Allen (2009) — The British Industrial Revolution in Global Perspective

Citation. Allen, Robert C. The British Industrial Revolution in Global Perspective. Cambridge University Press, 2009.

Summary

The book-length development of the high-wage / cheap-energy thesis of the Industrial Revolution. Allen marshals his own reconstructed city-level real-wage series (Allen wage series) to argue that late-17th and 18th-century Britain had a factor-price structure uniquely favorable to mechanization: wages were roughly twice those of continental Europe and three to four times those of Asia (in silver and subsistence-basket terms), while coal was far cheaper per unit of energy than fuel elsewhere. This ratio — expensive labor, cheap energy — made labor-saving, energy-using machinery profitable to invent and adopt in Britain long before it was profitable on the Continent or in Asia. The IR’s signature inventions (spinning jenny, water frame, Newcomen and Watt engines, coke smelting) are exactly what that price structure would predict.

Much of the book is dedicated to working through individual inventions case by case — computing profitability at British and non-British factor prices, and showing that the same machines that paid in Manchester did not pay in Lille or Mulhouse until continental wages rose.

Key claims

• British wages were unusually high in the 18th century relative to Continental Europe and Asia, in both silver and subsistence-basket terms.
• British energy was unusually cheap because of accessible coal.
• This wage/energy ratio made labor-saving capital-intensive innovation privately profitable in Britain earlier than anywhere else.
• Continental adoption of British innovations tracked the convergence of continental wage/energy ratios with British ones, with a lag of decades.
• Therefore: factor prices, not culture or institutions, are the primary cause of the British Industrial Revolution.