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Industrial Efficiency and Biased Technical Change in American and British Manufacturing: The Case of Textiles in the Nineteenth Century

Published online by Cambridge University Press:  11 May 2010

Ephraim Asher
Ephraim Asher
Affiliation:
Florida State University
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Extract

The major purpose of this article is to measure factor-saving biases in technical change within the American and British textile sectors during the nineteenth century. This empirical attempt will be made within the context of the historical debate concerning the causes for the superiority of American industrial efficiency as compared with the British.

Type
Articles
Information
The Journal of Economic History , Volume 32 , Issue 2 , June 1972 , pp. 431 - 442
Copyright
Copyright © The Economic History Association 1972

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References

I have benefited from comments made by S. Engerman, G. S. Maddala, F. J. de Jong, T. K. Kumar, and an anonymous referee. Needless to say that I am solely responsible for the contents of this article.

1 See Rothbarth, E., “Causes of the Superior Efficiency of the U.S.A. Industry as Compared with British Industry,” Economic Journal, LVI (Sept. 1946), 383–90CrossRefGoogle Scholar; Habakkuk, H. J., American and British Technology in the Nineteenth Century: The Search for Labor-Saving Inventions (London: Cambridge University Press, 1962)Google Scholar; H. F. Williamson, “Mass Production, Mass Consumption and American Industrial Development,” which appears in a volume published by the First International Conference of Economic History, Stockholm, 1960.

2 See Asher, E., “Relative Productivity and Factor-Intensity in the Manufacturing Sectors of the U.S. and the U.K. During the Nineteenth Century,” De Economist, CXIX, 4 (1971), 440–75CrossRefGoogle Scholar.

3 Temin, P., “Labor Scarcity and the Problem of American Industrial Efficiency in the 1850's,” The Journal of Economic History, XXVI (Sept. 1966), 277–98CrossRefGoogle Scholar; Fogel, R. W., “The Specification Problem in Economic History,” The Journal of Economic History, XXVII (Sept. 1967), 283–308CrossRefGoogle Scholar; Ames, E. and Rosenberg, N., “The Enfield Arsenal in Theory and History,” Economic Journal, LXXVIII (Dec. 1968), 827–42CrossRefGoogle Scholar; E. Asher, “Relative Productivity ….”

4 Arrow, K., Chenery, H., Minhas, B., AND Solow, R., “Capital-Labor Substitution and Economic Efficiency,” Review of Economics and Statistics, XLIII (Aug. 1961), 225–50CrossRefGoogle Scholar.

5 David, P. A. and Van de Klundert, Th., “Biased Efficiency Growth and Capital-Labor Substitution in the U.S. 1899–1960,” American Economic Review, LV (June 1965), 357–94Google Scholar.

6 These parameters are essential in rendering a dimensionally homogeneous production function. See de Jong, F. J., Dimensional Analysis for Economists (Amsterdam: North-Holland Publishing Co., 1967)Google Scholar, ch. i.

7 We might argue that although both countries have the same form of production function they are faced with different techniques of production. We are defining then “different techniques” in terms of different elasticities of substitution for both countries, i.e., σ1 ≠ σ2. In this sense we could argue that the Rothbarth-Habakkuk hypothesis in this study is examined under the assumption of different rather than identical techniques.

8 Hicks, J. R., The Theory of Wages (1st ed.; London: Macmillan, 1932)Google Scholar.

9 See its derivation in David and Van de Klundert, “Biased Efficiency Growth …, “pp. 362–63, and substitute EL and EK for l'(t) and k'(t) respectively.

10 Ibid., p. 364, with appropriate substitution.

11 Nerlove, M., “Empirical Studies of the CES and Related Production Function,” in Brown, M. (ed.), The Theory and Empirical Analysis of Production, Studies in Income and Wealth, XXXI (New York: NBER, 1967)Google Scholar.

12 The data used are from the following sources:

  1. a.

    a. U.S. labor series are from U.S. Census Office, Census Reports, Twelfth Census of the U.S. 1900, Manufactures: Textiles (Washington: G.P.O., 1902), pp. 27, 99, 102Google Scholar.

  2. b.

    b. U.K. labor series are from: Sir Arthur Balfour, Survey of Textiles Industries: Cotton, Wool, Artificial Silk (London: His Majesty's Stationary Office, 1928), pp. 143, 271Google Scholar; Ellison, T., The Cotton Trade of Great Britain (1st ed.; London, 1886), pp. 66, 127Google Scholar.

  3. c.

    c. U.S. capital series are from U.S. Census Office, Census Reports, Twelfth Census …, pp. 54–55, 99, 102.

  4. d.

    d. U.K. capital series are from Ellison, The Cotton Trade …, pp. 68–69; Mitchell, B. R. and Deane, P., Abstract of British Historical Statistics (London: Cambridge University Press, 1962), p. 185Google Scholar; Deane, P. and Cole, W. A., British Economic Growth 1688–1959: Trends and Structure (London: Cambridge University Press, 1962), p. 196Google Scholar.

  5. e.

    e. U.S. factor-shares series are from U.S. Census Office, Census Reports, Twelfth Census …, pp. 54–55, 122–23.

  6. f.

    f. U.K. factor-shares series are from Ellison, The Cotton Trade …, pp. 69, 123–24; Deane and Cole, British Economic Growth …, p. 196.

  7. g.

    g. U.S. capacity utilization series are from U.S. Bureau of the Census, Bulletin No. 160 (Washington: G.P.O., 1926), p. 49Google Scholar, and U.S. Bureau of Statistics, Statistical Abstract of the U.S. 1906 (Washington: G.P.O., 1907), p. 470Google Scholar.

  8. h.

    h. U.K. capacity utilization series are from Mitchell and Deane, Abstract …, pp. 179, 190–94.

13 See summary and evaluation of these estimates in Nerlove, “Empirical Studies ….”

14 David and Van de Klundert, “Biased Efficiency Growth ….”

15 It should be noted, however, that David and Van de Klundert's production function was applied to highly aggregated data and thus could properly omit the impact of intermediate inputs prices on the capital-labor ratio. In our study we are implicitly stipulating a particular form of gross output production function in which the capital-labor ratio is assumed to be invariant with respect to the relative price of the intermediate inputs—essentially raw cotton and raw wool. This, admittedly, may or may not be justifiable.

16 Solow, R. M., “The Production Function and the Theory of Capital,” Review of Economic Studies, XXIII (1955–1956), 101–08CrossRefGoogle Scholar; Leontief, W. W., “Introduction to the Theory of Internal Structure of Functional Relationships,” Econometrica, XV (1947), 361–73CrossRefGoogle Scholar; F. J. de Jong and T. K. Kumar, “Some Considerations on a Class of Macro-Economic Production Functions,” De Economist (forthcoming).

17 The necessary and sufficient conditions for such an aggregation are given in de Jong and Kumar, “Some Considerations …,” Appendix A.

Now our composite index of capital (K), is given by

In addition, let us postulate that

where L is our aggregate index of labor; (L1, …, Ln,) are different inputs of labor (a class of heterogeneous labor inputs); and (a1, …an,) are constant weights of the respective labor inputs in the aggregate index of labor. Then, it can be shown that the necessary and sufficient condition for input aggregation will hold in our production function. It should be noted that in our aggregate index of labor (L) the weights for the various types of labor inputs are implicitly assumed to be equal to unity.