Global perspectives

The Industrial Revolution, Politics and Public Policy

Paper
Posted on: 16th December 2019
Benedict Macon-Cooney
Head of Technology Futures

    Executive Summary

    Executive Summary

    Modernity, as we currently understand it, was conceived in England in the mid-eighteenth century. Its progenitor: technology. The innovations that kickstarted the Industrial Revolution fostered modern democracy and led to the foundation of modern economies. They disrupted society, upending old structures, as well as building new ones. Institutions, industry and demography were all to change course and, ultimately, little about life in Britain was left untouched by the Revolution. As it spread—first to Western Europe and the United States—it also left a much wider mark on the world. Technological transformation took a long time to feed through to politics and policy. But its diffusion ended up permeating both, ultimately reshaping political parties before the founding of the Labour Party, representing the culmination of a long debate over the role of capital and rights of workers.

    Today, as the world undergoes a profound period of technological change, far beyond what was experienced during the Industrial Revolution, there are some rhymes of history. There are deep questions around inequality, productivity and regulatory capture. Worries around corporatism are rising and consequently, calls for socialism are becoming louder. But the potential for reordering is even more substantial than in the past. It has also already begun.

    The companies that have dominated this age to date have done so as result of significant economies of scale and strong network effects. New business models have evolved, with platforms, aggregators and infrastructure businesses blowing away old models that controlled distribution and had costly fixed assets. This has in turn brought many people closer to economy: the restless inventiveness of a place like Silicon Valley was born out of public funding, but it thrived because the internet enabled distributed entrepreneurship and decentralised power. The countries that are thriving are those that innovative, adopt and adapt. Take-up begets take-off.

    The innovation engine is also no longer the national economy in the way that it was during the Industrial Revolution. Every country can be open to outside developments, and whereas in the eighteenth century the UK was an early exporter of new knowledge, many of the most significant developments today are happening in the US, China and other leading nations of Europe. This has raised the potential of what is possible, but so too has it changed people’s perceptions.

    We live in an age of abundance, but in an abstract sense. The resources are not of the earth. Their application is often unforeseeable, while the unintended consequences of connecting billions of people can be chaotic. But, like some of the great reform legislation of the nineteenth century, new media have enfranchised many more people. The overall effect of such change can feel like a cacophony in which it is hard to discern the signal from the noise. Politics and journalism, once the gatekeepers and leaders of public debate, have had their power eroded and are scrambling to hold onto control by lowering their standards.

    It is a hyper-documented time, and in a far more diverse and open public sphere some of the potential effects that technology might have on public policy are being widely explored. For example, the nature of work is changing, as a result of new business models and labour-replacing technologies that raise the spectre of large-scale worker displacement. This raises questions about education and retraining, welfare and human purpose. What are the skills needed for workers to withstand technological shocks? What is the right balance between labour and capital, when over-incentivising technology might hurt productivity by under-developing the human capital necessary to complement it? And should the OECD consensus on taxing labour more heavily than capital change?

    The growing clamour to tackle climate change has also opened up debates around the sustainability of capitalism. The question is whether a new model is needed, or whether technological change—based on its existing trends—can result in the necessary dematerialisation. This debate has its genesis in the Industrial Revolution and the resource use that was required to build modern, capitalist economies. But there is a compelling argument that Western nations are using technology to liberate the environment and are increasingly conscious of the need to produce and consume more wisely. Key to this has been the growth in renewable energy, with some forecasts predicting that zero-carbon technologies will overtake fossil fuels and provide more than half of the world’s generation needs by 2030. But the focus on this issue needs to be relentless, with investment in technological innovation and efficiency at the heart of it. In technological terms, this is the earthshot goal that politics must pursue.

    Underpinning this, however, will be artificial intelligence. It has the potential to radically alter the frontiers of our current reality. More than 40 nations have now published strategies outlining its potential across the whole public sphere: our models of health, education and even institutions themselves will all look dramatically different within a generation. But there is an existential question about what superhuman intelligence might bring, and whether such systems’ objectives would align with ours. This poses a fundamental line of inquiry: rather than continuing our current course, should we be ensuring that any actions that machines take are to achieve human objectives, rather than the loose objectives they presently pursue?

    With such deep issues to contend with, the overarching similarity between now and the Industrial Revolution is that there will almost certainly be a great realignment. The last few years of Western politics have in large part been a signal of this. The cultural and economic factors that have driven some of the upheaval of the old order have their origins in technology. Communication has been revolutionised and democratised. It has revealed pockets of hate, but it has also created new productive networks and access to insights and knowledge that were previously unimaginable. Firms such as Google and Facebook have thrived through mastering the new economics of the internet. This has increased consumer choice, with products such as Google Maps becoming ubiquitous, but the benefits they confer are quickly normalised. And as “software has eaten the world”1Marc Andreessen, “Why Software Is Eating The World”, Wall Street Journal, 20 August 2011 https://www.wsj.com/articles/SB10001424053111903480904576512250915629460, it has reorganised markets, work and value creation in the economy.

    The majority of people have been quick to embrace technology on an individual level and this shows little sign of slowing, even if there is a growing narrative of a backlash. Politics, on the other hand, has been slow to keep up, failing to anchor those who feel adrift in the tides of change. Institutions, which were broadly settled by the close of the Industrial Revolution, have so far failed to adapt to the new digital era. How they do so is the primary question that policymakers need to answer today. Yet the focus for too many has been on attempting to take control and rolling back the clock, rather than realising that decentralisation of power and self-organisation has been the most prominent theme of our age. How politicians harness and guide this development is therefore key. At present, reflexivity is driving both the left and the right, often with short-term success. The former demonstrates this primarily by a desire to bring many aspects of modern life under state control; the latter by pursuing protectionist and closed policies that often require external enemies to achieve their goals. Neither is likely to work in the long term as institutional and societal dissonance will become too loud for such policies to continue.

