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Modern economic growth began in England.

It's strange. We know it.

We can watch it.

This unique phenomenon in human history after millennia

where living standards did not change very much.

When suddenly population and output per person began to soar.

Started in a particular place on the planet.

It didn't start in five places, it didn't start in eight places.

It wasn't separate discoveries. It started in England.

We can watch it.

And therefore we can understand how this came about.

I sometimes feel it's a little bit like a

biologist being able to watch the start of life.

The first bit of life that emerges that gives rise to all the rest.

What's so interesting about life and one of the reasons

why I view it as an analogy for an economy is that we know that every kind of

life on this planet shares some basic metabolism and DNA structure.

And so the biologists have said life appeared once and from there it has

evolved and it has created a biosphere, a world of millions and

millions of species. It all started, presumably,

from a cell. Modern economic growth also has a

kind of DNA. It also came together from a number of

different materials and viola, something took off.

Also, in a way, a living property because a growing economy gave rise to forces

that continued the economic growth once it took off.

If it were so easy to create economic life, it would've happened many places.

We would have records of long economic growth in

China, long economic growth in different parts of the world.

But as John Maynard Keynes rightly pointed out, we did not see that in human history.

So what happened in the Industrial Revolution

as we call it, in the middle of the 18th century in England, in my view was

a unique coming together of various forces, that

allowed life in the economic sense to take off.

That first cell of a modern economy that became replicating

and that eventually spread to the entire world economy

took off.

Well what is it about the Industrial Revolution?

I think let's take a hint from the word, industry itself.

For the first time a society moved beyond agriculture as

the base, to one in which industry was the base.

This required a fundamental change of know-how,

of technology, of technical advance. But just like life

itself requires a lot of interaction of the components of the cell, so

too the life of an economy requires many things to come together.

Technology is certainly a core part but connecting the

different parts of the economy, the rural area where

people are growing food, the factory towns where workers are working in factories

producing textile goods, steel new output,

those interconnections are needed as well. The food has to get to the city.

The manufactured goods, the shirts and clothing are sold back to the farmers.

That requires transport,

that requires a market, that requires exchange.

And so for the Industrial Revolution to come together in

England in the 18th century many things had to be present.

First agricultural productivity starts to rise.

I wouldn't call it yet scientific farming, but

I would call it very systematic and evidence-based farming.

Farmers learning, better rotations for

crops, how to replenish the soil nutrients.

There was more urbanization, more trade, a market economy taking

hold, property rights, rule of law beginning to take hold.

Of course, there was the wonder of the scientific revolution.

Isaac Newton had shown that our world in physical terms is governed

by natural laws. This opened up a completely new way of

understanding things and it opened up new avenues of practical exploration as well.

One of the great breakthroughs came from 1712, even before the Industrial

Revolution but maybe you can say it was the start of it.

The invention of a steam engine by Thomas Newcomen.

The first steam engine,

burning coal to create motive force, was used to pump water

out of the shafts of mines. It was the beginning of the revolution

of steam engines and of, of technology. And then came a,

wonderfully creative targeted

genius who working in a university

lab in Glasgow in, in Scotland realized that Newcomen

had made a couple of design mistakes even though it was a great breakthrough.

James Watt looking for profit as well as for glory, said, I can

improve on that steam engine and the Watt steam engine in

1776 came to life. I think it's fair to say this

was the breakthrough from a technological point of view of the industrial era.

And in a way, it was the technological trigger of all that followed.

Because now it was possible to harness massive amounts of energy

efficiently, economically, effectively, to make profits.

These are the components that come

together in England uniquely.

But of course, we have to understand always that

without nature playing its helpful role, it would have

been impossible for all of the genius of Newcomen

and, and Watt if there were no coal in England.

And there never would have been a steam engine or Industrial Revolution.

Coal, iron ore deposits that could be turned into

a modern iron and steel industry. Wonderful transport conditions on

rivers on flat land the proximity of the coal fields to London.

The ability to build canals to connect the coal fields with

the, the new factory towns and allow for low-cost barge traffic.

All of this is an example

of the very special conditions in which nature and nurture, you could

say, the human ingenuity, the spur of profits, the

patent law, the rule of law, the market economy

came together to make possible this industrial revolution.

Have a look at the first individual who gave a modern

description of this even though he did not

mention industry itself all that much especially not

the steam engine because it was occurring exactly

the same year he published his wonderful work.

You're looking at Adam Smith, the author of The Wealth of Nations.

I think rightly called the father of modern economics.

Think James Watt produces the modern steam

engine in 1776.

Adam Smith publishes The Wealth of Nations in 1776.

The American colonies declare their independence and the inalienable right

to life, liberty, and the pursuit of happiness in 1776.

Quite a year for a takeoff. Putting together the concepts

of a modern economy governed by market institutions,

technological advance, the availability of crucial natural

resources, making possible the birth of a new kind of economic life.

Adam Smith explained the workings of a modern economy.

He gave us the idea of the invisible

hand of market forces helping to spur inventors,

manufacturers, farmers so that working together, not through literal cooperation

but by trading in the market place, could bring about a modern market economy.

And one of Adam Smith's wonderful lines from The

Wealth of Nations explains, and I quote, it is not

from the benevolence of the butcher, the brewer, or

the baker that we expect our dinner, but from their

regard to their own interest.

We address ourselves not to their humanity, but to their self-love.

And never talk to them of our necessities but of their advantages.

In other words we buy from the baker, the brewer, the butcher.

It is through market transactions that have

them producing their products, buying from the farmers.

It is from the manufacturers selling their goods,earning and looking for profits

that make the modern world economy work. And we know

the images of that early modern era.

James Watts, steam engine. The new factory towns with the coal

burning and, and the smoke coming out of the high chimneys.

The new modern form of transport in the early 19th century,

the steam engine pulling railroads and transforming

transportation around the world. The steam ship and the new

factories that are now powered by not

human or animal traction as was before people pulling and

pushing machines or animals pulling plows, but now

steam providing a massive, unprecedented amount

of energy. To drive the new industry to make possible

an unprecedented rise of a modern world economy

combining the natural resource base, the technological

knowhow and a spreading market economy. Now one of

the stunned observers of this, one of the critics of of some of

the harshness of early industrialization of course was none other than Karl Marx.

And Marx and his co-author Friedrich Engels wrote

in the Communist Manifesto in 1848 a kind

of ironic tribute to the power of this new, modern economy driven

by these breakthroughs in technology, changing the world in a unique way.

They caught that mood, even if they didn't like

it or fully understand of course what would evolve.

And even if they rightly pointed out some of

the harsh downsides, especially in that era, it's worth listening

to Marx and Engels, how they describe this new world in 1848.

And I quote.

Modern industry has established the world market, for

which the discovery of America paved the way.

This market has given an immense development

to commerce, to navigation, to communication by land.

This development has in its turn reacted on

the extension of industry and in proportion as industry,

commerce, navigation, railways extended in the same

proportion, the bourgeoisie, the new capitalist class developed,

increased its capital and pushed into the background

every class handed down from the Middle Ages.

A new world indeed had arrived.

The Industrial Revolution had brought form, forth

a new kind of economic life indeed.

A unique form that created

the modern era of economic growth.

The Industrial Revolution Starts in England

可持续发展的时代

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