Q. How different was the experience of industrialization in Britain, France and the German states?

The term ‘Industrial Revolution’ denotes the first historical instance of the breakthrough from an agrarian,
handicrafts dominated economy to one distinguished by machine manufacture and industry. The Industrial
Revolution brought with it and was in its turn shaped by significant improvements in productive and
processing technologies, inventions and innovations and a new form of social organization that revolved
around larger, more concentrated units of production: factories.

According to W.W Rostow the process of industrialization was marked by a series of stages: an initial
‘takeoff’ of technological innovation in certain sectors, a more extended period of adaptation during which
the new technology was applied to different areas of manufacturing producing higher growth rates, and a
final, mature stage in which technology can be used in all branches of production.

The classical narrative of the Industrial Revolution asserts that it began in England in the eighteenth century
and spread from there in an unequal manner to the countries of continental Europe, and then to a few areas
overseas with varying degrees of success. The exemplar industrial economy in this narrative is Britain while
other economies (whether continental or non-European) were perceived to be imitating the British model,
often imperfectly.
Alexander Gerschenkron’s classical model of economic development and ‘backwardness’ postulates that
different environments and different political and socio-economic conditions across Europe often lead to
very specific requirements for industrialization. He distinguished between: 1) countries with ample private
wealth and entrepreneurial initiative (Britain) 2) countries where dynamic new institutions such as
investment banks were required to fuel industrial growth (Germany, Austria, Italy, etc) and 3) countries in
which active state involvement was necessary to achieve the desired objective (Russia). In the case of
countries which belonged to the latter two categories, Gerschenkron also emphasized the role of motivating
ideologies such as nationalism and communism.

As we shall go on to see, traditional understandings of the nature and spread of industrialization across
Europe have come to be challenged and questioned. The centrality of Britain to the process and the classic
British model have been deconstructed and severely qualified. What has emerged is a much less coherent
although significantly more nuanced understanding of the process of European industrialization.

British Industrialization

The British experience of industrialization which became the classical model of the industrial revolution in
traditional historiography was characterized by a revolution in agriculture, a rapid fall in rural population
with the transfer of labour to the incipient industrial sector, corresponding urbanization, the technological
transformation of sectors of industry, large scale production for export and the growth of a mass market.

The eighteenth century in Britain marked a gradual break with the traditional form of economic organization
in Europe: a combination of craft manufacturing and a large labour force committed to agriculture.
Production, both manufacturing and agricultural was largely based on domestic household labour. The
eighteenth century saw the new developments which have been studied by economic historians as a form of
‘proto industrialization’. The expropriation of peasants through the enclosure movements of the late
seventeenth century created a large landless labour force which increasingly came to be employed in the
expanding domestic manufacturing systems which created new markets, especially for textiles. Many rural
workers now farmed only part-time, taking orders for thread and cloth from urban merchants. The alienation
of the peasant from his traditional modes of subsistence made him dependent on the market, creating mass
demand for basic commodities such as cloth and foodgrains.
Domestic production units began to increase in size and expanding their operations, heralding a gradual shift
towards the factory mode of production. Workers began buying more raw material than they could use
themselves and taking larger orders, meeting their requirements by hiring other workers and began to take
the route to becoming manufacturers. As more and more workers and small businesses began expanding
their operations by hiring wage workers, the percentage of a rapidly growing population employed in
agriculture declined.
The first changes occurred in the textiles manufacturing industries. By the 1730s a series of inventions
began to shift cotton manufacturing increasingly towards a factory system. Inventions such as the flying
shuttle and the spinning jenny and the linking of these devices to new power sources led to the
mechanization of many parts of the production process, making it faster and more efficient while also
altering the demands placed on the labour force. By the 1770s, cotton production was powered by steam
engines. As steam power was concentrated and could not be transmitted over long distances, workers had to
be assembled near the engines to do their work; small factories now replaced household production sites. By
the 1790s cotton production was concentrated entirely in factories and new factory centres such as
Manchester came into prominence. Sales of manufactured cotton goods soared for mechanization led to both
a fall in prices and an increase in output. Britain soon came to specialize in the production of cheap, low
quality cloth which sold in the new domestic mass market.
The heavy industries --- mining and metallurgy--- received a boost from the use of steam engines and the
vast coal reserves of Britain helped to sustain industrial growth through most of the 19th century.
By the 1820s the new technologies in cotton and other textiles had been extended to other sectors, including
pottery, metallurgy, aspects of coal mining and vitally, transportation. The factory mode of production was
applied to many branches of production, irrevocably altering them and creating a number of new cities and a
dynamic new business class. Rising output boosted industrial profits providing additional capital for further
changes. There was also a massive surge in British exports which threatened the existence of traditional
manufacturing sectors abroad. By 1870, British exports exceeded those of France, Germany and Italy
combined. The onus was now on the other countries of Europe to keep up with the pace of economic change
or face the consequences of competition with an aggressive, expanding industrial economy.

