National aggregates conceal more than they reveal. (Standard of living of UK working classes in Ind. Rev)

 

Standards of living can be measured in two main ways, either by measuring the total output of a nation and the income must equal that, or by considering each family in turn in order to determine their average income. The later is not possible for Britain in Ind. Rev. as the data is insufficient. We can make some "guestimates" about the first method and thus general trends can be observed.

GDP definitely rose during the whole of industrial revolution in monetary terms. Even if the inflation is taken account, especially during the Napoleonic wars, the GDP still grows in real terms. However as the population was growing too, then GDP per head was marginally falling during the Wars. Real wages were estimated to fall from 11.8 to 11.6 pounds between 1765 and 1785, and estimated to rose to around 20.4 pounds per head to 1851.

This rise does not proove that the people were actually better off as the living standards also depend on non-monetary things and the distribution of income and factors of production among the population.

The dispute of whether there was an improvement in living standards or not and if there was then to what extent remains unsolved. This is fiirstly because there is a disagreement and confusion about the definitions and terms of reference. The term standard of living is hard to define, there seems to be two sides - material(purchasing power and life expectancy) and qualitative (unemployment etc). Standards also differed widely accross the country that we have very little information about. There are also controversities about the time period.

The data is also to a limited accuracy. Births and deaths were not properly recorded and the validity of available data is very weak.

Interpretations to industrial revolution themselves differ. Was Ind. Rev. started with industrialization, urbanisation, transfer from primary to secondary industries or something else. Too much stress is put on ideological grounds in researches that should be left out whe considering the living standards.

As I said before real wages used to be the main tool to asses the well-being of citizents. It shows well the material living standards, but the index is solely concerned with wages, not earnings, make no allowance for unemployment and balance of occupations within the economy, does not take into account the changing basket of goods over time and is calculated mainly based on the archieves that have survived (mainly those of the richer instiutions. Industrialisation created severe unemployment (or underemploment) in the form of cyclical and technological unemployment. Although the real wages were rising, the living standards deteoriated, because job security fell.

On the same way the expectancy of life rose during Ind. Rev. althought the trend was not remarcable, but still increased living standards. There are two different schools of thought - one thinks rising life expectancy was purely exogenous and the other thinks it is because of better nutrion.

Much has been written about the quality of housing as being one of the key determinants of the living-standard. The boom towns with higher wage rates attracted a lot of labour that had to live in bad conditions, as there were not enough room for everybod, so several people shared the same room. The ousing in towns was definitely worse than that of rural areas and thus living standards fell with urbanisation. Research has however suggested that the living standards in towns improved as the Ind. Rev. progressed, the density of occupation per house diminished steadily. This evidence suggests that the living standard for people already in towns before INd. Rev. was rising.

The GDP value does not show the changing consumption patterns Britain was experiencing. The investment in the economy at the beginning of industrial revolution rose quickly to 14% of GDP. Although inward investment paid off quite quickly in lower transport costs withe better roads etc. and the National Income showed the improving living standards, the investment abroad did not give returns in the short-term, thus GDP figgures underestimate the real wealth produced. In 1850s the investment started to fall and this showed as an improvement of GDP, but actually lowered the living standards later on. The food consumption pattern is also important. As industrial revolution progressed the food consumption rose slower than the population until 1800 and regained its 1760 value at 1840. The aggricultural things became more expensive and industrial goods became cheaper, and nobody was consuming only food. This indicates a rise in living standards at the end of Ind. Rev.

General trend after 1800 was the increase in consumption. This should mean that people had more money to spare, but the taxation system in Britain relied on indirect taxes that was regressive, thus with increased consumption the transfer of earnings occured from poorer to wealthier that held the government bonds, especially during the high inflation periods of French Wars. This redistribution of income can be shown by the Lorenz curve:

 

The figgures estimated are that in 1851 top 10% received 125 pounds a year and lower 10% 5.8 pounds, in 1759 it was 45 to 4. So in real terms everybody, even the poorest, are better of, only richest will be even richer. The calculation of the relative distribution of income is very difficult and the error introduced (especially before 1800) can easily double or elliminate the effect. Also as food prices increased and industry prices fell there were more people in lower classes whose income went mostly on buying food, these people became worse of.

Not all people received these benefits of industrialisation and there were wide geographical discrepancies. English midlands and south were more prosperous and the living standards there rose, whereas some rural parts of England lost considerably because of the fluctuations induced by Ind. Rev. The estimates become better after the 1801 census and it is estimated that the income rose by 85% between 1801 and 1851. Main critisisms to this figure have been the evidence of worsening terms of trade as export prices rose more slowly than import prices and the qulity/quantity ratio is hard to calculate. The basket of goods also changes, so the conversation from current to constant prices is almost impossible for longer-periods.

The distribution of income between different factors of production also deteoriated. Some argue that during Ind.Rev. wages and rent must have increased equally whereas others say that the distribution becomes less even to allow for larger savings and investment. This ment rising prices and lagging wages for the ordinary worker for the years before 1815, after that all evidence show the increase in living standards. There was also increased competition that cut the profits arising from productivity improvements. However  Crafts new estimates on living staandards after and before 1820 show that they didn't change too much indicating that real-wage and output growth are fairly similar in long-run implying a fairly constant share of wage and non-wage income in people incomes.

The cultural aspects of life must also be considered. Again here are two conflicting views: on says that the general morale went down in citys and crime rose, the other points out how many famous poets have grown up from the cities.

Leisure is also important in determining the standard. There is some evidence to suggest that the lenght of the working year rose after the mid-eighteen century. Seasonal underemployment also fell. It is not clear wether the workers could actually enjoy all the leisure time or would they be working instead. Anyway these measures tend to reduce living standards and could be quite big.

The living environment became more polluted in industrial areas. This obviously reduces living standards, but not to a signifficant extent in 18th century as smoky coal fires wer providing heat to households and they did not know about the effects of smoke to their health.

There are also completely differnet views on living standards put foward by Marx and Engelsk. They basically look at the capitalist society as a capitalist using workers. They think capitalism is unfair to workers, for example when lands were closed, few people derived large amount of income, but many cottages ettc. that supported themselves before by using common land and wastes were thrown out. The history has shown that the ideas put foward by Marx will not work in realityy and some sacrifice of welfare is needed in the short-term in order to have benefits in the long-term. Not all people are suitable for managing the state and factors of productions, there must be leaders for the society to function efficiently.

One last thing that I want to view is the government policy during Ind. Rev. Government did not support economy by offering iincentives (ie with tax reliefs) to plough back profits, research or invest. It's main aim was to promote security in markets. It succeeded in a way that the investment was scured, but the expenditure on war was huge and neede to be financed either by borrowing or by increasing tax. Government objected direct taxation, so indirect tax was levied. This made the tax system more regressive - it benefited the few rich and made life harder for the poor. The borrowin on the other hand created inflation and was very erratic favouring a business cycle. This caused great fluctuations in the price level which again disbenefited poor.

 

As seen there were many pros and cons to the Ind. Rev. in terms of living standards. However a general trend can be observed that shows how benefits arising are more long-term (ie. urban population is steadily getting better of) whereas most of the cons are short term only and inevitable in any reforms - there will always be some loosers.