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Optimal versus actual investment behavior Were investment requirements really “modest” during the industrial revolution? By the standards of the contemporary Third World and the late nineteenth century, Britain recorded very modest investment shares in national income (Williamson, 1984a). That fact has generated a long and active debate centered around the question: Was the investment share low because investment requirements were modest, or was the investment share low because of a savings constraint? The first argues that investment demand in the private sector was the critical force driving accumulation during Britain's industrial revolution, low rates of technical progress and an absence of a capital-using bias both serving to minimize private-sector investment requirements. The second argues that Britain's growth was savings-constrained. Until very recently, the first view dominated the literature. This dominant view sees early nineteenth-century Britain as so labor-intensive that investment requirements to equip new workers could be easily fulfilled by modest amounts of domestic savings, so easily in fact that domestic savings had to look for outlets overseas. [ABSTRACT FROM AUTHOR]

Setting the stage Was city growth too fast or too slow during the First Industrial Revolution? Such questions are rarely posed of British historical experience, even though implicit judgments are being made all the time. Answers hinge on an assessment of the behavior of private labor and capital markets, on the one hand, and the provision of public social overhead, on the other. Most historians have taken the view that fast city growth was a Good Thing. After all, Britain underwent the industrial revolution first and was also more urbanized than her competitors. That historical correlation implies for most historians that Britain's fast-city-growth regime must have been optimal, that slower city growth would have been a mistake, and that faster city growth would have been infeasible. Anthony Wohl (1983) takes the contrary view. He argues that British authorities were unprepared for and surprised by the rapid city growth that carried the industrial revolution, with disastrous results. City governments didn't plan for the event, public-health officials were unprepared for the event, and city social overhead technologies were too backward to deal with the event. Furthermore, entrepreneurial and technological failure in the public sector, and rising land scarcity in the private sector, both served to breed levels of crowding, density, mortality, morbidity, and disamenities that were high even by the standards of the poorest Third World cities. Britain was simply unable or unwilling to house itself properly during the First Industrial Revolution. So much so that the 1830s and 1840s are seen by Michael Flinn (1965, p. 14) as a Malthusian retribution by disease. [ABSTRACT FROM AUTHOR]

Two competing views Did factor markets fail during the British industrial revolution? Did distortions in capital markets serve to starve industrial firms for finance and suppress accumulation there? Did urban-rural wage gaps, inelastic city-labor supplies and lack of integrated labor markets serve to drive up the cost of labor in the cities, thus choking off the rate of industrialization? With regards to labor-market failure, the literature is of two minds. Labor markets did fail An extensive traditional literature takes the view that migrants were reluctant to move, wage gaps were large, and regional labor markets were fragmented. A century ago, Earnst Ravenstein (1885, 1889) published his classic work on internal migration, subsequently augmented by Arthur Redford (1926) and Alex Cairncross (1949, 1953). Ravenstein asked how many migrated, when they migrated, who migrated, where they migrated from, and where they migrated to. The same questions dominate modern migration studies. Thus, for example, the literature has been busy substantiating Ravenstein's and Redford's observation that the majority of migrants went only a short distance, and often by steps. Such observations have encouraged the belief that workers failed to move to the highest wage areas and thus that the perfect labor-market thesis must fail. There is an equally long tradition among British labor historians that there was a multiplicity of labor markets between 1750 and 1850, that regional labor markets were very poorly integrated, and that local autonomy reigned (Pollard, 1978). [ABSTRACT FROM AUTHOR]