Britain
By: Siyanda Pali
It is perhaps common knowledge that Britain was the first country to undergo an industrial revolution in the 18th century, commencing around 1760. However, it is also perhaps prudent to explore the background for some details on how this may have been achieved, amongst other things.
To paraphrase (Chang H-J 2002, Defoe 1728), "Other elements were deliberately created by the state...It is difficult to establish the relative importance of the abovementioned factors in explaining the British success in wool manufacturing. However, it does seem clear that without what can only be described as the 16th century equivalent of modern infant industry promotion strategy put forth by Henry VII and his successors, it would have been very difficult, if not necessarily impossible for Britain to achieve this initial success in industrialisation. Without this key industry which accounted for about 50% of British revenue during the 18th century, its industrial revolution might have been very difficult, to say the least."
(McCusker 1996) also adds that Cloth exports, mostly woolen, accounted for approximately 70% of British exports in 1700, and were still well above 50% of total exports by the 1770s. The above are brief explanations of not only its integral nature, (state-facilitated), but also how Britain went from being a fairly backward economy in the 13th to 14th century, relying on the export of raw wool to the then Low Countries, often referred to as the Benelux, which were more advanced at the time (Belgium, Netherlands, and Luxemburg), referred to as such because of their extremely flat terrain or geography, to eventually having an economy which comprised of the most remarkable wool manufacturing industry the world over (Davies 1999, Defoe 1728, Ramsay G.D. 1982). For the sake of clarity, such a dynamic transformation was not purely as a result of laissez faire economics as others may wish for us to believe, but rather, included state intervention such as sending royal emissaries to other nations in order to identify suitable regions for wool manufacturing, the poaching of talent from the Low Countries (Belgium, Netherlands, and Luxemburg), increasing duties on the export of raw wool, as well as a preliminary ban on the export of raw wool (Ramsay G.D. 1982).
The pivot point for Britain's industrial period was the 1721 law introduced by Britain's first Prime Minister, Robert Walpole during the reign of George I (1660-1727). While Britain's policies prior to this were dedicated to capturing trade and increasing government revenue, the policies after 1721 were aimed at promoting manufacturing industries (Chang H-J 2003). Presenting the new law to parliament through the King's address, Walpole stated that, "It is evident that nothing so much contributes to promote the public well-being as the exportation of manufactured goods, and the importation of foreign raw material" (List 1885).
According to (Brisco 1907, Davis 1966, McCusker 1996) the legislation which came into effect in 1721, together with other policies were as follows:
1. A reduction on import duties of raw materials used in manufacturing, or eliminated completely
2. Duty drawbacks on imported raw materials for exported manufactures were hiked
3. Export duties on most manufactures were repealed
4. Foreign- manufactured goods fetched increased duties
5. Export subsidies were widened to also include other items such as silk products and gun powder, while subsidies which prevailed at the time for refined sugar and sailcloth, were increased.
6. Regulations to control the quality of manufactured products, especially textiles, was introduced, in order to protect the reputation of British manufactures in foreign markets, policies which were similar to those employed by South Korea, Taiwan and Japan during the post-war period (Chang H-J 2003)
In spite of Britain's widening technological gap with other countries, it continued its industrial promotion policies well into the early nineteenth century, (Bairoch 1993) equating to some 50 or more years or two generations after its industrial revolution.
The revocation of the Corn Law in 1846 created a semblance of 'free trade', which would be considered a cause for celebration by subscribers of the classical liberal economic doctrine (Bhagwati 1985). However, numerous historians see it as an act of "free-trade imperialism" designed to "halt the move to industrialisation on the Continent by enlarging the market for agricultural produce and primary materials." (Chang H-J 2002, Kindleberger 1978)
The latter is precisely the rationale by certain politicians at the time, e.g. John Bowring and Richard Cobden vis-a-vis the repeal of the Corn Law as their campaign.
Britain's Early Example of Kicking Away the Ladder
England vigorously opposed the industrialisation of its then colonies, in numerous ways (Chang H-J 2003):
1. Export subsidies (bounties) were used to encourage primary production in the colonies, while import duties produced in the abovementioned were prohibited.
2. High value-added manufacturing activities in the colonies were forbidden.
3. Exports from the colonies which competed with British products were barred eg cotton textile imports from India as well as woolen cloth imports from Ireland and the USA were both banned by Britain in 1700 and 1699 respectively.
4. Tariff use by colonial authorities was outlawed, unless deemed appropriate for revenue purposes. Even so, such tariffs would still be annulled in numerous ways.
Through 'unequal treaties', any tariff autonomy of colonies was eroded, with levels ranging between 3% - 5%. Starting with Brazil in 1810, Latin America in its entirety, including Persia (now Iran), the Ottoman Empire, China, Thailand (formerly Siam) as well as Japan up until 1911, were included in this group of countries.
To quote the distinguished economic historian Paul Bairoch, "In short, contrary to popular belief, Britain's technological lead that enabled this shift to a free trade regime (1846) had been achieved behind high and longstanding tariff barriers (Chang H-J 2003, Bairoch 1993).
It is also for this reason that German economist Frederich List draws his comparison of Britain to one who ascends the summit, then, 'kicks away' the very ladder which they had used to ascend, depriving others of enjoying the same opportunity. Perhaps it is prudent to quote him in copious amounts, to further indent the point:
"It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, depriving others of the means of climbing up after him. In this lies the secret of the cosmopolitan doctrine of Adam Smith, and of the cosmopolitan tendencies of his great contemporary William Pitt and all his successors in the British government administrations. Any nation which by means of protective duties and restrictions on navigation has raised her manufacturing power and raised her navigation to such a degree of development that no other nation can sustain free competition with her can do nothing wiser than to throw away these ladders of her greatness, to preach to other nations the benefits of free trade, and to declare in penitent tones that she has hitherto wandered in the path of error, and has now for the first time succeeded in discovering the truth (List 1885).
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