On The Economy of Machinery

by Charles Babbage was published in 1832. I discovered it courtesy of Sydney Padua’s , not having known Babbage had written at all about political economy.

[amazon_image id=”1511434422″ link=”true” target=”_blank” size=”medium” ]On the Economy of Machinery and Manufactures[/amazon_image]

It’s a marvellous book. Babbage clearly had a joyous, expansive interest in everything. The first half describes and discusses all kinds of innovations in manufacturing – how machines work, what different industries have been introducing, and a long chapter on different types of copying, from copperplate printing to mass production techniques making copies of manufactured items.

The second half turns to questions of political economy and it is fascinating to see how Babbage links his observations about actual businesses that he visits – clearly, very many of them – and the price lists he sees, and the machines he has seen built – with analytical principles. He describes the importance of fixed costs and increasing returns to scale; the importance of asymmetric information in explaining many phenomena in business; the way large productivity gains depend on a reorganisation of production, but may be left untapped unless there is enough pressure from competitors because old techniques are still profitable; the phenomenon of geographic clustering for exactly the reasons Alfred Marshall more famously set out his 1890 ; and the sheer restless dynamism of the industrial economy. He even has thoughts about the relationship between automation and jobs.

All in all, it adds up to a very modern-seeming view of how the economy operates. Although of course it would have seemed very old-fashioned to 20th century economics, having no equations, no steady state equilibrium, no machinery of assumptions and axioms.

I love Babbage’s detailed empiricism. He is overjoyed by the potential of the division of labour, and takes Adam Smith’s example of pin manufacture. He visits pin makers of all kinds and describes the 10 stages of pin making in some detail. He tells us whether tasks are mainly done by men, women or children, and what their typical wages are. He describes the tools used and how they work. He also has a detailed account of pin making from half a century earlier. He can put a figure on the productivity gain from the division of labour!

It turns out Babbage wrote a fair bit of economics. I might move on to another of his works.

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3 thoughts on “On The Economy of Machinery

  1. Could Babbage have foreseen that one day the economic and financial policies of governments would be decided by people essentially sticking pins in it?

  2. I expect he never used the words ‘fixed costs’, ‘increasing returns to scale’, ‘asymmetric information’ or ‘geographic clustering’?

    I have here a wonderful quotation from ‘Tess of the D’Urbervilles’ (a bit of a tangent, but bear with me):

    “what are called advanced ideas are really in great part but the latest fashion in definition–a more accurate expression, by words in logy and ism, of sensations which men and women have vaguely grasped for centuries”

    Replace ‘sensations’ with ‘ideas’, and the same holds.

    I expect a lot of the early development of economics would have been taking more vaguely expressed ideas from late 18th and early 19th C thinkers and giving them more exact definitions with fancy words, and perhaps eventually some mathematical and graphical representations.

  3. While reading views of economics by non-economists, you might also be interested in Fred Soddy’s books.

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