However, this industrial revolution led to a series of problems both social and economic. Among these problems was the fact that Britain had become the world’s most urbanized country. This meant that almost half of the population of Britain at this time was living in cities. This led to several social problems mainly in the areas of education, healthcare and housing. There were also several economic problems that would face Britain after 1870. The emergence of new industrial powers in Germany and U.S.A meant that Britain’s industrialization was facing a decline. The UK had for so long been referred to as the “workshop of the world” as it was the leading manufacturer by 1870 (Mathias, 1969). Britain then underwent a serious economic decline in the years to follow. By the year 1913, Britain was lagging behind Germany and U.S.A the two most industrialized at the time.
“Britain acquired both the advantages and the disadvantages of being the first industrial nation” according to Mathias (1969). This industrial revolution in Britain led to an increase in the growth of the country both politically and economic. The development of the technological and organizational innovations in Britain led to economic change. This growth, however, was accompanied by several disadvantages that other industrializing nations opted to avoid thus explaining the economic decline that were witnessed. Among the mistakes was the fact that Britain’s manufacturing industries was more into an industrial structure that was not easy to adapt and change as other economies were growing.
For over a century after 1870, Industrialization can be categorized in two ways in relation to the rise and fall of manufacturing in Britain. The first is to look at the British economy in 1870; it was a leader and model to all other developing economies especially in Europe that was trying to copy British success. Britain was the leading economy in the whole world, and with this economic superiority Britain acquired military dominance and political sway over its foes. This strength was derived from the industrial revolution, and this led to the UK being also a global leader both in manufacturing and industry (Floud, Roderick, and Paul, 2004). The other is to look at the decline of economic power of Britain for the past years. This means the growth of other countries such as Germany, Japan and U.S.A that have all grown in terms of economic, political and military might. The recent emergence of ‘BRIC’ countries of Brazil, Russia, India and China also add up to how the world has changed since them.
There were several reasons why the economy of Britain declined right at the time when most economies were growing throughout the world. In the earlier 19th century, the UK had become a major innovator in machinery such as steam engines that were used for pumps, steamships, factories and railway locomotives. UK was also a leader in producing textile equipment, and tool-making. The railway system was invented in Britain, and it was Britain that built most of the equipment that was used by other countries. The UK was a leader in international and domestic banking, entrepreneurship, and trade. The global British Empire built, and it was the single most superpower at this time. By the year 1840, Britain abandoned mercantilism and started practicing "free trade," with no tariffs or quotas or restrictions. Britain had the backing of the powerful Royal Navy that was stationed to protect its global holdings, while its legal system offered a system for resolving disputes cheaply (Bowden and Higgins, 2004).
Between the years 1870 to 2000, the total economic output per head in Britain had risen by over 500% thus showing a great improvement in the standards of living among Britons. “In 1870, British economy had the second highest output per head second only to Australia. By the year 1913, it had been overtaken by two more countries making it fourth in the world. By 1950, British output per head was still higher than the six founder members of the EEC with over 30%. But 50 years later British output per head has been overtaken by several countries not only in Europe but Asia and the Americas” (Crafts, 2000).
One of the reasons for the economic decline in Britain was the fact that British industries did not adapt faster to the technological changes that were occurring in the world after 1870. While most countries adopted hydroelectric power to run their industries, British industries were still caught up in using steam engines that were slower. British industries were unable to adapt quickly to these technological changes. This led to other countries such as Germany and U.S overtook Britain in terms of technological innovation. “In the 1870s, capital per worker in UK manufacturing was over 10% higher than in the USA and 30% higher than in Germany. By the year 1900, the position has changed and US manufacturing was 90% more capital intensive than British manufacturing and German manufacturing had caught up with the UK” (Broadberry, 1992, p.76). This shows how much the inability to adopt modern technology cost the British industries.
Another reason was the fact that most developing countries adopted trade restrictions and tariffs as a way of strengthening the growth of their domestic industries. This meant that the “free trade” that had existed from 1840 was now not available, and Britain had a rough time selling its products abroad. The small population in Britain meant that there was not enough market to purchase their goods. It was a case of supply greater than demand. This meant most industries underwent decline and in the process affecting the economy (Floud, Roderick, and Paul, 2004).
The high number of social problems in Britain was another issue why economic growth in Britain was dwindling. A high population in Britain was living in urban areas, and this led to several problems such as housing, education, and healthcare. These social problems greatly contributed to the decline of Britain. The high population in urban areas caused housing problems leading to the establishment of slums and poor housing conditions. The education system was also faulted for not being science oriented like the German and U.S. education systems. According to Bowden and Higgins (2004, p.338) it was not easy to produce a highly skilled labor force in Britain because almost less than a quarter of the population received a secondary or tertiary education. Poor healthcare led to a weakened workforce thus making it hard for industries to prosper during this period.
The British government was faulted for its inability to invest in newer industries to counter the other developing countries. More countries were investing more on new technology save for Britain that was still relying on its old outdated industries. Another problem was the fact that the cost of labor in Britain was much higher than in other countries such as Germany. The lack of qualified labor was also a major issue that affected economic growth in Britain (Johnson, 1994).
Britain has undergone several changes from 1870 to date. However, it is important to note that most of these changes have had a negative impact on the country especially on its economy. Britain has moved from being an industrial leader and economic hub of Europe in 1870 and the latter years to the position it currently holds behind several European, Asian and American countries. However, Britain has maintained its status as a superpower in the world among other countries. It is still a huge economy producing most goods that are exported to other countries though at a smaller capacity.
Bowden, S. and Higgins, D.M. (2004), ‘British industry in the interwar years’ in R. Floud and P. Johnson (eds), The Cambridge Economic History of Modern Britain. Volume II: Economic Maturity, Cambridge, Cambridge University Press, 374-402. Available at http://www.onlinelibrary.wiley.com/british-industry-in-the-interwar-years.com
Broadberry, S. and Crafts, N.F.R (1992), ‘Britain’s productivity gap in the 1930s: some neglected factor’, Journal of Economic History, 52, 531-58. Available at http://www2.warwick.ac.uk/fac/soc/economics/staff/academic/broadberry/publications/
Crafts, N. (2002), Britain's Relative Economic Performance, 1870-1999, London, Institute of Economic Affairs. Available at http://www.iea.org.uk/publications/research/britains-relative-economic-performance-1870-1999
Floud, Roderick, and Paul Johnson. The Cambridge Economic History of Modern Britain (2004) Available at http://universitypublishingonline.org/cambridge/histories/ebook.jsf?bid=CBO9781139053853
Johnson, P.A. (ed.) (1994) Twentieth-century Britain: economic, social and cultural change. London: Longman. Available at http://www.h-net.org/reviews/showrev.php?id=3670
Mathias, P. (1969), The First Industrial Nation: an Economic History of Britain, 1700-1914, London, Methuen &Co. Available at http://www.researchgate.net/publication/Peter_Mathias_The_First_Industrial_Nation_An_Economic_History_of_Britain_1700-1914_Methuen_and_Co._Ltd._London_1969_pp._522_xiv_3