Unit 2 Technology and incentives

2.9 Markets, cheap calories, and cotton: The colonies, slavery, and the Industrial Revolution in Britain

It was the Industrial Revolution in Britain that reallocated global manufacturing production from Asia to Europe, as reflected in Figure 1.18. It transformed life not only in Britain but also in much of the rest of the world. It was not something that just ‘happened in Britain’; it resulted from interactions between Europe and the rest of the world.

Textiles were at the heart of these interactions: the taste for cotton textiles in Europe—and especially Britain—came from Indian imports; much of the new technology came from Continental immigrants; the main raw material—cotton—came from the Americas, where it was largely produced by enslaved Africans; and the incentive to mass-produce textiles would have been greatly diminished had it not been for Britain’s overseas markets.

To maintain the momentum of continuous growth as the Industrial Revolution took off, Britain required access both to the inputs for the expansion of the textile industry and to growing markets where the final products could be sold. The coal that would fire the textile and other mills once the steam engine was developed was readily available in Britain. But for both the raw cotton inputs to the textile industry and the markets for its outputs, Britain’s dominant position in global geopolitics was critical.

Growing markets for textiles and other manufactured goods in Britain, colonial North America and India, as well as West Africa and the rest of the world, provided opportunities to specialize in the production of textiles and other products, in which the British had a comparative advantage. The key inputs for the burgeoning textile industry were cotton and, less obviously, calories. The booming manufacturing centres of northern England pulled large quantities of labour off farms. Feeding them required imported calories, particularly in the form of sugar—mostly produced by enslaved workers in the British West Indies. The raw cotton that was milled into textiles in Britain also came from slave plantations in North America, for the most part in the British colonies and later the southern United States.

There is no question that Britain’s colonies and enslaved labour provided both the markets and the materials for the expansion of output known as the Industrial Revolution. A much-debated question goes beyond asking whether colonies and slavery were involved (they were) to ask: Were the colonies and enslaved labour necessary?, in the sense that had they not been available, the Industrial Revolution would most likely not have occurred when and where it did.

To answer a question like this, we ask another one: ‘Where would the calories and raw materials for the textile industry have come from if not from slave plantations in the North American colonies?’ As we explain in Section 1.10 and Section 1.11, this is called a counterfactual.

These calculations are from Kenneth Pomeranz. 2000. The Great Divergence: China, Europe, and the Making of the Modern World Economy. Princeton: Princeton University Press. Chapter 6.

It has been estimated that producing, on British farms, the quantity of calories provided by slave-produced sugar would have required between 11 and 15% of all of the arable land in Britain. The effect would have been to raise the price of food substantially, which would have required an equivalent increase in wages to allow British workers to be sufficiently well nourished to do their jobs.

We know that later, when cotton exports to Britain were halted during the US Civil War (as Unit 8 discusses), finding substitutes for US cotton—in Egypt, India, and elsewhere—proved to be very difficult. Had American plantations not provided cotton as a raw material, it is likely that the textile industry would have produced woollen rather than cotton textiles. The amount of wool equivalent to the cotton imported from North America would have required more than all of Britain’s crop and pasture land combined.

So if the relevant counterfactual is that in the absence of slavery and the British Empire, these key raw materials that powered the Industrial Revolution would have been provided from Britain, the answer to the question ‘Were colonies and slavery necessary for the British Industrial Revolution?’ appears to be: ‘Yes’. Even if other sources of inputs could have been found, it is likely that they would have been substantially more expensive, especially given the quantities required to sustain the levels of increasing output achieved by the Industrial Revolution.

The effect of these higher costs of raw material inputs and labour (due to the higher cost of food) would have been to reduce the rate of profit in the new manufacturing firms. Reduced profits would have meant that firms invested less in new machinery and buildings. As a result, output per hour of labour would have grown more slowly.

Concerning markets, most of the demand for British-made textiles and other manufactured goods came from British buyers, but sales to the rest of the world were nonetheless important. If the relevant counterfactual is that British colonies did not exist and the western hemisphere were populated by its indigenous inhabitants, the global demand for British textiles—in North America and India especially—would have been substantially reduced. As a result, the price at which the ever-increasing output of the Industrial Revolution could have been sold would have been lower, further reducing the profits of the new firms and their ability to invest and grow.

Slavery may have been less necessary to the Industrial Revolution in the US due to the abundance of land and, as a result, the lesser reliance on Caribbean sugar produced by enslaved people. But the abundance of land was itself the consequence of the near elimination of the indigenous population through a combination of European-borne disease and military force.

In Unit 1, we asked whether British colonial rule contributed to the subsequent poverty of India, which had before the Industrial Revolution been one of the most advanced manufacturing centres in the world, with incomes not very different from Great Britain. In this video, the economist Nathan Nunn investigates the Atlantic slave trade, which played a critical role in providing raw materials for the Industrial Revolution in Great Britain, and its contribution to the persistence of poverty in Africa in the centuries that followed.

We cannot say whether without slavery and British colonies, the Industrial Revolution would not have happened and Britain would have remained in the Malthusian trap. Whether or not this is true, the fact that it could be true underscores the key point. The institutions that contributed to the Industrial Revolution in Britain include those frequently stressed (such as private property, markets and firms competing for profits, that jointly make up capitalism) but also other institutions: colonial domination and the enslavement of people.

Exercise 2.12 The role of slavery in economic development

Karl Marx said: ‘Without slavery you have no cotton; without cotton you have no modern industry.’ (1846)

Choose one part of this quote from Karl Marx and provide evidence to support and/or refute it from a lecture given in 2019 by the economic historian, Gavin Wright. (You can also read a short summary of the lecture online.)