    This paper looks at how the Industrial Revolution also created such a dissonance, which politicians were slow to respond to. It maps out how that major wave of innovation created a set of disruptions that had long-term economic impact on a macro basis. Technological change transformed productivity, but it also created hardship in the short term and was slow to feed through into incomes more widely. The pace of technological change it initiated continued throughout the twentieth century, speeding up in every iteration. For example, the “half-life” of a skill is now less than five years by some estimates, when in previous generations it could have meant a job for life. Steam and electricity took time to feed through to systems, whereas ICT adoption was almost instantaneous. Politics must quickly change its mindset and think about how it builds institutions that harness the potential that technology is bringing. There are some clear challenges, but technology is primarily driven by people. Politics’ role is not to fight it, but instead to guide it towards optimal societal outcomes.

    First wave of gadgets

    First wave of gadgets

    “About 1760 a wave of gadgets swept over England”2Ashton, T. S., The industrial revolution, 1760-1830. [1997 ed.] Oxford; New York: Oxford University Press was the description of events that century by a schoolboy in T.S. Ashton’s The Industrial Revolution. His choice of words may conjure up images of small devices or even novelties, but the “gadgets” of the eighteenth century were more monumental: Abraham Darby’s coke blast furnaces in 1710; Thomas Newcomen’s atmospheric engine in 1712; James Watts’ steam engine in 1776; John Kay’s fly-shuttle in 1773; Hargreaves’ spinning jenny in 1770; and Richard Arkwright’s water frame a year later. That era of human history was characterised by famous inventions that together changed the course of the next two centuries.

     

    The impact of these innovations, however, was not purely economic. The direction of public policy would change, as would the distribution of political power. The foundational text of capitalism was written, as was that of communism. New parties rose. Trade unions were formed. Protectionism made way for liberalisation. In short, feats of engineering re-engineered society. But it took a long time for politics to catch up with the reality of these advances. As we experience another revolution today, more gadgets have swept over us. The mobile phone is arguably the world’s first universal technology. Objects such as headphones and televisions are ubiquitous, while some other digital elements are more abstract, living in the ether of the internet. The scale and scope of these are more substantive, and the opportunities more profound. But there are again questions about diffusion and how politics adapts. Yet as with the Industrial Revolution, many politicians are failing to adapt to the changes around them, attempting to impose control, and faltering in helping people through an accelerating process of change.

    The origins and causes of England’s Industrial Revolution are the subject of significant debate by economists and historians alike. Various explanations have been put forward, some mono- and others multi-causal. High wages along with cheap coal created demand for technology, as industry sought to substitute labour for capital and energy. The rate of capital formation increased, as did levels of world trade. Institutional shocks3Acemoglu, D, S Johnson, and J A Robinson (2005), “The Rise of Europe: Atlantic Trade, Institutional Change and Economic Growth”, American Economic Review 95: 546-579.such as the Glorious Revolution in 1688 and earlier, the Civil Wars, created a more inclusive, pluralistic political culture, with the establishment of the supremacy of Parliament over the monarchy and the basis of the Whig party. The Reformation had earlier laid the basis for the “Protestant work ethic”. Geographical factors, such as a temperate climate and an abundance of resources, also conferred advantages over the tropics and nations with scarce natural wealth, while the dissolution of monasteries4Leander Heldring, James Robinson, Sebastian Vollmer, “The origins of the Industrial Revolution”, VoxEU.org, 18 November 2017 https://voxeu.org/article/origins-industrial-revolution 200 years before and the creation of land markets drove local industrialisation.

    Evolutionist arguments have also been offered as alternatives to revolution. These present a collectivist view of endeavour, in which dynamism only flourishes within an ecosystem, and where humans tend to converge on ideas at a given time. Thus the Industrial Revolution can be seen as the compound effect of the “altruistic individualism of Renaissance humanism, the vitalism of the Baroque, and the modernism of the Enlightenment”5Phelps, Edmund, “Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change,” Princeton University Press, 2013. JSTOR, www.jstor.org/stable/j.ctt32bbrz, . This view, in which a confluence of social and economic factors and variables aligned, was why England just pipped France and Belgium to the line. From all of this, what is clear is that industrialisation was a complex historical process that combined economic, social, cultural and scientific forces. And as the economic historians Kevin H. O’Rourke and Jeffrey G. Williamson write, even if scholars cannot agree on the date or even the terminology, one thing is indisputable: “the rate of technological advance accelerated”6O’rourke, K.H. & Williamson, J.G. J Econ Growth (2005) https://doi.org/10.1007/s10887-005-1111-5">. The nation was about to take off and become the workshop of the world.

    This technological progress was to underpin the country’s transition to modern economic growth. Productivity growth led to an increase in GDP per capita, as well as real wages. It dispelled the famous theory of the economist Thomas Malthus, who wrote that the “power of population is so superior to the power of the earth to produce subsistence for man”7Malthus, Thomas, An Essay on the Principle of Population, 1798, http://www.esp.org/books/malthus/population/malthus.pdf, although at the time, the strength of the former was significant. In 1750, the population of England and Wales was little more than 6 million. But by the time Malthus published his Essay on the Principle of Population in 1798, towns and cities had begun to swell. This growth and the worries of catastrophe that it had unlocked raised political questions. John Rickman, a civil servant, described the problem in a technocratic sentence for the ages: “an intimate knowledge of any country can be the only foundation of the legislation of that country.”8Levitan K, “A National Undertaking”: Taking the Census. In: A Cultural History of the British Census. Palgrave Studies in Cultural and Intellectual History. Palgrave Macmillan, New York, 2011https://link.springer.com/chapter/10.1057%2F9780230337602_2#citeas Charles Abbot, a Member of Parliament who was about to become Speaker of the House of Commons, agreed, as did the Prime Minister, William Pitt the Younger, and in 1800 Parliament accordingly passed the Population Act, legislating for the United Kingdom’s first census to be conducted a year later. By this time, the population was approaching 11 million. Urban centres such as London and Manchester had seen their populations rise dramatically.

