Industrial Revolution and market forces in England

Posted by Alexander Snitker September 14, 2012 Comments are off 2457 views

By Alan Brooks

“Machinery and the Labourer:” a 19th Century journalist takes a look at the Industrial Revolution and market forces in England.

Between 1811 and 1812 there were uprisings across England in which a number of cotton mills and a lot of factory machines were burned or destroyed by workers (known as Luddites) who were worried that industrialization would mean the end of all their jobs. If one worker with a machine could do the job of 12 workers then the other workers would be laid off and starve in the streets. Within a few years it was obvious that their doomsday predictions were completely wrong and today the argument that technological advances hurt workers is known as “The Luddite Fallacy.”

In 1857, a writer for Charles Dickens’ Household Words penned an article outlining exactly what had happened to workers and the lower classes in England since the industrial revolution. He points out that, contrary to the Luddite’s prediction that laborers would lose their jobs to mechanized factories, the opposite had happened. More workers were employed, at better wages, and had more job security than before.

The author writes: “The general argument starts from the fact that depressed markets force the manufacturer, if possible, to cheapen the cost of production… This charge involves a temporary lessening of the number of hands employed at the lowest rate of wages, but it establishes a permanent demand for improved labour at an improved price… Production having been cheapened, the price of the article produced continues to be low, and, by the lowering of price, there is obtained an increase of demand which very soon brings up to (or, more commonly, raises beyond) the old scale the number of men occupied in the business of producing. Thus, there is still work for the old number of hands, and usually for some new hands, too: while there remains the fact that an improved class of workmen has been instituted, that so many men, who might otherwise have remained near the bottom, have gone up a step or two higher in the social scale.”

So, basically, what’s good for business is good for people. Greedy capitalist fat-cat CEOs who want to line the silk pockets of their bespoke suits find ways to cut costs and everybody wins.

As the author of the article points out that, when industries improve their efficiency (whether due to technological advances or to economic forces), “there is a consequent decrease in the fluctuations of the trade. Not only then has a better kind of labour been produced, and in the end an increase made in the number of labourers employed; not only is prosperity increased; but it is also made more durable.”

He gives an example: “In the year seventeen hundred and ninety-two it cost a shilling, with the machinery then used, to make a pound of yarn; fifty years later, the cost was only twopence. Of the one sum the labourer received as wages fivepence-half-penny on every pound of material: of the other he received only a penny; and yet, in the former period, the weekly wages were four shillings and fourpence, and in the latter eight shillings and eightpence — earned chiefly, in each case, by women and children. The cost of production has, since this account was rendered, been still further lessened, and the wages have still risen.”

Today we hear calls for the increased regulation of industries, increased taxes on their profits, protectionist measures for workers, particular industries, or the “middle class.” What the Victorians in England discovered (and quickly forgot) is that progress, both social and economic, comes from market competition and that when you impede the markets, you impede progress and drag everyone down.

So the Marxist argument that workers are the sole agents of progress; that the “working class” is the most important part of the economy, is bunk. Economies aren’t driven by consumers, they are driven by capitalist greed. The desire to sell more of a product, to cut production costs in order to undermine competitors, that is the catalyst that drives true progress in the world and that is what free-markets are all about.

Regulations are always protectionist in nature. They seek to protect a group, or a company, or an industry, and they inevitably hurt competition and thus the market. If we allowed markets to progress naturally and removed barriers to entry and trade, we would see innovation and improved effenciency and, as a result, greater prosperity for everyone.

As the author of the 1857 article said: “with the machinery comes a demand for better labour and the offering of better pay; with it comes, also, increase of production, and a necessary widening of the whole field of labour and of the resources of the working-class; with it comes also a cheapening of the product, therefore a more extended, a more certain and less fitful demand, a lessening of that fluctuation in the labour market which makes the well-being of the workman insecure. Great, then, proves to have been the mistake of the poor men who twenty or thirty years ago dragged out machines and burnt them in the market-places of our rural towns.”

Protectionism is counterproductive to progress in particular and to the economy as a whole. It is better for everyone if people are allowed to buy the best product for the best price and any interference (or regulation) in that system inevitably leads to regulatory capture, rent seeking, and/or cronyism.

About Alexander Snitker

Alexander Snitker is a United States Marine veteran and the first Libertarian U.S. Senate candidate from the State of Florida. Website: E-Mail:

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