Innumerable works have been written from as early as the 19 th century itself seeking to understand why the
industrial revolution took place in Britain first. An industrial revolution required certain basic conditions to
exist: the availability of investment funds to finance mechanization, access to raw materials and especially
coal and iron, government interest in supporting economic innovation, an available labour force that did not
have too many alternative sources of employment and entrepreneurial initiative.
It has been argued, by Gerschenkron, for instance, that the concentration of capital in the hands of an
enterprising and prosperous merchant class which was willing to invest in production was a phenomenon
unique to Britain and offers one explanation of the early industrialization that took place in the 18 th century.
However, it is important to note that it was relatively rare for established merchants to invest in factory
production which was seen as a risky venture. Early industrialists came mainly from artisanal and
manufacturing backgrounds. Despite the establishment of national banking systems in England at this time,
the role of banks in investment seems to have been negligible: new banks preferred to focus on merchant
and real estate operations and rarely gave loans to industrial firms.
Revisionist arguments assert that the initial costs of industrialization and mechanization were not very great.
Therefore, there was no great expense incurred in installing machines at a time when the pioneering
inventions in industrial technology were only beginning to take place. By the time these technologies came
to be developed, there already existed a wealthy industrial class which possessed enough wealth to invest in
technological improvements without external financial aid.
The rich deposits of mineral resources in Britain were undoubtedly of great significance in the process of
industrialization, but are, according to Joel Mokyr, of secondary importance. These resources could be easily
procured through trade or if not, local substitutes could be found. Mokyr notes that Switzerland, Flanders
and Alsace were all regions which were not abundantly endowed with coal and iron but were able to develop
modern metallurgical industries. For Mokyr, natural resources occupy an important position in the story of
the industrialization of Britain only to the extent that they stimulated the technological innovations that were
to transform the economy, and are, in his account, the chief factors in Britain’s rise. Thus, for instance, coal
mining and its difficulties led to the development of the steam engine.
While in Gerschenkron’s analysis the role of the state in the industrialization of Britain was not of any great
consequence, in recent accounts, this does not seem to be the case. The development of the cotton industries
in Britain was assisted by the decision of the government to ban cotton imports from India, thus protecting
home industries from external competition. Robert Lee argues that the eighteenth century in Britain
witnessed the growth of a “fiscal military” state in Britain: at its peak, the state was the largest employer,
purchaser and borrower in the domestic economy. It also carried out a progressive dismantling of corrupt
practices from the 1770s onwards while the parliamentary system ensured the representation of new
business interest groups which were able to guide British economic policy to promote industrial growth. Lee
also observes that if political stability is accepted as a precondition for economic development, then it was
only the British state which possessed a single, unified legislature, a well defined administrative structure
and was free of the particularism of the surviving feudal class which often guided state policy on the
continent. Economists such as Douglas C. North argue that better specified property rights in Britain
promoted efficiency in the allocation of resources. Property rights in innovation, police protection and the
absence of confiscatory taxation are all seen as examples of how the same condition promoted capital
accumulation and innovative activity. Others scholars such as M. Olson argue that economic growth was
limited by the intervention of pressure groups in the political apparatus which sought to protect their vested
interests and pursue their own economic interests. He asserts that in Britain, the 18 th century was a time
when these pressure groups were relatively weak and incapable of interfering with state economic policy.
According to Joel Mokyr, the state acted as the guarantor of a de facto laissez faire economy which placed
few obstacles in the way of business activity and even provided scope to side-step mercantilist legislation.
In addition, Mokyr credits Britain’s ‘Poor Laws’ which established a mandatory well-organized poor relief
system in urban areas with maintaining a secure and reliable labour force.
One of the oldest and most controversial hypotheses which seek to explain Britain’s early industrialization is
Max Weber’s theory of the Protestant Ethic which postulates a connection between radical Protestant
doctrine and entrepreneurial initiative. While it is difficult to ascertain by any objective standards whether
Protestant doctrine did in fact encourage such entrepreneurial virtues as resourcefulness, initiative, a
willingness to undertake risks, etc., Mokyr supplies a more acceptable social explanation for the
entrepreneurial spirit of Britain’s business classes in the 18 th and the 19th centuries. According to Mokyr, the
Restoration of 1660 led to the creation of a new society where the quality of life was defined not just by
conspicuous consumption, but also by the status if an individual in the social hierarchy. The pursuit of
wealth therefore was the pursuit of social status which encouraged the accumulation and reproduction of
wealth in each generation.