    The pessimism or even myopia of Malthus, who failed to account for technological change increasing agricultural yields, was understandable in an early era of deep technological change. But it is also an argument that has continued to play out in different guises in the centuries since. On each occasion, the pessimists have usually been proved wrong, even if they have often provided a useful challenge function. Today, the productivity puzzle is one that continues to pose questions for economists, even if it is now 30 years on from Robert Solow’s quip that “You can see the computer age everywhere but in the productivity statistics.”9Solow, Robert, "We'd better watch out", New York Times Book Review, 12 July 1987 http://www.standupeconomist.com/pdf/misc/solow-computer-productivity.pdf For example, the American economist Robert Gordon has argued that we may never see the growth of days gone past, and that all the big breakthroughs have essentially been achieved. Others have gone further, writing about the death of science, or suggested that perceived failings of the Large Hadron Collider, for example, show that we are approaching the limits of our knowledge.

    As a rejoinder, some have argued that the growth of previous centuries is not necessary: for example, in Why Slower Economic Growth Is a Sign of Success, Dietrich Vollrath has written that in “1940 you might have spent your money installing plumbing for running water, or a toilet”10Vollrath, Dietrich, “Why Slower Economic Growth Is a Sign of Success,” forthcoming, January 2020, University of Chicago Press,https://www.press.uchicago.edu/ucp/books/book/chicago/F/bo44520849.html , yet once we had those goods, our “spending turned towards services”, such as Netflix and Hulu. As a result, we may need different metrics of progress. Another counter-argument to doubts about our technological potential is that artificial intelligence and other nascent technologies may change the boundaries in ways in which we can’t conceive, ushering in a new golden age. It brings to mind Amara’s Law – named after the Stanford University computer scientist Roy Amara – that we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run. The charge is often that this is overly optimistic, but if drug discovery or genomics research were to solve a disease such as cancer, the cost savings to society would be huge and the human benefits cannot, of course, be quantified. But this is where diagnosis and understanding are again key.

    Whether such technological breakthroughs would dramatically alter productivity is a question yet to be resolved. If we were to build a new symbiotic relationship with machines, through which humans could achieve new health or education objectives, there is a great likelihood that it would do. When Malthus wrote his Essay, there was little by way of statistical depth to challenge his thesis; but—as we now know—this was an era in which productivity was growing. In The Technology Trap, Carl Benedikt Frey explains that “in the period 1780–1840, output per worker grew by 46 percent”, but the spoils of this were not being shared evenly: “real weekly wages, in contrast, rose by a mere 12 percent”.11Frey, Carl Benedikt, “The Technology Trap: Capital, Labour and Power in the Age of Automation,” Princeton University Press. 2019.

    A rising tide does not lift all boats

    A rising tide does not lift all boats

    The Industrial Revolution was arguably the first period to raise these tensions. In its first phase, the automation it brought was labour-replacing. It was an era of increasing output, but without broad-based wage growth, and of increasing profits for some, while many in poverty saw little improvement to their economic lot. Over decades, this can have net positive results, as the capital released can be deployed in creating new industries and better-paid and more skilled jobs. But while 20 or 30 years is not long in the sweep of human history, it can mean a whole generation of people becoming casualties. The economic historian Robert C. Allen has dubbed the first half of the nineteenth century Engels’ Pause, in which the “the surge in inequality was intrinsic to the growth process” 12Allen, Robert C., “Engels’ Pause: Technical Change, Capital Accumulation, and Inequality in the British Industrial Revolution,” 2008, https://www.nuff.ox.ac.uk/Users/Allen/engelspause.pdf.

    And income was not the only point to pause. Other metrics were slow to move: life expectancy in 1850 was little more than 40, much the same as it was 100 years before. A cholera outbreak in London in 1832, for example, was also to kill more than 15,000 people.

    Life Expectancy in the UK

    For many people, technological change resulted in work in “dark, satanic mills”, squalid living conditions and the exploitation of children.13Nardinelli, Clark, “Child Labor and the Industrial Revolution,” Bloomington, IN: Indiana University Press, 1990 By 1835, 63 per cent of the textile factories’ workforce consisted of children aged 8–12 and women. Across the country there was also a lack of franchise, little access to education or public health and no system of welfare support. Politics was taking its time to adapt to technological change that began with the establishment of the first factory in 1769 in Cromford, near Derby: it took until 1802 with the Health and Morals of Apprentices Act for any form of legislation on factories to pass. Sponsored by Sir Robert Peel— father of the future Prime Minister by the same name—it stopped apprentices working at night or for more than 12 hours a day, as well as providing some basic education. Peel was a “Church and king” Conservative who believed in the divine right of kings and “non-resistance”, and an ally of William Pitt the Younger, yet as a Lancashire mill owner, he showed concerns for the conditions in which children were working.

    There had been previous tentative steps to address poverty: a few years earlier, the Elizabethan Poor Law, originally enacted in 1601 to provide relief for the most destitute, had been amended. To provide outdoor relief – a form of assistance such as money, food or clothing without a requirement to enter a workhouse or poorhouse – the Speenhamland system was established, supplementing wages to account for family size and the cost of bread. The backdrop of this reform was not purely domestic. The French Revolution at the turn of the century had fostered a deep conservatism in British politics, which was, at the time, the preserve of land-owning nobility. The Speenhamland system was a response to potential unrest that might be sparked by rising food prices.

