"The Wealth and Poverty of Nations", by David Landes, and read pages 207-210. Based on your reading of Chapter 3 in macroeconomics, "Economic Decision Makers", explain in detail how you interpret Landes's story about mechanization using the ideas developed in this chapter.

TI-IEWEAIJHAND POVERTYOF NATIONS Pg2lil}I This was a factory, comparable in almost every way to the cotton mills of a later era. Almost. . . the difference was that the Lombe mill at Derby, along with the hand-operated throwsters' shops that had preceded it and some smaller machine imitators, was more than enough to accommodate England's demand for silk yarn. Silk, after all. was a cosdy raw material, and the silk manufacture catered to a small and afuent clientele. So the Lombe mill, fty years ahead of those rst cotton mills of the 1770s, was not the model for a new mode of production. One could not get an industrial revolution out of silk. ' Wool and cotton were something else again. When wool sneezed, all Europe caught cold; cotton. and the whole world fell ill. Wool was much the more important in Europe, and cotton's role in the Industrial Revolution was in some ways an accident. The British "calico acts" (1 700 and 1721), which prohibited the import and even wearing of East Indian prints and dyestuffs. were intended to protect the native woolen and linen manufacturers, but inadvertentiy sheltered the still infant cotton industry; and while cotton was a lusty infant, it was still much smaller than the older branches at midcentury. The rst attempts to build spinning machines aimed at wool, because that was where the prot lay. But when wool bers proved troublesome and cotton docile. inventors turned their attention to the easier material. Also, the encrustation of the woolen industry and the vested power of its workforce impeded change. Cotton. growing fast, recruiting new hands. found it easier to impose new ways. This is a constant of technological innovation as process: it is much easier to teach novelty to inexperienced workers than to teach old dogs new tricks.* Whythe interest in mechanization? Primarily because the growth of the textile industry was beginning to outstrip labor supply.ii England * 0n the resistance of workers in wool to mechanization , see especially Randall, Before the Luddites. who points ou t this respons e wa s also a function of organization and the sharing of gain. Where the workers were in effect independen tagents, as in York-shire, they ha d little trouble adopting new ways that proted them; where they served as wag e labor , as in the West Country, they tough t machine s that threatened employment. 1' The rst in the series of spinning machines that laid the foundation of the factory system was that of Lewis Paul and .John Wyatt (patented in Paurs name) in 1733 . The key invention her e was the us e of rollers turning at different speeds for drawing out the bera feature that became thereafter a regular component of spinning machines tted with a yer or equivalent. At that time, we are told, the shortage of spinning labor was nothing like what it would become in another generation; in the words of Pg203 had jumped ahead on the strength of rural manufacture (putting-out), but the dispersion of activity across hill and dale was driving up costs of distribution and collection. Meanwhile. trying to meet demand, employers raised wages, that is, they increased the price they paid for nished work. To theirdismay, however. the higher income simply permitted workers more time for leisure, and the supply of work actually diminished. Merchant-manufacturers found them selves on a treadmill. In deance of all their natural instincts. they came to wish for higher food prices. Perhaps a rise in the cost of living would compel spinners and weavers to their task.' The workers, however. did respond to market incentives. They were contractors as well as wage laborers. and this dual status gave them opportunity for self-enrichment at the expense of the putter-out. Spinners and weavers would take materials from one merchant and then sell the nished article to a competitor. stalling now one, now another, and juggling their obligations to a farethee-well. They also learned to set some of the raw material aside for their own use: no backward-bending supply curve when working for their own gain. Trying to conceal the embezzlement. weavers made thinner, poorer fabrics and lled them out by artice or additive. The manufacturer in turn tried to discourage such theft by closely examining each piece and if necessary "abating' the price of the nished article. This conflict of interests gave rise to a costly cold war between employer and employed. The manufacturers clamored for help from the civil authorities. They called for the right to inflict corporal punishment on laggards and deadbeats (no use trying to ne them); also the right to enter the weavers' cottages without warrant and search for embezed materials. These demands got nowhere. An Englishman's home was his castle, sacred. Little wonder. then, that frustrated manufacturers turned their Wadswort h an d Mann . hardly seriousThe Cotton Trade. p. 414 . Yet the unevenness of the yarn produced by hand spinners-both the individuals work and from one spinner to the next mean t that weavers had to buy far more yarn than they actually used in order to have enough of a given quality. The machine promised to end that Ibid.. p. 41 6 . * These constraints were the morevexatious in a context of rising consumer demand . The growing appetite for things should have increased the supply of labor ; and so it did in the long run. But in the short, demand got ahead of supply. and manufacturers got impatient. 0n the link between consumptio n an d industry, see de Vries. \"Industrial Revolution.' Pg209 thoughts to large workshops where spinners and weavers would have to turn up on time and work the full day under supervision. That was no small matter. Cottage industry. after all. had great advantages for the merchant-manufacturer. in particular, low cost of entry and low over-head. Inthis mode. it was the worker who supplied plant and equipment, and if business slowed. the putter-outcould simply turn off the orders. Large shops or plants. on the other hand, called for a substantial capital investment: land and buildings to start with. plus machines. Putting-out, moreover, was popular with everybody. The workers liked the freedom from