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... e investment opportunity, is only a failure if it reduces the present value of the expected flow of future profits of the firm. Thus, managerial mistakes must reduce profit levels below what they would otherwise have been... If a given error is limited to a single firm, ... the consequences would be limited to that firm. If, however, all the firms in the industry made the same mistake, the situation would be quite different.
The efficiency loss caused by the collective error would now be much larger. " Many of Britain's industries were started up with capital gleaned from relatives, friends and acquaintances by families, who by the third generation were no longer interested in the 'hands -on' approach, and delegated some of their responsibilities to managers in favour of more 'aristocratic' pursuits. These managers consequently were content to oversee a traditional work ethic and routine which suited the employees and owners, who in turn were content to maintain the level of profit with minimum outlay. This consequently stifled innovation, re-investment in new technology and fostered complacency, leading to decelerating economic growth. Moreover, workers found it difficult to discard old methods, locations and the traditions created by these industries, for institutional and psychological reasons.
The skills and practices of management and trade unions might, in fact, have been be unsuitable to the new industrial environment. "The survival of outdated production methods at best provides only part of the explanation for the decline of the British economy after 1870. Entrepreneurial resistance to technological innovation was not always unjustified, and, where it was, it was not always a sufficient explanation of decline. Even where the neglect of more efficient techniques was the principal cause of the loss of competitiveness, the question remains whether technological backwardness was the root of the problem or symptomatic of more fundamental disorders. " (10) However, Jean-Pierre Dormois supplies a sympathetic continental viewpoint. (11) A vast and complicated national economy is simply not susceptible of altering its configuration at the ' drop of a hat'. Electrical engineers were thwarted in their attempts to electrify the cotton and mining industries, but engineering and shipbuilding embraced electrification more readily. Gas lighting was cheap and widely used, and the railway network was all pervasive, thus little headway was achieved.
British manufacturers were widely regarded as poor salesmen, and simply not aggressive enough in the establishment of cartels. The massive outflow of capital abroad was seen as detrimental to relatively newer industries such as electricity, electrical equipment and motor vehicles, those industries which relied on large injections of initial capital. The alleged failure of Britain to create large-scale monopolies meant that it was unable to reap the benefit of beaureacratic management. However, some of today's largest manufacturers are breaking up into smaller subsidiaries and many business historians have emphasised the advantages inherent in the family firm. Britain did indeed lose its pre-eminent manufacturing position, due, in part, to the fact that the world economy had changed greatly in complexity, and Britain became, instead, a more important trading / investment nation. The original industries, brought to fruition on the British forge of industry (cotton, iron, steel and shipbuilding) lost importance in relation to newer industries that had grown and been exploited by Germany and America.
But this is a misleading picture, as McCloskey explains, (12) The industries in Hoffman's index of industrial output. do not constitute a random sample of the statistical universe of British entrepreneurial performance, weighted as they are towards the old industries making commodities and away from the new industries providing services. International comparisons of productivity using similar indices of output in the United States and Germany would yield biased readings; it could well have been that as a mature industrial nation in 1870 Britain already had achieved an advanced technology in the basic industries of the industrial revolution and was well advised to continue the search for productivity improvement in services and light industries, which are underrepresented in the standard indices of industrial output. McCloskey does conclude, however, that scattered cases of entrepreneurial success, Lever Brothers in soap and Courtaulds in rayon, for instance, do not break the hypothesis of general failure attributed to the entrepreneur, but further ponders the question of whether the 'failures' were important to the performance of the economy as a whole, and whether the neglect of new techniques was of any consequence, given the paucity of quantitative evidence.
In view of this, Aldcroft, with reference to his 1964 piece, is substantially less sweeping in his later work in 1968 (13) The fact that some industrialists were slow to adopt new techniques does not necessarily mean that they were inefficient or lacked enterprise. On the other hand, neither must one adopt an unduly complacent attitude when discussing the performance of British business in this period. As we have already seen there was considerable room for improvement in many branches of British industry. But the problem was not always simply one of failure to innovate on the part of the industrialists. It was almost inevitable that the British economy would quite literally "run out of steam" at some period. There were simply not enough new innovations to propel the rate of growth any faster, as by the 1890 s the advantage of a fully utilised railway system and the transition to the "factory system" was largely ended.
The economy had reached " a technological plateau ." In addition to this, Crouzet feels that (14) "It is obvious that, from the moment when industrialisation spread, the share of the pioneer countries in world industrial production was bound to diminish. It was also unlikely that England would stay ahead in every field; new competitors with special comparative advantages could forge ahead in certain specialities and even trespass on traditional British preserves. Above all, when there was a country like the United States, which spread over half a continent, with immense natural resources, a large population that was energetic and educated, together with various other conditions favourable to growth, it was inevitable that she would become a great industrial power and finally overtake a small island " Supple ponders Britain's economic situation at the end of the nineteenth century (15) Given the fact that national income and living standards continued to grow, and that Britain's international position as a capital market and supplier of financial and commercial services boomed, it is difficult to see why the last years of the century got their original reputation in the first place. " Indeed, the British consumer might have been tempted to ask What depression? as public's wages rose at a time when prices were falling and they were now able to buy "consumer" products, which were supplied by Germany and not Britain. Ensor reasons that (16) If we combine the price and wage movements together in order to find the movement of 'real wages', we may calculate that as between 1860 and 1900 they had improved about 77 per cent Britain was continuing to invest abroad and in the old original industries, as the cost of replacing plant would have been prohibitive and profits remained satisfactory. Saul's influential work is satisfied that (17) It is apparent that there is no one reason for Britain's apparent industrial decline.