    At this time, Samuel Whitbread—an acolyte of the Whig statesman Charles James Fox and part of the “Foxite” progressive portion of a party divided by factions—had also put forward a bill to introduce a temporary minimum wage. This was defeated by Fox’s rival, Pitt, and the then Conservative government, with Speenhamland instead attempting to provide a minimum standard of living, the basic idea of which is similar to the Universal Basic Income today. Some of the criticisms at the time also echoed those of the twenty-first-century debate. For example, the economist David Ricardo, best known for his work on the economic value of labour, worried that Speenhamland would discourage work. In Das Kapital, Karl Marx wrote that it suppressed wages, while the twentieth-century economic historian Karl Polanyi was most withering, arguing that it stopped the creation of a labour market, and that the “labouring man was homeless in society”.14Polanyi, Karl, “The Great Transformation: The Political and Economic Origins of Our Time,” 1944. This is also in part because the rules in place meant people could apply for support in their parish of residence, discouraging labour mobility and migration even over short distances.

    Technological backlash and attempts to assert control

    Technological backlash and attempts to assert control

    Even if Speenhamland played its part in staving off widespread revolution, Britain would not be immune to revolt as technology had led to hardship in part of the population. In 1811, hundreds of framework knitters gathered near Sherwood Forest, near Nottingham, to protest working conditions. This was the beginning of the Luddite uprising and a frame-breaking epidemic, which literally set man against the machine. This revolt can be seen as a form of tech-conservatism, rallying against the wheels of progress. To others it was an early form of unionism and an important example of early collective bargaining, which had been prohibited with the introduction of the Combination Act 1799 (albeit this was slightly softened a year with the Arbitration Act). A more rounded view, however, would be that technological advances were necessary, but productive techniques that produced further dislocation would need to be addressed by policy. Referencing Hobbes, Frey writes that “the lives of many commoners got nastier, more brutish, and shorter”15Frey, Carl Benedikt, “The Technology Trap: Capital, Labour and Power in the Age of Automation,” Princeton University Press. 2019., and that for the Luddites, technology was not liberating. But government was to take the side of industry, allying political power and technological progress in a potent push for economic growth and imperial influence.

    From the macro perspective, industry was essential to Britain’s dominance on the world stage. It is also helped change the long-term prosperity of people around the world, expanding the resources of knowledge and technology. Just as with the transformational advance we are living through today, there was deep turbulence during the ascent of industry. Ignoring such micro elements in the short run may often be politically prudent. However, they can cause ripple effects with long-term consequences. In the Industrial Revolution the most powerful example of this was political reform, with legislation that began to shape workers’ rights and welfare. But the immediate political reaction to the Luddites can in part be traced through the two pieces of legislation introduced in the aftermath: the Framework Bill, which prescribed capital punishment for breaking frames, and the Bill for the Preservation of Peace in the County of Nottingham, which allowed authorities to appoint special constables.

    This was an attempt to keep a lid on an issue that was perceived as being of lower magnitude than others at the time. The Napoleonic Wars had still to be settled; and tensions with the United States were rising and would spill over into conflict that year. Trade had decayed as result, but the Conservative Prime Minister Spencer Perceval, an heir to Pitt, showed little pity towards the rioters. The Whig Lord Henry Brougham, who was later to play his part in the 1832 Reform Act and the 1833 Slavery Abolition Act, was to show more sympathy in a speech in the House of Commons. Saying that it was his duty to raise the plight of the lower classes, he described how workers in one region were “silent, still, and desolate during half the week, during the rest of it miserably toiling at reduced wages for a pittance scarcely sufficient to maintain animal life in the lowest state of comfort."16http://1812now.blogspot.com/2012/06/june-16-1812-orders-in-council-to-be.html

    In his maiden speech in the House of Lords, Lord Byron famously opposed the death penalty for frame-breakers, saying that while “you may call the people a mob”, do not “forget that a mob too often speaks the sentiments of the people”.17Frame Work Bill, HL Deb 27 February 1812 vol 21 cc964 https://api.parliament.uk/historic-hansard/lords/1812/feb/27/frame-work-bill. Byron’s romanticism differentiated him from Whigs such as Brougham and Whitbread, who were heavily influenced by the philosopher Jeremy Bentham. The progressives of the party, their liberalism was based on individualism and rationalism—on utilitarian ideals. Out of government for a long period, the Whigs remained their commitment to “peace, retrenchment and reform”, but they were still a party of a rural society, not of the growing industrial capitalist one. Radicals such as Tom Paine were also active at this time, and believed that power and sovereignty lay with the people and not the monarchy. But the party of government at this time was the Conservatives.

    Perceval and his successor, Lord Liverpool, represented the Old Tory orthodoxy, people who—alongside religion and the divine right of the monarchy—believed in limited government or interference, including in the labour market. This was perhaps in part due to an excessive interpretation of Adam Smith’s Wealth of Nations (1776), just as today people misunderstand its critique of corporatism, and the need for competition in the market. Writing on this period in The Web of Government, the sociologist Robert MacIver has said that as the country transformed from an oligarchical state into a laissez-faire one, “there is no more remarkable example in history than this of the ineptitude of political man to adapt his institutions to the needs of the times.”18MacIver, R. M., “The Web of Government,” 1947, https://archive.org/stream/in.ernet.dli.2015.222117/2015.222117.The-Web_djvu.txtThis is perhaps being again tested today as institutions of an analogue age try to keep up with people living in a digital one.

