Daniel Gross on Greenspan's Successor
Questions of Character - New York Times

One of the Big Questions, Well Set Up

Greg Clark sets up the problem: http://www.econ.ucdavis.edu/faculty/gclark/GlobalHistory/Global%20History-12.pdf

I know that the English millocracy intend to endow India with railways with the exclusive view of extracting at diminishing expenses the cotton and other raw materials for their manufactures. But when you have once introduced machinery into the locomotion of a country, which possesses iron and coals, you are unable to withhold it from its fabrication.... The railway-system will therefore become, in India, truly the forerunner of modern industry (Marx (1853)).

As we saw, it is not clear when the great turning point in human history, the Industrial Revolution, actually arrived. Arguments can be made for dating this to the Middle Ages.... But certainly by 1860 there was a steady expansion of the production possibilities year by year through the development of new production knowledge in the most advanced economies. We also saw that modern economic growth stemmed ultimately from an increase in knowledge, rather than from physical capital accumulation, or from the exploitation of natural resources. This, it would seem, should have ensured the rapid spread of the Industrial Revolution across the world. For while developing new knowledge was an arduous task, copying innovations was much easier. In particular the new technologies of the classic Industrial Revolution were not particularly sophisticated. Thus they were quickly transmitted to other European countries....

As can be seen even, though the railway in its modern form was not fully developed until the Liverpool-Manchester line of 1830, adoption of railways was rapid in many countries. By 1840 ten countries had established rail lines of their own. India had completed a railway by 1853 even though it was one of the world’s poorest countries. Thus the lag in diffusion of technology is modest even in the early nineteenth century. Similarly if we look at the earlier Watt steam engine we again see modest lags.

In the course of the late eighteenth and nineteenth century there were a series of technological, organizational and political developments that seemed to imply the integration of all countries into a new industrialized world... railways, steamships, the telegraph, the mechanized factory... specialized machine building firms... whose business was the export of technology... political changes....

The world before 1800 was one in which information and people traveled at astonishingly slow speeds. We have a nice example of the speed of information flow for the later Roman Empire.... When the emperor changed in Rome there was thus a period when legal documents Egypt had, incorrectly, the name of the previous emperor. The length of this period indicates how long it took information to get to Egypt.... In the Roman Empire, along a major trade route, information flowed at an average speed of 0.7 miles per hour.... Even by 1800 information flows were not much faster. The London Times did not print news of Nelson’s triumph at the Battle of the Nile on August 1, 1798 until October 2, 62 days later. That is an average speed of travel of the news of 1.5 miles per hour....

In the course of the nineteenth century both the speed and the costs of land transportation, even in the poorest countries, were revolutionized by the spread of railways.... Ocean transport was similarly revolutionized in this period by the development of faster more cost-effective ocean steamships... the screw propeller, iron hulls, compound engines, and surface condensers.... [S]ubmarine cables.... In the 1840s before the telegraph it took 5 to 8 months for a letter to go from Britain to India.... By 1865 India was linked to Britain by a telegraph system partly over land which could transmit messages in 24 hours.

These changes together made the world a much smaller place in the late nineteenth century.... In 1907, for example, it cost ₤0.4 to carry a ton of cotton goods by rail the 30 miles from Manchester to Liverpool, but only ₤1.5 to ship those goods the 7,250 miles from Liverpool to Bombay.... [Real] shipping costs to the East were only 2% the level of 1794 by 1906....

So why wasn't the whole world developed by 1914? That's one of the very big questions.

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