There may have been institutional problems but the heritage of Britain 's industrial start and the peculiar market difficulties of the late nineteenth century are the most positive reasons we can propose. It is enough to know that the rate of growth of productivity had been falling steadily for 30 years or more and that this was in direct contrast to Britain's main competitors. DORMOIS contends that by 1913, Britain still enjoyed the highest standard of living and had transformed the 'first industrial nation' into the first mass consumption society, in that services had outgrown manufacturing activities, was enjoying the fruits of her earlier endeavours, and was still the example historically closest to optimal wealth creation. (18) It appears then, in conclusion, that early British scholars of this period of the economy have been unduly harsh on the British entrepreneur. He was n' t the most important single reason for the relative decline of the British economy, but his inexperience of the unprecedented complexities of a new world economy were certainly a factor. His mistakes, in hindsight were understandable, but not quite as serious as first thought, and it was almost as if Britain was economically pre-ordained to evolve alternatively into the domination of the trade and finance industry.
In Donald N. McCloskey with Lars G. Sandberg, From damnation to Redemption: Judgements on the Late Victorian Entrepreneur, in Donald N. McCloskey (ed); 'Enterprise and Trade in Victorian Britain, Essays in Historical Economics, ' (London, George Allen & Unwin 1981). Derek Aldcroft (ed), ' Development of British industry p 34 f in Donald N. McCloskey with Lars G.
Sandberg, From damnation to Redemption: Judgements on the Late Victorian Entrepreneur, in Donald N. McCloskey (ed); 'Enterprise and Trade in Victorian Britain, Essays in Historical Economics, ' (London, George Allen & Unwin 1981). Francois Crouzet, 'The Victorian Economy', (London, Methuen & Co Ltd, 1982). Michael Dintenfass, ' The Decline of Industrial Britain 1870 - 1980 ' (London, Routledge 1992) Jean-Pierre Dormois, 'Late Victorian Economic Performance in the Continental Mirror' in 'Nederlansch Economisch-Historisch Archief Volume 7 Number 2, ' (Netherlands, 1993) p. 107 - 122 web doris. html Sir Robert Ensor, 'England 1870 - 1914 ' (Oxford, Clarendon Press in Oxford 1936) E.
J. Hobsbawm, 'Industry and Empire' (London, Pelican 1968) P. Lundgreen, 'The organisation of science and technology in France: a German perspective', in R. Fox and G. Weisz, eds. , The organisation of science and technology in France (Cambridge, 1980) in Jean-Pierre Dormois, 'Late Victorian Economic Performance in the Continental Mirror' in 'Nederlansch Economisch-Historisch Archief Volume 7 Number 2, ' (Netherlands, 1993) p. 107 - 122 web doris. html Donald N. McCloskey with Lars G. Sandberg, From damnation to Redemption: Judgements on the Late Victorian Entrepreneur, in Donald N. McCloskey (ed); Enterprise and Trade in Victorian Britain, Essays in Historical Economics, (London, George Allen & Unwin 1981) L. G.
Sandberg, The Entrepreneur and technological change in Roderick Found and Donald McCloskey eds, The Economic History of Britain since 1700. 2. 1860 to the 1970 s, (Cambridge, Cambridge University Press 1981) S. B. Saul, 'The Myth of the Great Depression' (London, Paper mac 1969) Barry Supple, 'Foreword' in Donald N. McCloskey, ed Enterprise and Trade in Victorian Britain, Essays in Historical Economics (London, George Allen & Unwin 1981)
xiii) (2) in McCloskey, 1964, p. 57 (3) (Ensor, 1936, p. 277) (4) (Dintenfass, 1992, p. 19) (5) (Dintenfass, 1992 p 38) (6) (Hobsbawm, 1968, p. 168 - 169) (7) (Hobsbawm, 1968, p. 185) (8) (Lundgreen, 1980, p. 311 - 332) (9) (Sandberg, 1981, p. 102) (10) (Dintenfass, 1992, p. 26) (11) (Dormois, 1993, p. 107 - 122) (12) (McCloskey, 1981, p. 62). (13) (Aldcroft. ed, 1968, p. 34) (14) (Francois Crouzet, 1982 p. 379) (15) (Supple, 1981, p. xii) (16) (Ensor: 1936: p. 275) (17) (SB Saul, 1969, p. 220) (18) (Dormois, 1993, p. 107 - 122)
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Research essay sample on British Entrepreneurs And The Decline Of Economy