    Among the elite and intellectuals of the nineteenth century there was also a nostalgia for the passing of the idyll of the agrarian economy and a lament for the evils of the new squalid industrialisation, comparable to some of the moral worries over Big Tech and the disruption it creates. The poet laureate, Robert Southey, summed up the sentiments of many: “The immediate and whole effect of the manufacturing systems, carried upon as it is now on the great scale, is to produce physical and moral evil,”19Riello, Giorgio and O'Brien, Patrick, “Reconstructing the Industrial Revolution: analyses, perceptions and conceptions of Britain’s precocious transition to Europe’s first industrial society,” Economic History Working Papers (84/04). Department of Economic History, London School of Economics and Political Science, 2004,http://eprints.lse.ac.uk/22337/1/WP84.pdf he wrote in the Colloquies. However, there were shafts of light in political reform as a branch of Tory humanitarianism championed labour reform, and others such as Sir Samuel Romilly rallied for penal and capital punishment reform.

    But as the Congress of Vienna (1814–15) was about to bring an end to the Napoleonic Wars and peace in Europe, another feud was about to open up at home. The rapid spread of technology around Europe had meant that other countries were producing crops more cheaply than England could. While the nation had comparative advantages in the production of iron and industrial manufacturing, the price of crops was likely to fall as a result of the end of the British naval blockade of the United States. In an attempt to protect their wealth, the country’s land-owning nobility, which included the governing class, introduced the protectionist Corn Laws. New competition would be fought through mercantilism, with no imports of corn allowed until British corn reached a price of 80 shillings per quarter. From a domestic policy perspective, this legislation was going to hurt the poor the most: it would keep the price of bread high for workers, who were already beginning to show their disquiet. But it was also the wrong policy response to the changing nature of competition that technological change and more interconnected markets had brought. The Corn Laws were later to be repealed by Sir Robert Peel, in one episode of the long-running debate over free trade debate and imperial preference that consumed the Conservative Party, the echoes of which can be found in the Brexit debate today. This was the first of many feuds opened up in British politics by technology and globalisation. Politicians sought to resolve it by protecting their interests, rather than modernising to meet the people’s demands.

    Stifling legitimate grievances

    Stifling legitimate grievances

    Before Peel would be central to one of the century’s most prominent debates, however, his father was seeking to build on his earlier reform. He pushed through the Cotton Mills and Factories Act in 1819, which had been originally been drafted by the reformer Robert Owen, who is known as a father of English socialism, of rationalism and, in Polanyi’s words, of society itself. Owen would later establish the Grand National Consolidated Trades Union, an attempt at a general union, but for now Peel’s act would prevent children under nine years old from working in the cotton industry, laying the ground for further Factory Acts. If this was a small step of progress for labour, events in Peterloo that year were about to further reshape affairs. That August, 60,000 people gathered on St Peter’s Field in Manchester to protest against living conditions as well as a lack of Parliamentary representation. What was intended to be a peaceful day ended with the deaths of several hundred protestors in what has come to be known as the Peterloo massacre—the bloodiest clash in modern British political history, and one that still holds the imagination of many today.

    On the 200th anniversary of the Peterloo massacre, the Labour Party’s leader, Jeremy Corbyn, posted on Facebook that “a direct line runs from Peterloo to the foundation of the Labour Party, which exists to represent the interests of the majority against the elite at the top”. In the aftermath of Peterloo, the poet Percy Shelley was to write The Masque of Anarchy, one line of which—“Ye are many—they are few”—forms the basis of the party’s slogan today; it was also quoted in Tony Blair’s change to Clause IV of Labour’s constitution in 1995 to state the belief in creating “for each of us the means to realise our true potential and for all of us a community in which power, wealth and opportunity are in the hands of the many, not the few”.

    In their aggressive response at Peterloo, the authorities elevated the anger of protesters and captured the ire of many more by answering with oppression, rather than liberalisation. Still paranoid over the French Revolution, which had preoccupied Pitt, Liverpool tried to control events by suppression, introducing what became known as the Six Acts. The Whigs, who called for a Parliamentary enquiry, strongly opposed repressive legislation to prevent meetings, speed up convictions and curtail the free press. A young journalist, John Edward Taylor, was one of those present that day and the events strengthened his reformist ideas. This resulted in the founding of the Manchester Guardian two years later, a newspaper that later simply became the Guardian. That day, the historian A. J. P. Taylor has said, “began the breakup of the old order in England”.

    The role of mass movements and media is also intricately linked: in 1790, the year in which William Nicholson was to patent the cylinder press, only 1,500 people would receive a copy of The Times every day. However, innovations in printing and production as well as a reduction in “taxes of knowledge” would reshape the media landscape. By 1850, 40,000 would subscribe to The Times, while other papers had been established around the country and were fast in growing their readerships. The innovations of the Industrial Revolution would see papers go from single sheets, painstakingly put together at a rate of a about 200 per hour, to thousands being able to be printed. It would see knowledge, previously confined to an elite, opened up much more broadly.

    However, with the Newspaper and Stamp Duties Act, Lord Liverpool had tried to stymie this. A year after Peterloo a plot to assassinate Liverpool and his Cabinet was foiled, while the consolidation of politics towards a two-party system began accelerating. More liberal Tories, such as William Huskisson—who would also be a proponent of the distinctly unenlightened position on imperial preference—pushed for reform in places, including the repeal of the Combination Acts in 1824 (although a further act introduced the following year would severely restrict the activities of unions). At this point the Conservative Party not yet a well-organised party machine. The politics of this new industrial era had so far been characterised by multiple independent groups, competing factions and attrition. The Ministry of All the Talents in 1806 had been an attempt to bring an end to political confusion, but the era was one of ideological polarisation and political conflict. Yet, since the first government of Pitt beginning in 1783, it had still broadly been a period of Conservative rule and Whig opposition.

