The Fabric of Society and How It Creates Wealth.

Lynn, Richard

The Fabric of Society and How It Creates Wealth

Charles F. Foster and Eric L. Jones

Arley Hall Press, 2013,

This book is concerned with one of the major problems in economic history--why the industrial revolution took place in Britain in the late eighteenth and early nineteenth centuries and enabled the United Kingdom to become, for several decades, the richest and most powerful nation in the world. The study is principally the work of Charles Foster and is the last of several essays he has written on this question.

Foster begins by emphasizing that the industrial revolution did not occur evenly over the whole of Britain but was principally centered in the northwest of England. He argues that this is attributable to the presence of three conditions. First, there was a wide distribution of wealth, the effect of which was that a small but sufficient amount of capital was possessed by many families. This increased the probability that the capital required for industrial innovation would be available to the relatively small number of individuals who had the necessary ability and motivation to be successful innovators. To exemplify this thesis, Foster then undertakes a detailed research into the archives of Arley Hall, an estate in Cheshire, and documents that a wide distribution of capital was present.

The author contends that the second necessary condition that enabled the industrial revolution to take place in the northwest of England was the culture of business in the northwest that induced individuals to invest their capital in technical innovations. The third necessary condition was the existence of plural political institutions such as parliaments and juries. He observes that such favorable institutions sometimes continue to exist in societies despite growing inequalities of wealth but that the new rich often tilt the economic and political field in their own favour and thereby restrict further opportunities for innovation, as happened in Holland in the 18th century.

Foster extends his thesis to an examination of similar surges in economic and industrial innovation and prosperity that had occurred earlier, first in northern Italy during the period from around 1000 to 1500 AD, and later in southern Germany from around 1300 to 1600. He shows that the same three conditions were also present in these earlier economic advances.

This is work is important in that it highlights the crucial contribution of a wide distribution of capital to economic development, which is the most original part of the analysis and has not been sufficiently considered hitherto by economic historians.