German Industrialization

The German experience of industrialization is widely regarded to be the perfect example of ‘latecomer
industrialization’. Industrialization in Germany got under way only towards the middle of the 19 th century as
a result of various factors. The absence of protection for textiles perhaps hampered early development and
certainly fostered a sense of industrial inferiority, compounded with the growing market for British imports.
The political fragmentation of Germany in the first half of the 19 th century also prevented the economic
unification of the region. The abolition of guilds and serfdom also took much longer in Germany, inhibiting
labour mobility. Through much of the 19th century Germany remained dependent on foreign technologies,
contributing no new inventions to the early industrialization process. It was only after the Zollverein, the
German customs union was established in the 1830s that a larger national market began to emerge. By the
1840s, coal mining and iron production began to noticeably improve. By this time, of course, the German
states were engaged in systematically expanding their railroad network. Despite the continued dependence
on foreign technologies, even for railroad construction, the 1840s seem to be the period when the first
industrial breakthrough happened in Germany. Growth rates, capital formation, manufacturing output, etc
report a distinct upward trend by the 1840s.By the 1870s Germany had acquired an unmistakably capitalist
market economy with a strong industrial sector.
One of the most significant aspects of German industrialization was its sheer speed. It is important here to
take note of the advantages enjoyed by Germany as a ‘latecomer’ to the process of industrialization. From
the very outset, German industries and collieries tended to be as capital intensive as those in Britain. As
technology was easily available from Britain, Germany did not have to go through a corresponding stage of
technological innovation; she could simply take advantage of the inventions that had already revolutionized
production in Britain. It might also be observed that the improvements and breakthroughs in the German
industrial sector took place not in the same sectors as in the case of Britain; there were no great advances in
the textiles industry in the process of German industrialization, for instance.
Instead, we encounter an emphasis on the heavy industries: mining and metallurgy. The production of coal,
iron and steel clearly form the leading sector in the industrialization of Germany. The production of capital
goods assumed primacy in the German economy and cyclical ups and downs were governed by the growth
of this industry. All the heavy goods characteristic of this phase of the industrial revolution came from the
German metallurgical and engineering industries: pressed steel and metal pipes, boilers and factory
machines. The predominance of these sectors was perhaps inherent in the trajectory that German
industrialization took.
Central to Germany’s industrial ‘takeoff’ in the 1840s was the development of the railways. The leading role
of the railways illustrates perfectly the effect of what economists call ‘backward linkages’: the stimulus it
provided to producers of capital goods. Production was increasingly geared towards the making of machines
to produce more machines. The new economic system in Germany depended upon a regular supply of raw
materials and a means of distributing the finished goods to the consumer. The railways had a dramatic effect
on transportation costs and improved distribution also reduced the amounts of capital tied up in stocks. The
railways also extended the market culture into previously unaffected areas and also assisted the development
of a new labour force which was tempted off the land by the prospect of employment in the task of railway
construction.

In the nationalist historiography of German industrialization, the role of the state in the process is invariably
exaggerated. Modern historians are more skeptical of these claims, noting the relatively small amounts that
even advanced states like Prussia actually invested in fostering economic growth. Robert Lee argues that
state intervention in the economy was actually to protect small scale handicraft production in a manner that
militated against large scale industrialization. The role of the state, he contends, w=could actually be
detrimental.
However, much of the construction of the German rail network even though it was in private hands, was
indirectly financed by the state through the assumption of planning costs, guarantees, subsidies, etc. Mines
and colleries were frequently state-run. The policies of the state in the mid 19th century were also designed to
favour industrial and commercial development: taxation systems that fell most heavily on land and
consumption, measures of economic liberalization such as new company laws and freedom of movement
permitting greater mobility of labour and capital. The establishment of a growing free trade area ---the
Zollverein---- also provided a great stimulus to domestic entrepreneurship. The Zollverein also helped to
create a united German economy, establishing a uniform currency, weights and measures and patents and a
common legal framework for commercial operations. The establishment of a state run educational system
which emphasized on technical education also helped to develop and entrepreneurial skills as well as
produce a trained labour force.

