that wealth is affected by political and socio-economic policy of governments

institutions matter a lot because they are the most important triggers of economic development

good government creates a prosperous country

bad government is bad for the economy

believes that they are selfish; that it is their nature

this does not mean that you cannot be socially or economically useful

on the contrary selfishness can contribute to economic growth

economic egotism promotes competition prosperity and market economy

national defence

securing property rights

establishing legal system

promoting free trade

good, peaceful, and orderly government

broad market with extensive trade zones

geographical division of labor with regional specialization of industries that supply the whole market

incomes rise as a result

Early modern Europe (1450-1750)

-improvement in ship building lowered transportation costs

-maritime trade expanded

-specialization occured: Poland exported Grain; Denmark and Hungary cattle; england wool

Overall Smith's model doesn't work universally. China still managed to grow pretty significantly despite despotism. But it does do a good job of explaining Europe

He was definitely right about international trade boosting growth. IR was one of teh crucial factors to the success of the IR

opposed socio-economic equality

believed that under equality, the less able portion of the population will grow indefinitely without being checked

resulting in overpopulation and an economic crisis

Two variables: resources and population

resources grow arithmetically

population grows geometrically

unless checked, population will grow indefinitely

this creates land shortages, congestion, overpopulation, declining real wages, and decreasing living standards

two checks to prevent overpopulation

Providential (positive) check=wars, famines, diseases, ecological disaster, natural disasters, etc (all exogenous)

Prudential (preventative) check=abstinence (man-made check)

those with high nuptiality and fertility, large families

all of which creates low level of average income and slow or no economic growth

those with small familities, large proportion of single people and birth control operates

causes a higher level of average income, higher living standards, and faster economic growth

if you raise the income of the poor through welfare legislation the number of poor would increase (due to cut in death rate) until there are so many that their income will eventually fall back to the initial level

**it is impossible to raise income of the poor without paying with overpopulation and eventual return to low income

Karl Marx, 1867,

held that there are three super-structures that drive development: productive forces (natural resources and technology, exogenous), mode of production (economic system/regime capitalism, communism, etc), ideological structure (law, govt, religion, etc)

When 1 changes, 2 also changes

through revolutoin

the capitalists will never be ready to yield certain power to the working class but they will never be united enough to withstand revolution

on the other hand the working class will be united enough to rise up and cause revolution

Ancient society: Slavery

Medieval society: Feudalism

Marx's own times: Capitalism

Future: Communism

Marx said that all periods were characterized by use of money and exploitation of weaker classes

harmony between different classes

no more exploiters and exploited

won't see wealth concentrated in the hands of the few

equal distrubtion

no further need for revolutions or class structures

labor was the most important source of capitalists profit

machiens are useless without workers but owrkers are useful without machines

factory owners under-appreciate the importance of workers and exploit them

accumulation of machines is irrational form of economic behavior

more should be invested in labor

first two-sector growth model

one sector produces capital goods and the other produces consumer goods

workers earn wages and spend them all on consumer goods while capitalists earn profits and are able to save what they don't spend on consumer goods

we are left with a gap in expenditure patterns

because of the industrial revolution

no need to colonize crappy land or any land at all actually because food will come from countries with comparative advantages in food production

because of insufficient resources governments couldn;t make sure that nominal wages would go up with price increases

so prices increased alone which caused real wages to decrease

post ir population grows, prices grow, and real wages grow

Foreign Trade,

Manufacturing sector (led also to urbanization and rise of the industrial class),

technological innovations (textile and metallurgy industries, great need for coal)

Glorious Revolution of 1688

Protestant William III

supremacy of parliament over the crown

grants religioius freedom

secures property rights

Creates permanently funded national debt

strong tendency of the govt to cherish and promote intellectual activity

Crown funded the Royal Society

wealthy entrepreneurs funded the Lunar Society

1) Predominance of coal/coke as combustible element (shift from charcoal to coal) used for fuel and source for steam power

2) Steam power as the main source of energy power (replaced wind, water, and animals)

3) Mettalurgy advances (iron production increased, perfection of blast furnaces, shift from iron to steel after invention of the bessemer convertor (1855))

4)Textild industry (automatization of textile works instead of handheld looms and shift from wool to cotton)

