The period of rapid technological, economic and social transformation that began in Britain in the late 18th century and spread across the world over the following 150 years. Mechanised manufacturing and the rise of the factory system massively increased productivity, displaced artisanal labour, and concentrated workers in industrial cities. Britain’s early lead, combined with colonialism and imperial power, allowed its factories to displace artisans across the globe – not just in Britain, but in India, Ireland, and most of the colonised world.
The productivity gains did not flow to those producing them. British real wages were essentially flat from the 1780s to the 1840s while output per worker climbed sharply, ==the share of GDP going to profits rising as the share going to wages fell ==– an Engels’ pause in which half a century of mechanisation produced no compensating rise in wages.
Hellish working conditions, urban poverty and disease outlasted the wage stagnation by another generation, easing only as labour movements, factory reforms and franchise extension forced productivity and wages to recouple in the second half of the 19th century. A second realignment followed the shocks of 1914–45 and the post-World War II redistribution of wealth.
A common narrative – that improved technology automatically raises living standards in the long run – obscures this two-step: the technology did not deliver the gains; the political settlements forced by organised pressure and external shocks did.
The dynamics of the Industrial Revolution remain a key reference point for debates about whether new technologies – today, AI – will lift or harm workers’ wages and living standards. The answer depends on who owns the technology and how its gains are distributed.
References
- Allen (2007), “Pessimism Preserved: Real Wages in the British Industrial Revolution”, University of Oxford Economics Working Paper 314.
- Wikipedia: “Industrial Revolution”
- Gary Stevenson - Will AI destroy the economy?