3/13/14

Observations

The industrial revolution in England took place between 1750 and 1850. I read the book Ed gave me, but I was puzzled. As I read it I was asking myself some questions. Why in England? Why in the 18th century? What triggered the “revolution”? Or was it an “evolution”?

Trying to put together the pieces of the puzzle was challenging. Writers (historians, economists, philosophers) look at the subject from their viewpoint.

Inventors were stimulated to make new inventions. Why? The law protected and rewarded inventors and inventions through a well managed property rights system. Education was superb in England and it allowed the spreading of knowledge. Commerce flourished. The English markets were homogeneous and compact. Railroads and canals were developed to ship minerals and goods. International trade was supported by an unchallenged navy and a large commercial fleet.

Max Weber insists that the protestant ethics was the major reason for the dedication to work and produce wealth. The comparative freedom of the people allowed vertical mobility. In France, for instance, the guilds (as in Italy now) were against the laissez faire attitude in vogue in England and conceptualized by Adam Smith.

The introduction of a Central Bank and the management of the national debt created efficiency in financial transactions unsurpassed in the medieval age.

England and the English speaking people dominated the world for more than 300 years because of:
a) property rights that were rewarding risk-taking;
b) a superb educational system which spread the new knowledge;
c) excellent transportation (navy, roads, and canals);
d) a financial system that allowed the efficient financing of business transactions. ,p>This is the legacy of the industrial revolution. Any deviation from this legacy will produce a country doomed to under perform its competition.

(This Observations appeared in the 2-12-2007 issue of The Peter Dag Portfolio ).

George Dagnino, PhD Editor,
The Peter Dag Portfolio.
Since 1977
2009 Market Timer of the Year by Timer Digest
Portfolio manager

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