On the Industrial Revolution

The Industrial Revolution had an enormous impact on the world's economies. However, it is clear from looking at the economies of the world today that some countries were impacted less than others, and some not at all. However, not all of the countries that did not industrialize failed in undertaking the process; rather, some of these countries opted out of the process entirely. By examining three countries that succeeded, failed, and opted out of the industrialization process -- the United States, India, and the Netherlands, respectively -- we can determine the factors that determined these outcomes.

The United States offers an example of successful industrialization, and the key factors in this success appear to be combined aspects of population and economics. Fernandez-Armesto notes that, despite very large-scale immigration to the United States over the course of the 19th century, the U.S. nevertheless remained underpopulated, and countries with small workforces are more conducive to industrialization. The remaining factors of industrialization in the U.S. were chiefly economic. Industrialization increases supply, and as economists are wont to say, "supply creates its own demand."[1] Part of this demand in the United States was the government itself, which funded public projects that relied on industrialization -- e.g., the railroads -- and to fund these projects, the U.S. government increased the money supply. As Fernandez-Armesto notes further, the key factor that prevented such a monetary policy from becoming grossly inflationary was probably increased production and trade. Thus, industrialization in the United States was successful finally because it became a self-perpetuating process.

In India, the chief force preventing successful industrialization was colonialism. By the 19th century, India had already been in the process of being colonized by the United Kingdom, and this process would intensify over the course of the century with power transferred from the British East India Company to the government. However, the reasons for failed industrialization in India were ultimately also economic. Because the British expropriated goods produced in India, it had the effect of decreasing demand for those goods, thus depriving India of a key factor that drove successful industrialization in the United States. Moreover, Fernandez-Armesto reports, the British laid a heavy tax burden on India, thereby decreasing the money in circulation among Indians, entered into direct competition with Indian-owned textile mills that were less industrialized, thereby driving down the price of textiles, and finally passed protectionist tariffs on Indian-produced goods, thereby eradication any remaining demand for Indian-produced textiles. Fernandez-Armesto links these policies to a mass exodus of Indian laborers to elsewhere in the British Empire for work, causing native Indian owned and run businesses to collapse. Clearly, industrialization in India for the Indian economy failed -- although just as clearly it did not fail the British.

Finally, in the Netherlands, industrialization was largely avoided. Fernandez-Armesto offers the Netherlands as the quintessential example of a country that largely did not industrialize because it did not have to. While its neighbor Belgium became arguably the most industrialized country in Europe, the Netherlands continued through much of the 19th century to be a primarily agrarian economy. Fernandez-Armesto reports that the Netherlands retained an agrarian position despite having an empire (in Indonesia) and having extensive long-range trade -- two factors that should have favored industrialization. Ultimately, the Netherlands opted out because it worked in a sort of economic partnership with Belgium, with the former supplying food to the latter, and the latter supplying industrial goods to the former. Thus, the Netherlands'  position of opting out, like the success and failure of the United States and India, respectively, is informed by economics also -- here, the case of economic cooperation yielding a sort of symbiosis between the two countries. 

In conclusion, we can see that economics was the chief driver in how well, how poorly, or whether at all countries adopted industrialization. The United States, although blessed with the idea situation of underpopulation of workers, truly benefitted from a self-perpetuating system of industrialization driving demand and vice versa. India failed in industrializing because its economy was exploited to the greatest extent possible by its colonizer, the United Kingdom. Finally, the Netherlands opted out of industrializing because it could rely on the economic symbiosis it enjoyed with Belgium. While these conditions would ultimately change in the 20th century, with service economies largely replacing industrial economies, by the end of the 19th century, clear patterns of industrialization had emerged worldwide that would persist for some time. 

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[1] John Maynard Keynes, The General Theory of Employment, Interest, and Money, University of Missouri-Kansas City Web site, accessed November 19, 2015, http://cas.umkc.edu/economics/people/facultypages/kregel/courses/econ645/winter2011/generaltheory.pdf, p. 22