Gilboy vs. Mokyr Who is right

A detailed Summary of Gilboy vs. Mokyr Who is right

The Industrial Revolution that began in Britain in the mid 1700's and lasted for about half a century has left many economists debating on its origins and the eternal questions of "why?" and "how?" There has been much research on the topic and many theories have emerged that try and explain some of the shady areas of the topic. There has been debate on whether demand or supply was more prevalent in starting the Industrial Revolution, such as the work done by Elizabeth Gilboy and Joel Mokyr. Gilboy's work "Demand as a factor in the Industrial Revolution" was widely accepted in the economic community when it was first published although it has received criticism. One of the critics of the Gilboy thesis, is Joel Mokyr who published "Reassessing the Industrial Revolution: A macro view" which was a reworking of the Gilboy thesis. The intent of this essay is to compare the works of Gilboy and Mokyr citing importance in their similarities and differences and giving insight into which argument has more merit.

Gilboy's paper starts off by highlighting that in economic history the factor of supply has been overemphasized and that classical economists accepted demand as constant. Gilboy states that

Mokyr was Gilboy's greatest critic, and basically took her studies and analyzed them piece by piece using different economic interpretations, and showed that there were holes in her arguments. Although Mokyr disagrees with many parts of Gilboy's thesis he does agree that demand had a place in the Industrial Revolution. He explains the place of demand in the Industrial Revolution in the conclusion of his essay. Mokyr emphasizes though, that the profound questions of the Industrial Revolution must me pursued in supply rather than demand-related processes.

If considerable involuntary unemployment had existed in preindustrial and early industrial economies, it should be expected that sudden expansions of aggregate demand should have affected output and employment in a significant way. It seems, however, that in the one test case for which evidence exists, the Napoleonic Wars, this was not the case. It may thus be inferred tentatively that preindustrial and early industrial economies were as a rule on their transformation curves. This is not to say that in no sense were there any under-utilized resources in preindustrial Europe that could be brought into productive activity during the industrialization process. Obvious examples are a better allocation of resources due to increased efficiency of the market mechanism or the formation of additional factors of production complementary to labor. But such movements should be viewed properly as supply and not as demand-related phenomena. (Mokyr, p109)

there was a movement towards the factory system, and that this system could not be profitable unless there was growing demand in the society to utilize the products that it produced. Therefore, there were four conditions necessary for the growth of large-scale production especially in its initial stages; 1) a change in economic habits; 2) an increase in demand; 3) new wants; and, 4) social and economic mobility. If any one of these four factors were present in an economy the others were likely to emerge. These four conditions branded a society that was socially unstable, standards of living were changing, and class lines were not clearly drawn.

Mokyr then concludes his argument by reiterating his intent in writing his essay was to examine Gilboy's hypothesis in every possible interpretation, and to decide whether to assign an important role to demand factors in the explanation of the Industrial Revolution. He says that the questions of "when," "where" and "how fast" are to be sought in supply, not demand related processes. Mokyr ends by stating that the wide and uncritical acceptance of the Gilboy thesis is an error and that he hopes that his essay will make skeptics out of some Gilboy's followers.

A decline in prices of agricultural goods will lead to an increase in the demand for nonagricultural goods if, ceteris paribus, the demand for agricultural goods is inelastic, as is usually assumed...the theory (Gilboy's) runs into a timing dilemma: whereas agricultural prices fell in the first part of the eighteenth century, they started to rise after 1750.... to the end of the Napoleonic wars. (Mokyr, p98)

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Approximate Word count = 2590
Approximate Pages = 10 (250 words per page double spaced)

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