According to the Gerschenkron model, the industrialization of Germany depended upon funds supplied by
institutions such as investment banks which were state-backed. Blackbourn notes that while rates of capital
accumulation were quite substantial in Germany during the 1830s and 1840s, potential investors were
concerned about the high levels of risk involved in industrial concerns; conversely many family firms were
suspicious of ‘outside’ capital. By mid-century, however, this was no longer the case. Profits from large
scale agriculture began to find their way into industry and private banks in Berlin, Cologne, Dresden, etc
lent money to promote industry, although mainly to local entrepreneurs whom they knew personally. The
prominence of former or active merchants among early industrialists meant that commercial capital too
began to be used to fuel industrial growth. Like Blackbourn, Robert Lee also underplays the role of banks in
the industrial ‘takeoff’ of Germany, observing that the expansion of the banking sector hardly ever preceded
industrial growth. Development assistance to new industries only became widely available in Germany after
the 1870s. This period saw the establishment of a number of joint-stock banks controlled by industrialists
which together constituted a powerful engine by which profits generated through production were channeled
back into the domestic production process and less into overseas investment or foreign bonds. The 1870s
saw the forging of close ties between banks and industry which soon became a hallmark of German
industrial capitalism.

Another novel institution of German industrialism was the joint-stock company which raised public capital.
The joint-stock company presaged the developments that would take place in the German industrial sector
after the crisis of 1873, precipitated by the collapse of an investment boom. At the end of the period 1873-80
which were very tough years for German industrialists, there were permanent structural changes in the
German economic landscape. Industrialists began to try to control markets through concentration and the
formation of cartels, or agreements between producers. By the 1880s there had come into existence huge
firms like Krupp which dominated much of German metallurgy and mining with branches extending from
the smelting and refining of metal to the production of armaments and ships. These cartels were able to set
prices independent of market forces by establishing and regulating quotas for certain market products. By
the late 19th century there were 300 cartels in Germany, many of which wielded extensive political influence.
This proved to be of great significance when, towards the end of the 1870s, the state was persuaded by
industrial and agricultural interests to provide tariff protection, with the active involvement of the heavy
industry owners.

French Industrialization

The classical narrative of the spread of the industrial revolution across Europe interprets France as a case of
failed industrialization. J.H. Clapham actually went so far as to say that France never went through an
industrial revolution in the first place. It is certainly true that France experienced no great surge of industrial
growth comparable to either that of England or Germany. As a result, economic historians have tended to
speak of its economy as “retarded” or “stagnant” in the nineteenth century. More recently however the
French experience has come to be seen as the earliest and one of the most successful cases of sustained
modern and industrial growth and not as the failed imitative efforts of a “follower” of Britain. French
industrialization, indeed, has a character entirely its own.

