The Rational Optimist_ How Prosperity Evolves - Matt Ridley [105]
Demand it and they will supply
People do not start businesses unless there is demand from consumers. One root cause of England’s miracle was that thanks to trade enough Britons were rich enough after 1700 to buy the goods and services supplied by manufacturers so that it paid manufacturers to go out and find more productive technologies, and in doing so they stumbled upon something close to an economic perpetual motion machine. ‘One of the most extraordinary facts of the [eighteenth] century was the enlargement of the consuming classes,’ says Robert Friedel. ‘There was a consumer revolution in eighteenth century England,’ writes Neil McKendrick: ‘more men and women than ever before in human history enjoyed the experience of acquiring material possessions.’ Compared with mainland Europeans they were wearing wool cloth (as opposed to linen), eating beef (as opposed to cheese) and white wheat bread (as opposed to rye). For Daniel Defoe, writing in 1728, a low level of demand from the masses was far more important than a rich demand from a few:
Poor People, Journey-Men, working and pains-taking people ... These are the People that carry off the Gross of your Consumption; ’tis for these your markets are kept open late on Saturday nights ... Their Numbers are not Hundreds or Thousands, or Hundreds of Thousands, but Millions; ’tis by their Multitude, I say, that all the Wheels of Trade are set on Foot, the Manufacture and Produce of the Land and Sea, finished, cur’d, and fitted for the Markets Abroad; ’tis by the Largeness of their Gettings, that they are supported, and by the Largeness of their number that the whole country is supported.
Initially, it was the cost of luxuries that fell fastest. If you could afford only to buy food, fuel and fibre, you were not much better off than your medieval predecessor; but if you could afford spices, wine, silk, books, sugar, candles, buckles and the like, then you were three times better off, not because your income had gone up, but because the price of these goods was coming down thanks to the efforts of traders in the East India Company and their ilk. There was a mania for Indian cotton and Chinese porcelain and it was by copying these Oriental imports that the industrialists got started. Josiah Wedgwood, for instance, was not technically better at making pottery and porcelain than many others, but he was supremely good at making sure it was affordable, by dividing labour among skilled workers and applying steam to the process. He was also very good at marketing porcelain to the consuming classes by making it seem to be both posh and affordable – the holy grail of marketing ever since.
Cotton tells the tale best, though. In the 1600s, English people wore wool, linen and – if they were rich – silk. Cotton was almost unknown, though some refugees from Spanish persecution in Antwerp settled in Norwich as cotton weavers. But trade with India was bringing more and more ‘calico’ cotton cloth into the country, where its light, soft, washable character, and the way it could be colourfully printed and dyed, attracted demand from the well off. The weavers of wool and silk resented this upstart rival, and pressed Parliament for protection against it. In 1699, all judges and students were told to wear gowns of wool; in 1700 all corpses were ordered to wear shrouds of sheep’s wool; and from 1701 it was decreed that ‘all calicoes painted, dyed, printed or stained ... shall not be worn’. So ladies of fashion bought plain muslin and had it dyed. Riots broke out and women seen wearing cotton were even attacked by gangs of silk or wool weavers. Cotton was considered unpatriotic. By 1722 Parliament had bowed to the wishes of these weavers and on Christmas day that year, when the Calico Act took effect, it became illegal to wear cotton of any kind, or even to use it in home furnishings. Not for the last time, the narrow interest of producers triumphed over the broader interest of consumers in an act of trade protectionism.
And not for the last time, protectionism would fail,