Gabriel Söderberg, Department of Economic History, Uppsala University

 The Industrial Revolution:  - What was its core?  - How did it change the world?  - How does it affect us?  Skepticism towards its sustainability:  - Early proponents  - End of skepticism during 20th century and return around the 1970s  - Relevance of question today – with your help

 England  Replacement of organic energy (wood, animals, human work), water and wind with fossil energy  Replacement of human work with machines  Enormous increase in productivity  Enormous increse in use of natural resources

 Factories close to energy sources: water, wood lands  Transition to fossil fuel through a number of technological innovations  Expensive labor  incentives for machines  Problems with coal mining: water in tunnels  steam engine for better pumping  more coal  Coal: portable, extremely compact  factories can be set up anywhere  Coal as energy, iron as material  better transport  increased world trade

Thomas Malthus David Ricardo

 Humans must have food + food supply increases slowly + humans cannot control their reproduction = Population will grow faster than food supply  Increased food supply  increased population  return of misery  optimists are wrong  Constraining factor: agricultural technology

 Growth not possible in the long run – stationary state  Diminishing return of the soil  more expensive food  higher wages  less profits  less investments  end of growth  Two ways to counter this: technology and free trade - technology not to be trusted  freetrade as ideal partly explained be technology pessimism!!

 Time of great optimism, reduction of inequality, increase in general welfare for the masses, large and stable economic growth  Technology and science widely accepted as the driving force  The optimism of the Enlightenment and modernity is mixed with economic theory

Simon Kuznets Robert Solow 1924-

 The reason for economic growth is:”…the vast increase in the stock of useful knowledge…the underlying capacity of the knowledge transmitted to control production processes, the emergence of experimental science and the empirical outlook which, building upon past attainments of mankind, provided the indispensible basis for modern economic growth” – Kuznets 1965

 The Solow model (1956): Y=A+K+L  A=Y-K- L  technological development is the thing left!  The most important factor, but is left unexplained in the model!  Technological development is taken for granted, ”a gift” from public funding of science

 1970s: oil crisis, stagnant growth, ideological and theoretical shift  Crisis of values: growth questioned, environmental movement skeptical about eternal growth

 Club of Rome founded 1968  ”Limits to Growth” (1972) – population growth and consumption needs to be reduced; sells in 12 million copies, in 30 languages  Solow’s Criticism: ” "The authors load their case by letting some things grow exponentially and others not. Population, capital and pollution grow exponentially in all models, but technologies for expanding resources and controlling pollution are permitted to grow, if at all, only in discrete increments."

 Pro market shift in ideology and economic theory  Financial deregulations, innovations  Increased globalization  Chinese industrialization  cheap consumer goods

 Financial crisis part of end of growth?  - Yes: No growth opportunity  capital goes into financial assets building bubbles  -No: Depressions natural part of industrial society, followed by new growth  Yes: Environmental problems and depletion of oil will stop growth  No: Science and technology close to major breakthroughs

Questions and comments?