On Economic Maturity and Entrepreneurial Decline
British Iron and Steel, 1870-1913

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Economic Maturity and Entrepreneurial Decline
Reviewer: Harvard University Press

It is often alleged that late Victorian businessmen in Britain displayed little of the vigor of their fathers in competition with the new industrial powers of the late nineteenth century, Germany and the United States. This allegation has been the foundation for a great many interpretations of the end of British domination over the world's economic life and of the economic difficulties that Britain has faced subsequently.

The British iron and steel industry is taken traditionally as the prime example of entrepreneurial decline. Mr. McCloskey shows, however, that businessmen in the industry performed on most counts as well as their German and American counterparts. The lack of evidence of entrepreneurial failure in the industry casts serious doubt on the importance of the entrepreneurial factor in Britain's relative decline. It suggests, indeed, that the supposed failure was a mere reflex of Britain's early attainment of economic maturity and the contemporaneous drive to maturity of Germany and the United States.

McCloskey uses relatively uncomplicated economic tools to establish these points. The central tool is the measurement of total factor productivity in the iron and steel industry in Britain and abroad. It is supplemented by analyses of supply and demand (to remove the influence of slowly growing demand at home from the record of the British industry): of the profitability of adopting the basic open hearth process of steelmaking (to show that the slowness of Britain to adopt it-which has been the keystone of the case for entrepreneurial failure-was economically rational); and of the competitiveness of the industry's markets (to validate use of these simple tools).

The book is based on a thorough study of the trade newspapers of the industry, its scientific journals, its statistical annuals, and the many reports of the British government and contemporary observers on its activities. It combines, therefore, the virtues of the "old" and the 'new" economic history. And although the book is historical, its conclusions are relevant to any study of economic growth past or present, in particular to the study of the role of entrepreneurship.

This book, a revision of Mr. McCloskey's Ph.D. dissertation, was awarded the David A. Wells Prize for l970-7l. The author is Associate Professor of Economics, The University of Chicago.

    Economic Maturity and Entrepreneurial Decline


    Contents

  1. British Iron and Steel, 1870-1913
  2. Donald N. McCloskey
  3. 1. The Iron and Steel Industry and the Hypothesis of Entrepreneurial Failure
  4. A. The Historiographic Career of the Hypothesis of Failure
  5. B. The Quantitative Evidence for Britain as a Whole
  6. C. The Relevance of the Experience in Iron and Steel
  7. D. Assessing Entrepreneurial Performance in Iron and Steel
  8. 2. The Market Structure of the Industry
  9. A. Cycles in Monopoly Power from 1870 to 1913
  10. B. Monopoly Power among Regions of the Country
  11. C. Competition and the Hypothesis of Failure
  12. 3. The Industry's Consumers and the Industry's Growth
  13. A. The Slow Growth of Demand
  14. B. The Substitution of Steel for Iron
  15. 4. The "Most Notable Single Instance" of Entrepreneurial Failure: The Neglect of the Basic Process
  16. A. Was the Neglect of Basic Ores Irrational?
  17. B. The Shift to Basic Steel
  18. 5. Productivity Change, 1870-1913
  19. A. The Material-Intensity and Capital-Lightness of the Industry
  20. B. Pig Iron
  21. C. Bessemer Steel Rails
  22. D. Open Hearth Steel Ship Plates
  23. 6. Was Productivity Change More Rapid in the American Industry?
  24. A. Productivity Change in American Iron and Steel
  25. B. Slow Growth and Antique Technology in Steel
  26. 7. American and British Productivity before 1913
  27. A. Levels of Productivity
  28. B. How Well British Entrepreneurs Performed Appendices
  29. A. Sources for Estimating U.K. Gross National Product and Inputs of Capital and Labor
  30. B. The Prices of British Iron and Steel
  31. C. The Input and Output Structure of the British Iron and Steel Industry in 1907
  32. D. Sources and Methods for Productivity Measurement in Pig Iron
  33. Index