    Religion becomes the diving line

    Religion becomes the diving line

    The fissures in the Conservative factions were, however, building. Differences on free trade and protectionism, later to be a long-standing fault line, were slowly rising, as were deep divisions on individual liberty, representation and Parliamentary reform. However, following the death of Liverpool and the short-lived premiership of George Canning, under whom many Conservatives refused to serve, a split was to come as a result of Catholic Emancipation. The Ultra Tories, who held deep Anglican beliefs, broke from the governing party now led by the Duke of Wellington after the passing of the Catholic Relief Act in 1829. In the following year’s election, triggered by the death of King George IV, the Conservatives were to win the most seats, but the ramifications of the split allowed the Whig Earl Grey to form a government, putting reform on the table.

    The Swing Riots were to take place that year, with agricultural workers destroying threshing machines across the south of England and East Anglia. It was the largest labour unrest in English history, with many farmhouses burnt to the ground and troops and local militia deployed against the protestors. The Poor Laws, poor crop yields and returning soldiers entering the labour market were all adding fuel to the fire. Anger was often aimed at Irish migrants too, because of a belief that they were stealing jobs. But the spark lighting the unrest was still technology. Agricultural workers had seen their winter earnings decimated by steam threshing. Output was rising, increasing capital investment in technology and returns to owners. But those being hit were the workers. Swing was not to be the only unrest at the time; the riots were followed by the Merthyr Rising of miners in Wales in 1831, as people’s anger continued to rise. The instability of the government resulted in another election that year. It was a Whig landslide and paved the way for the passage of the Reform Act in 1832. This reform was necessary: just 10 per cent of the British adult male population was allowed to vote before this point. If enfranchisement was politically significant, the changes were incremental: after 1832, 18 per cent of adult males in England and Wales and 12 per cent in Scotland were entitled to vote. Reform was not born out of dispassionate analysis of the country’s needs but rather out of crisis, and democratisation was a product both of revolution and of the threat of one.

    But out of the ashes, new shoots can grow. And in meeting the rising anger at this time, the Whigs—who had often walked a fine line between radicalism and traditionalism—were representing the people’s interests. While the Whigs’ rising fortunes were in contrast to the decline of the Tories, the seeds of Conservative renewal were also being planted by their new leader, Sir Robert Peel. As a party of tradition, they had resisted reform and Peel himself had said he “was unwilling to open a door” which he “saw no prospect of being able to close”. But in a politically febrile time he quickly sought for his party to make peace with the new settlement.

    The Whigs had introduced the Factory Act in 1833, which continued to try to improve the lot of children, while a small education grant was introduced, so that the Church could begin to provide schooling. The Poor Law Amendment Act also changed the system of poor relief. But while it may have been a remedy to more parochial government, opening up the labour market, it was also seen as punitive. In political terms, however, it was enough. The Whigs held firm, finding electoral success again in 1835, although this was as much to do with their reputation as the reformers of 1832 as with the modernising force they represented. In the election campaign Peel would set out his progressivism in the Tamworth Manifesto. It committed the party to reform, but not the “perpetual vortex of agitation”. It accepted the constitutional settlement. And it would lay the foundations for the modern Conservative Party.

    Growing movements

    Growing movements

    Trade around the world continued to grow in the middle decades of the nineteenth century, and England was dominating European iron markets, as well as the global cotton and coal industries. As Andrew McAfee20McAfee, Andrew, “More From Less: The surprising story of how we learned to prosper using fewer resources – and what happens next,” Scribner, 2019 has written, in 1750 the country was producing around 8 per cent of Europe’s iron. Around a century later this was nearly 60 per cent, while the country was producing around half of the world’s cotton and 65 per cent of its coal. Before 1825, the country had no commercial steam locomotive. By 1850, steam railways covered 6,000 miles. Engels also observed the extent of the progress in The Condition of the Working Class in England: the country now had the finest roadways and, having had no canals in 1755, it now had “2,200 miles of canals and 1,800 miles of navigable river”.21Engels, Friedrich, “The Condition of the Working Class in England,” 1845

    Steam was also to the hit the open waters, with Isambard Kingdom Brunel’s steamship SS Great Western, launched in 1838, increasing global connectivity. With the advent of William Wheelwright’s Pacific Steam Navigation Company, the markets of North and South America were opened up, with new ships carrying coal across the Atlantic. 1838 was also finally to see an end to the slave trade and the success of the abolitionist movement that had begun 50 years earlier. But the success of one struggle was accompanied by the making of another that year.

    The first working-class mass movement, Chartism, was to decry the incrementalism of the Reform Act. A successor to the earlier radicalism of Tom Paine and others, the Chartists drew up a People’s Charter of six demands for Parliament, which included all men having the right to vote, the professionalisation of politics by giving MPs a salary, as well as removing the requirement for MPs to own property. Their first petition was to be presented to the House of Commons the following year. It had gathered more than a million signatures, but was rejected by MPs. This contributed to the Newport rising that year, which ended in bloodshed, but the seeds had been planted. At the next election, eight Chartist candidates were to stand, although they and Viscount Melbourne’s Whigs were resoundingly defeated by Peel’s resurgent Conservatives.

    The repeal of the Corn Laws in 1846 was the stamp this period of government has left on British history. It marked a further step for globalisation but was also the beginning of a long-running feud in the Conservative party, in which many misdiagnosed Britain’s place in a world being changed by these new forces. As the historian David Edgerton has written, today Brexit “brings to light, in stunning clarity, Brexiters’ deluded political understanding of the UK’s place in the world”22Edgerton, David, “Brexit is a necessary crisis – it reveals Britain’s true place in the world,” The Guardian, 9 October 2019, https://www.theguardian.com/commentisfree/2019/oct/09/brexit-crisis-global-capitalism-britain-place-world, but it took a long time for that to be revealed then, with the debate stretching on into the early twentieth century. Peel had been right, but ultimately he was to pay the price for it.

