How Did The Industrial Revolution Change Economic Thought?
Prior to the Industrial Revolution, economies were primarily agricultural. Whether an economy did well or not depended on the vagaries of nature, such as the weather. The availability of land was seen as the major constraint on economic growth. Mercantilist thought prevailed. This was the basic notion that a country should try to hold on to its stock of precious metals by minimising the products it bought from elsewhere and maximising its exports. The Industrial Revolution introduced new ideas, namely that technology could substantially increase the productivity of workers, making economies much more dynamic; and that extreme specialization was often efficient, implying trade between the different parts of the world which specialised in different areas of production, rather than local self-sufficiency, which had been the norm before.
