‘Agriculture played a fundamental role in British industrialisation.’
- Explain the main ways in which agriculture can theoretically influence industrialisation. Word Count = 498
Agriculture can influence industrialisation through the generation or release of capital, the release of labour, acting as a market for industrial goods or through increased output.
Perhaps the most fundamental way that agriculture affects industrialisation is by providing output (foodstuffs and raw materials) which sustain an industrial urban population. If the urban population is growing quickly then the agricultural industry would need to increase output to feed these workers, this could work by the price of foodstuffs rising which would encourage more investment in farms and a strive to increase productivity. Without an increase in agricultural output imports would have to rise to feed the urban population, although the dietary requirements of urban dwellers were less than rural dwellers due to the nature of their work.
The agricultural sector can act as a market for industrialised goods, purchasing manufactured goods and helping to support the industrial market by increasing profits which could be reinvested.
If agricultural productivity increases then more output should be produced with less labour input. This means that there should be surplus labour in the economy which can be directed (released) towards industry. This directing would occur through the wage mechanism – low wages in the agricultural sector (as a result of high supply) would encourage workers to the city where higher wages would exist. Although this is the theory it can only happen if we assume that there is geographical and occupation mobility of labour, that is the labour force is able and willing to move across regions (i.e. from the countryside to the city) in pursuit of work and furthermore that they have the necessary skills to undertake industrial work. This may not necessarily be true as people may not wish to live in the city where living conditions were poor and mortality was high, alternatively they may not be able to afford to move, particularly if there were large differences in the housing/rental market between cities and rural areas.
Similarly, high agricultural productivity may mean that there was spare capital underutilised. Potentially this could have been used in industry instead but it wouldn’t particularly benefit industry as it wasn’t homogeneous and hence only had certain uses which suited it to agriculture and not the production industry. It may be possible that if agriculture had been more developed as an industry that it wouldn’t demand too great a share of the available capital resources, thus freeing this up, and reducing the cost, for industry to use. Alternatively though, capital could be released to industry by rural savings. Ricardian theory states that any surplus left after wages (to labour) and capital (to owners) goes towards rent (land owners). It is unlikely that labour would earn enough to develop proper savings, and very little of this would have reached financial intermediaries that would have been able to direct it towards industry. However, it is more likely that landowners would have been able to save rent which could then be invested in industrial activity, helping boost capital.
- Discuss which of these possible influences is supported by the empirical findings for Britain. Word Count = 989
It is difficult to confirm whether these influences actually occurred in Britain due to contentions over the timing of the agricultural revolution, which is largely due to poor sources of data which lead to varying conclusions.
Earlier we said that a fundamental function of the agricultural sector is to provide foodstuffs (and to a lesser extent other raw materials) to the urban population to feed them. The evidence suggests that English farms failed to keep pace with population growth, despite advances in yields and agricultural output, and thus it was left to foreign imports of foodstuff that sustained the population after 18001. It is difficult to accurately determine agricultural output during the period in discussion as there is no written records of national agricultural output over the period we are looking at (1600-1850), this means that to work out output inventive measures have been employed by historians. One such method is using demand functions which account for price elasticity of demand, income elasticities of demand and cross price elasticities of demand in regards to industrial output. It is estimated that YED was 0.5 (food was a normal good), PED was -0.6 (fairly elastic) and that XED was 0.1, using this measure we derive agricultural output growth of 0.2% per annum between 1700-1800 and a much greater 1.1% p/a growth in 1800-502. This output growth was much slower than population and demand growth3.
Moving on to whether agriculture released labour into industry we see that the percentage of the workforce in farming fell from 74% to 35% between 1500 and 18004. There were many reasons for this decline; yields in crops improved due to selective seeding and the adoption of new crop cycles which improved soil fertility through nitrogen fixing and reduced the amount of time land was left fallow. Yields in livestock also increased through better feeding – largely as a result of the new crop cycle which produced food, e.g. turnips, all year round- and due to animal husbandry which led to the development of breeds which got fatter at a younger age.