    Repealing the Corn Laws was not to be the only achievement of Peel’s time in office. He continued his father’s push on factories, with legislation in 1844 that is now known as the first health and safety act in Britain. Given the squalid nature of urban areas, the Health of Towns Commission was also formed, which—following the formation of associations in cities such as Liverpool and Manchester—would pave the way for the Public Health Act in 1848. Throughout this time the Chartist movement was still going strong: their second petition to Parliament in 1842 gained more than three million signatures. More than six miles in length, it took 30 Chartists to lift. Presenting it to the Commons, the Radical MP for Finsbury, Thomas Slingsby Duncombe, spoke of the impact he felt the forces of technology, capitalism and globalisation were having, referencing the monopolies of machinery and of the “means of travelling and transit, and a host of other evils too numerous to mention”.23Parliamentary Debates: Official Report: Session of the Parliament of the United Kingdom of Great Britain and Ireland, Volume 63, Thomas C. Hansard, 1842 But the petition was again rejected.

    New divides

    New divides

    Britain was still a nation of contrasts. It was self-confident, wealthy and open, with industrialists and entrepreneurs reshaping the world through the machinery of the industrial era. But in part it was still shaped by a landowning elite, who had controlled political power and contributed little to this modern technology, as well as poverty and a new “proletariat”. Much wealth, both new and old, was built on the backs on others, with little form of trickle down in income in the short term. As with the digital transformation we are experiencing today, this was a great period of progress. But whereas today we are increasingly thinking about how we dematerialise our consumption as we increase our welfare—a feat that is likely to be possible in this new technological era—consumption during the Industrial Revolution was built on the extraction of resources.

    Technological acceleration was not increasing living standards for the majority. This fact was foundational for the radical politics of the era, which saw—for example—the publication of Engels’ The Condition of the Working Class in England, and (co-authored with Karl Marx) the Communist Manifesto in 1848. In the year of the Manifesto’s publication, revolutions were to sweep over Europe. Countries across the continent had experienced similar levels of population growth as Britain: the Italian states had increased from around 17 to 34 million over the first half of the century, while Germany had increased from 22 to 33 million. Around 10,000 km of railways had also been laid across the continent.

    As with steamships crossing the Atlantic, the growth of the railways across Europe was part of the broader opening of the world as a result of technology. The beginning stages of global infrastructure were being built. Transport, media and machinery were expanding frontiers of knowledge and the perception of possibilities, as well as everyday understanding of events. As the world opened up, however, forces of nationalism were also building as a force against economic liberalism. The German economist Friedrich List believed that liberals looked at economic policy though a “boundless cosmopolitanism”, when between “each individual and entire humanity, however, stands THE NATION”.24List, Friedrich, “The National System of Political Economy,” English translation 1885 This was in contrast to the Ricardian belief in promoting “the happiness of mankind”, or the philosopher John Stuart Mill and Radical and Liberal statesman Richard Cobden’s view that free trade and interdependence would create peace. As Mill put it, free trade was “the principal guarantee of the peace of the world”.25Mill, John Stuart, “Principles of Political Economy,” 1848

    With nationalism rising again today, and globalisation going through a period of deep challenge—and in some places retrenchment—this tension has again become apparent, with the US–China trade war being just one example. The difference today is that many elements of technology are now nearly universal; the global economy is far more interdependent, with intricate supply chains and systems of finance; and the internet has also given rise to innovative firms that have mastered the new economy, leading to worries about competition in the market. Some of the policy questions this has raised have their roots in the industrial era: in the US, for example, industrialisation and the growth of railroads led to the Sherman Antitrust Act in 1890. This legislation has shaped the character of competition ever since, and it is again being invoked today as policymakers consider the reach and power of Big Tech firms such as Facebook, Google and Amazon. Yet much comment on this issue is reflexive, rather than reflective about the changing nature of the world economy. It is also part of a bigger debate causing splits in global politics, with protectionist and nationalistic forces of both left and right rising while economic liberals who still believe in capitalism, interdependence and the exchange of ideas and innovation as a path to prosperity are in retreat.

    To fight those resisting change in Peel’s time and to get the repeal of the Corn Laws through the House of Commons, he needed the support of the Whigs and the Liberals. Philosophical differences were expressed with cries of betrayal and the subsequent split in the Conservatives—with the Protectionists of Lord Stanley on one side, and the Peelite free-traders on the other—led to the Whigs forming a government with Lord John Russell as Prime Minister. A further election in 1847 saw them continuing to govern, and the Chartist leader Feargus O’Connor won a seat in Parliament—the first and only the movement would achieve. O’Connor used his position to present the movement’s last petition the following year; it was rejected for the third and final time. The tumult of the next few years and the different alignments that had now formed meant that the protectionist Conservatives were now the party of the landowning rural aristocracy. In rowing back Peel’s modernisation, the Conservatives now represented the old order.

    On the other side, the new Peelite–Whig–­Radical coalition that formed in 1852 reflected the rising diversity and cosmopolitanism that was forming in parts of Britain. With the Peelite Lord Aberdeen as Prime Minister, the coalition was to be a short-lived affair. Coming into it, Aberdeen knew it was a “great experiment, hitherto unattempted, and of which the success must be considered doubtful”, even if the “Public have regarded the new administration with singular favour”.26Brown, David, “Palmerston and the politics of foreign policy, 1846-55,”  Manchester University Press, 2002 The main issue of the time was one of foreign policy. The European approach of a congress system and of federation, pursued by Aberdeen and William Gladstone—who embodied the new Victorian Liberalism and would become Prime Minister four times—clashed with a nationalistic  approach favoured by Lord Palmerston and Benjamin Disraeli, the father of one-nation Conservatism and another future PM.

