

Economic Development: Y = C + S

Y = I / KPR

S I

Demographic revolution )

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3. Capital-product relationship is labour applied to physical capitalWe need:a. Technology

- Previous Scientific Revolution (XVII th century)

- Applicability of inventions for the sake of profit

b. Labour- Quality

* Educational Revolution

* Mentality Revolution (bourgeois revolution, women liberation…)

- Quantity

* Agricultural Revolution

* Demographic Revolution

Requirements for Industrial Revolution

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Demographic Indicators

Rate of reproduction= 2,1 or 2,2Gross birth rate (N) = n/P x 1000Mortality Rate (M) = m/P x 1000Rate natural increase= n – mLife Expectancy (e0)Population pyramidsHuman Development Index

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World map of Human life expectancy, 2007

http://www.gamedesign.jp/flash/worldmap/worldmap.html

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Population pyramid:developing country

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Population pyramid

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Human Development Index 2006

██ 0.950 and over██ 0.900-0.949██ 0.850-0.899██ 0.800-0.849██ 0.750-0.799

██ 0.700-0.749██ 0.650-0.699██ 0.600-0.649██ 0.550-0.599██ 0.500-0.549

██ 0.450-0.499██ 0.400-0.449██ 0.350-0.399██ 0.300-0.349██ under 0.300██ n/a

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Value theory in David Value theory in David RicardoRicardo THEORETICAL PROBLEM:

In 1815, corn price increased in England and a Parliamentary Commision tried to determine if it was due to the high rents demanded by landowners

RICARDIAN SOLUTION: CORN MODEL. Assumptions:

Corn is the only commodity in the economy Corn value depends on the cost of production in

the land with worst natural conditions Different lands have different fertilities Diminishing marginal returns in agriculture

Classical EconomicsClassical Economics

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Population increases

100 U100 U1

ALandK/L

80 U90 U90 U2

90 U90 U100 U100 U1

BALandK/L

Population increases

60 U70 U80 U80 U3

70U80 U80 U9O U9O U2

80 U80 U90 U90 U100 U100 U1

CBALandK/L

Population increases

40 U50 U60 U70 U70 U4

50 U60 U70 U70 U80 U80 U3

60 U70 U70 U80 U80 U90 U90 U2

70U70U80 U80 U90 U90 U100U100U1

DCBALandK/L

TP and MgPL = 100 UR = 0 U

Price increasesTP = 280 U

MgPL = 90 UR = 10 U

Price increases

TP = 520 UMgPL = 80 U

R = 40 U

Price increases

TP = 800 UMgLP = 70 U

R = 100 U

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Putting-Out system

1884, Van Gogh 1883, Van GoghJan Gossaert, 1530

Las Hilanderas, Diego Velázquez (1599-1660) Santa Isabel’s tapestry factory workshop

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Papin

Newcomen

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Model of the spinning jenny (Hargreaves)in a museum in Wuppertal, Germany

SPINNER

Flying shuttle, Kay

WEAVER