Conversation

The emperor responds: “Your mechanism is no gift to us. It is tremendously complicated; it would take my best master craftsmen years to assemble. It is made of iron, which could be better used for weapons and armor.…
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“And even if we built these engines, they would consume enormous amounts of fuel, which we need for cooking and heating. “All for what? Merely to *save labor*. Our empire has plenty of labor; I own many slaves. Why waste iron and fuel in order to lighten the load of a slave?”
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We can think of innovation as a kind of product on a market, with supply and demand. To explain the Industrial Revolution, economic historians like Joel Mokyr emphasize supply factors: factors that create innovation, such as scientific knowledge and educated craftsmen.
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But where does *demand* for innovation come from? What if demand for innovation is low? And how much can demand factors explain industrialization? Riffing on an old anti-war slogan, we can ask: What if they gave an Industrial Revolution and nobody came?
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Robert Allen, in *The British Industrial Revolution in Global Perspective*, says demand factors have been underrated. He argues that many major inventions were adopted when and where factor prices made it profitable and a good investment to adopt them, and not before.
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Allen emphasizes high wages, energy prices, and the cost of capital. If labor is expensive and energy & capital are cheap, it's a good investment to build machines that consume energy in order to automate labor—and to do the R&D needed to invent such machines. But not otherwise.
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And, when he’s feeling bold, Allen might push the hypothesis further: if demand factors explain technology adoption, we don’t need hypotheses about supply factors. We don’t need to posit that some societies exhibit “bourgeois virtues” or possess a “culture of growth.”
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PS: People speculating on the *exact strategy* you should use to get an ancient emperor interested in the steam engine are missing the point of this thought experiment.
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Note that although I learned a lot from this book, I don't fully buy Allen's perspective! See the full post for some responses/criticism from other economic historians, and for my thoughts and conclusions:
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