It is important to note when studying the case of French industrialization that France always started off with
a major disadvantage: she was deficient in natural resources. France did not possess the large coal reserves
of Britain, Germany or the United States. The metallurgical and mining industries therefore were from the
outset weaker than those of Britain and Germany.
It has been argued by some that the experience of the French Revolution established the social and
institutional conditions for the industrialization of France in the 19 th century. The legislators of the
Revolutionary era established uniformity in law, markets, money, taxation and in measurement; freedom to
work and trade; and the recognition of property as a sacred and inalienable right. Corporations, collective
action and restrictive trade practices were forbidden, and workers combinations criminalized. However, it
must be admitted that the Revolution and the Napoleonic Wars dislocated the economic activity and retarded
industrial growth for almost a generation. Further, restrictions on economic activity preventing the formation
of companies and preserving common rights to certain land uses remained in force as they did across
Europe. Manufacture was limited to small family workshops. The confiscation and sale of church lands
added to the number of landowners in France, large and small. High inflation and economic disruption made
real estate seem the safest investment and thus at the end of the revolutionary period in France, there had
come into existence a dominant class of middle to small farmers many of whom owned the land they tilled.
Small scale peasant production of handicrafts and food continued uninterrupted in France, preventing the
sort of changes associated with the agricultural revolution in England in the previous century.
The predominance of peasant proprietorship meant that economic growth took place within a stable
economic, social and technological framework: small scale agriculture and manufacturing carried out by a
traditional rural workforce by labour intensive methods. Units of production continued to remain small,
family based workshops and manufacturing units without the use of wage labour on any great scale. There
was nonetheless an increase in output through minor improvements in technology, better utilization of
existing technology, a reduction in transport costs, improvements in the scope and efficiency of markets, the
efficient utilization of the available factors of production through increased specialization, increased division
of labour and so on.
While in absolute terms the output of France remained far below that of either Britain or Germany, there
seems to have been a comparable, sustained increase in per capita output. This was primarily due to the slow
rate of population growth through a voluntary reduction of birth rates. Standards of living remained
relatively high and the expansion of demand was slow, limiting the development of the French factory
sector. The slow increase in population and gradual urbanization left many regional and local markets intact,
allowed peasant agriculture to make piecemeal adjustments to slowly rising demand and set limits on the
market for mass produced goods.
While factory production remained limited in the textiles and heavy industry sectors, France was able to
make full use of the market competitive advantage that France already enjoyed in many highly skilled, high
quality industries in the eighteenth century. The production of luxury commodities such as fine furniture,
jewellery, tapestries, silk cloth etc was a flourishing industry employing France’s finest artisans and
craftsmen. As a result of the limits on industrialization in other areas and as a means of circumventing
British competition, many French manufacturers worked to expand craft output without completely
revolutionizing the technology. Designs and production came to be standardized allowing workers to be
trained more easily and increase their output.
William Sewell argues that the gradual introduction of the factory system, contrary to popular perception,
did not lead to the decline of the urban artisan. On the whole, the modern manufacturing sector and the
traditional handicrafts sector seem to have coexisted even after the liberalizing reforms of 1860, catering to
different sections of the population. However, elements of the factory system seem to have found their way
into the traditional sector: Sewell notes that as cities grew and innovations in technology took root, some
urban entrepreneurs turned away from the practice of making items to order for their clients and instead
came to specialize in lower quality, standardized and ready to wear items that could be produced more
efficiently and sold at a lower price---a practice known as confection. He also records organizational
changes with the growing popularity of the system of ‘marchandage’ by which a contractor would undertake
to construct a number of new houses and subcontract the work to a ‘marchandeurs’ who would engage
workers at the lowest wages they could negotiate. This system tended to reduce wages and make the
maintenance of uniform standards of pay and working conditions impossible.
France pioneered in one of the most obvious outcomes of the industrial revolution: a major innovation in
distribution systems. With more goods to sell and a growing urban market, traditional small shops came to
be replaced with departmental stores.

The degree of state involvement in the industrialization of France was much greater than in the case of
Britain. In France, the construction of the railways was carried out by the state and then turned over to
private companies to operate, providing their own rolling stock. The state also subsidized the construction of
roads, canals and shipping. While the state seems to have been on the whole wary of excessive intervention
in the natural operation of the economy, it continued to maintain tariffs, quotas and prohibitions to protect
domestic industries against foreign imports, a policy which drew a lot of flak. Interestingly, however, when
in 1860 Napoleon III attempted an experiment with trade liberalization with the Anglo-French commercial
treaty, he was accused of exposing France to low cost imports with which no French producer could hope to
compete.
His attempts at reform have been held accountable for the recession that France faced after 1860. However,
this might be better explained with reference to the basic flaws in the French model. The slow growth of the
agricultural sector combined with a series of bad harvests led to a crisis in the food grains sector, a crisis that
the British grain exporters swiftly capitalized upon. With a weak, closed domestic market industry in France
had lost its competitive edge. It failed to invest in modern production techniques which led to the collapse of
a number of traditional industries during the 1880s. It was only with the re-installation of protectionist
mechanisms towards the end of the century that stability was restored to the French economy.

French and German industrialization might be said to possess a distinctive character of their own with
certain historically specific traits which conform neither to the classical British model or to the
Gerschenkron categories of ‘follower industrialization’. The search for an overarching model of
industrialization in Europe is therefore ultimately fruitless; each model overlooks the specificities of the
process in each nation and the negotiation with local socio-economic, political and cultural conditions which
must invariably take place. The distinctive trajectories of industrial development of the economies across
Europe neither can nor should be seen as adaptations or aberrations of the British model, nor should they be
classed as ‘follower economies’ and attributed a uniform pattern of growth. Any attempt to study
industrialization in this manner fails to explain the varying experiences of the continental nations in the
process of industrial growth and transformation.

BIBLIOGRAPHY:

1) Steven M. Beaudoin (ed): The Industrial Revolution