Furthermore the enclosure movement (which had already converted 71% of open fields into enclosed land by 17605 before the parliamentary movement even began) and high food prices led to the consolidation of farm holdings as high prices meant that landowners sought high rent (and they could increase rent more by consolidating land) and enclosure was costly for small firms due to investments in fencing. Allen estimates that enclosure alone increased labour output by 11% in heavy arable district and by a smaller 3% in light arable district. Consolidation of plots into large farms would have allowed economies of scale which would reduce the amount of labour needed.
These improvements in agricultural labour productivity (43% overall6) meant that a smaller share of labour was needed to work in the farming industry and can explain the drop from 75% to 35%. This would benefit industry as a larger share of the workforce could work in industry. The absolute number of workers in the agricultural industry actually remained constant (or rose slightly; according to Allen), so the fall in the percentage of farmers in the workforce was more attributed to the population growing than it was from agriculture actually releasing labour to work in industry. This would still have been to the advantage of industry, as rural dwellers not employed in agriculture are likely to have moved to urban areas to work in industry. As Chambers7 said, the capitalist farming system which had evolved in Britain between 1700 and 1850 couldn’t sustain unemployed rural inhabitants, thus driving them to the cities and pushing industrial wages down, allowing higher profits for firms who could reinvest this to further propel industrialisation.
We would expect that agriculture would have been able to help generate capital in industrial production by directing savings accounted (largely) from rent to firms in manufacturing who required finances to purchase capital. Due to the consolidation of farms into large scale capitalist plots in order to attain higher rent we would expect rents to be quite high, meaning there was a large pool of savings available for industry to invest with. Contrary to this belief there is little evidence that this actually did happen. Most of the rent that landlords received was reinvested in their agricultural properties (in order to generate larger rents in the future), lent to other farmers/agricultural owners or spent on foreign imports of luxury goods. Postan said that “surprisingly little [of the wealth of rural England] found its way into the new industrial enterprises”8.
Additionally, agriculture didn’t reduce demand for investment and thus wasn’t responsible for a release in capital. Agricultural capital actually increased from a factor of 183 in 1700 to 353 in 18509. This is likely to have reduced the supply of loanable funds, driving up interest rates and hence making it more expensive for industrialists to attain funds.
To conclude, there is very weak evidence that the agricultural industry helped nurture the industrial scene in Britain, despite increasing productivity and output, agriculture was unable to feed a quickly growing population. Instead the country turned to foreign imports, and without them the urban population that industrialisation relied on, wouldn’t have been able to survive. The agricultural sector didn’t provide a market for manufacturers as rural consumption of manufactures increased by 1/3 between 1700-1800 at a time when industrial production increased by a factor of 310. Instead industrialists had to look to foreign or urban markets to absorb their output. Furthermore the agricultural industry didn’t provide much capital for industry to use to invest with. Nor did it directly release labour to the industrial sector, however the ability for more output to be produced with fewer workers did lead to fewer workers (in relative term) being required to feed a growing population, thus freeing up labour who would move to the city to earn a living and provide labour to the industrial sector.
Source 1 – Pg 217, Robert Allen: Tracking the Agricultural Revolution in England.
Source 2 – Table 4.1 pg. 102, Robert Allen: Agriculture during the industrial revolution, The Cambridge Economic History of Modern Britain: Floud and Johnson.
Source 3 – Pg 102, Robert Allen: Agriculture during the industrial revolution, The Cambridge Economic History of Modern Britain: Floud and Johnson.
Source 4 – Pg 2, Crafts and Harley: Precocious British Industrialisation
Source 5 –Pg 99, Robert Allen: Agriculture during the industrial revolution, The Cambridge Economic History of Modern Britain: Floud and Johnson.
Source 6 – Pg 2, Crafts and Harley: Precocious British Industrialisation
Source7 – Pg 180, O’Brien: Agriculture and the Industrial Revolution
Source 8 – Pg 115, Robert Allen: Agriculture during the industrial revolution, The Cambridge Economic History of Modern Britain: Floud and Johnson.
Source 9 – Table 4.4, Pg 107, Robert Allen: Agriculture during the industrial revolution, The Cambridge Economic History of Modern Britain: Floud and Johnson.
Source 10 – Pg 115, Robert Allen: Agriculture during the industrial revolution, The Cambridge Economic History of Modern Britain: Floud and Johnson.