[amazon_link id=”184637927X” target=”_blank” ]On The Economy of Machinery and Manufactures[/amazon_link] by Charles Babbage was published in 1832. I discovered it courtesy of Sydney Padua’s [amazon_link id=”0141981512″ target=”_blank” ]The Thrilling Adventures of Lovelace and Babbage[/amazon_link], 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 [amazon_link id=”1573921408″ target=”_blank” ]Principles of Economics[/amazon_link]; 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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