Thomas Newcoment in 1712

it was used to remove water from the coal mines

sped up extraction time and lowered production costs

James Watt's Steam engine was created and improved upon from 1763 to 1782

was used in coal mines, in blast furnaces used for the refining process in the iron industry, in the textile industry for spinning and weaving, in transportation (locomotives and steamboats)

F. Blast furances were not a new innovation of the IR but prior to the IR they were operated with charcoal not with coal

Use of coal allowed iron to be smelted and processed much faster

considerable decline in teh cost of production of iron

Invented in 1855

was used for the removal of impurity in iron through oxidation

allowed a switch from production of iron to steel

dramatically decreased costs of steel production

in 1860 steel became the most important building block

1860-1900

Great fall in steel prices

widespread application of steel

used in railroads instead of iron--more durable

shipbuilding instead of wooden boats

military: steel artillery

Construction: buildings, bridges, etc

doemstic phase: 1730-1770

Hargreaves' "Spinning Jenny" in 1764 mechanized the spinning wheel

factory phase: 1770-1825

Arkwright's "Water-Frame" in 1768 perfected the spinning jenny

1769-71 Arkwright established two first cotton factories in England

Crompton's "Mule" in 1774-1779 combined the spinning Jenny and the Water-Frame

Roberts' "Self-Actor Mule" in 1825 was the first automatic machines

Hargreaves' "Spinning Jenny" (1764)

Arkwright's "Water-Frame" (1768-9)

Crompton's "Mule" (1774-9)

Roberts' "Self-Actor Mule" (1825) based on steam power

steam-powered locomotives and boats

led to market integration and lower transaction costs

1760-1800 canal networking

by 1820 canals became inadequate: expensive and slow

new means of transport was needed

the stockton-darlington line (Durham)

for 12 miles

implemented in 1825

1825: Stockton-Darlington line in Durham

1829-30: Manchester-Liverpool line

1830-36: Railway Boom: Birmingham-London Euston; Birmingham-Crewe

1836-45: crisis (financial panic)

1845:75: renewed mania by 1875 70% of all existing lines were laid

1863-1908

1863: the first London Metro line was laid it was underground partially closed

1863-1890: expansion of the Metropolitan Line and construction of other underground lines

1890: first deep and fully closed undergroun line

by 1908 eight underground lines

lack of uniform railway guage so some lines couldn't effectively connect

mainly a private and not governmental initiative until 1947 when the railways were nationalized

development of local/regional capital markets (like london stock exchange, etc)

transportation costs per unit decreased by about 50%

communication: 1838 telegraph operated by railroads

labor force mobility: from surroudning countryside to towns

indsutry development: coal, iron needed for rail

agriculture: efficient and risk-free movement of livestock; transportation of perishable products

1788: first paddle wheeler (steam-operated) used

1807: Foulton perfected steam-powered paddle wheeler

1830s: paddle wheeler were commonplace

paddle wheelers were made of wood and impractical for long-distance shipping because they were too weak

by 1860s iron ships took over

Brunel's screw propeller (1836)

worked in conjunction with the Compoutn Steam Engine (1854-60) created strong power to allow the screw propeller to drag a boat through the ocean

steam-turbine of Charles Parsons (1884)

human international migration: UK to Americas

British naval supremacy

colonization and imperialism

global trade

trans-continental communication

1) England was relatively peaceful country; no war fought on her soil unlike on the continent

2) Per capita taxation levels England had one of the lowest

3) Cultural factors: marriage patterns

4) Health and disease: england was relatively free from health disasters

relatively high age of first marriage for women (25-30)

relatively high percentage of never-married people (15-30)

the DR wouldn't have been possible without the decline in the EMP

switch from low-pressue demographic system (low fertility, nuptiality, and birht rates; larger proportion of older people) to high pressue demporgarphic system (dominated by fertility, nuptiality, high birth rates, larger proportion of younger people)

England started retreating from EMP around 1740--much earlier than other countries

Relative growth 1541-1661

Stagnation (Malthusian trap) from 1661-1741

Demographic Revolution 1741-1911

birth rates, death rates, and net migration rates

change in P=(immigration - emmigration) + (Birth - death)

improvements in hygiene

late 1870s Koch and Pasteur discovered bacteria as vectors of disease transimission and that boiling water killed bacteria

nutrition improved with IR adn the transportation revolution

 less stress, had to perform less physical labor and had improved living conditions

increase in fertility, conception-choice and delivery success

women were healthier, better diet, less stress, etc