    The government did push on with some domestic legislation: Palmerston oversaw the Factory Act of 1853, continuing a long and arduous creep towards improving industrial working conditions, especially for children. He attempted to allow trade unions to form, while the Truck Act would introduce terms under which workers were entitled to payment in money, rather than goods or tokens for employers’ own shops. The Smoke Nuisance Abatement (Metropolis) Act 1853 was also the first attempt to tackle air pollution from factories that billowed out black smoke over the rapidly growing industrial towns. The end of the taxes on knowledge would also begin: advertisement duty was abolished in 1853,27Hansard, 1 July 1853, https://api.parliament.uk/historic-hansard/commons/1853/jul/01/advertisement-duty and newspaper stamp duty in 1855. Paper duty would also go by 1861, with each successive move expanding the reach of newspapers and information. Gladstone’s 1853 Budget—at nearly five hours, his speech was the longest to date—was momentous for the free traders, as it abolished duties on 123 items and cut them on 133 others.

    Towards a two-party system

    Towards a two-party system

    The government had challenged Disraeli’s proclamation that “England does not love coalitions”, but the country’s involvement in the Crimean War from 1854 was to put an end to this one less than three years after it begun. The realignment of these different elements of politics had, however, set a new course for parties, as economic and social change sped up during a second wave of industrialisation. Ultimately, the Whig–Radical coalition was to become the Liberal Party in 1859, cementing the two-party system. A century on from the first wave of “gadgets”, technological development had reordered British politics. The Liberal Party had morphed, becoming the modernising, reformist, open force, while the Conservatives were now the traditionalist, closed one. As is common with political parties that make sense of the world as it is, and where it is going, the Liberal Party would govern for a large part of the coming three decades, but not without turbulence.

    Calls form reform were growing, as were agitations. The trade unions, who had moved away from their “no politics” policy of the previous decade, aligned with the radicals in pursuit of social reform and legal rights. So too had the Union victory in the American Civil War (1865) elevated the issue, with many those pushing for reform being supporters of this cause. The free trader and Radical MP, John Bright, was among them. As was Edmund Beales, who would be President of the newly founded Reform League between 186501869 and , take on the cause of the Chartists.  Gladstone tabled a Reform Bill in 1866, which would have resulted in 400,000 new voters. It was to be defeated. Conservatives such as Lord Cranborne proposed the extension of franchise, lamenting the potential voters “power of combination, their ignorance of economic laws, their strong taste for the despotism of numbers”28Robert Cecil, Viscount Cranborne, “The Reform Bill”, Quarterly Review, vol. 119, 1866Aristocratic Whigs such as Lord Elcho and Lord Grosvenor were also to oppose, forming the “Adullamites”, named after the Cave of Adullam in the Old Testament, where King David sought refuge from King Saul. Perhaps the most prominent among them was the Liberal, Robert Lowe, who did little to hide his feelings, stating that:

    “If you want venality, if you want ignorance, if you want drunkenness, and facility for being intimidated; or if, on the other hand, you want impulsive, unreflecting, violent people, where do you look for them in the constituencies? Do you go to the top or to the bottom?”29Saunders, Robert, “Democracy and the Vote in British Politics, 1848-1867: The Making of the Second Reform Act,” Routledge, 2016

    Even if they were sheltering from the inevitable, Russell, who was for the second time Prime Minister, had misjudged the speed of reform. Whipped up by Disraeli, the opposition would help bring down the government. The Reform Bill would, however, pass a year later. By doubling the electorate to two million it had gone much further than the one proposal just a year earlier, , before the third Reform Act in 1884 extended the franchise further and the Redistribution of Seats Act in 1885 made electoral districts equal. Not until 1928 was universal suffrage  achieved.

    Further changes would happen throughout this period: the Education Act 1870 laid the foundations for the universal provision of free schooling in the country. The Trade Union Act in 1871 was a founding piece of labour law and a long culmination of efforts including Owens four decade before. Further Public Health Acts were introduced in 1872 and 1875, before the 1877 Factories and Workshops Act would require education and accommodation for workers. Human capital was necessary to complement technology and multiply its effects. And health, education and rights were all crucial to this end.

    The issue of housing had been growing throughout the nineteenth century, as urbanisation also picked up pace. Technology increased choice, with many people feeling liberated from rural life. The concentration of people in urban areas rose dramatically. In 1800 it had been around 20 per cent. A century later it was nearly 70 per cent. As a result, the slums of Victorian England were swelling. Joseph Bazalgette’s sewer network had been completed, removing some of the cesspools and, along with John Snow’s insights on the origins of cholera, helped improve public health. But families often lived in single rooms in which they would “sleep and eat, multiply, and die.”30Salisbury, Lord, “Labourers' and Artisans' Dwellings,” The National Review, 1883 The governing principle up until this point had been a predominantly laissez-faire approach that favoured personal responsibility, particularly among the Conservatives. Yet with Lord Salisbury leading a Conservative government three times between 1886 and 1902, the response to the housing situation saw a shift towards some state intervention. With the establishment of the London County Council (LCC), as well as the Housing of the Working Classes Act 1890, slums could be cleared, while social housing could be built. The first of these would be the Boundary estate in Shoreditch, which included 58 workshops and 200 costermongers’ shed. On the construction of the estate, the infamous Old Nichol Street slum was cleared. Lord Salisbury would later express regret for being swayed by socialism, but he set a precedent. Ten years later the act would be extended so that all councils could build houses. By the beginning of World War I nearly 24,000 homes had been built. The founding of the LCC and the Local Government Act 1888 was also a landmark moment in the beginning of decentralisation in UK politics. Technology, internal migration and surging local economies had created disparate needs in different areas. Such complexity was hard to manage through central control. But if the Industrial Revolution was to change the location of power in politics, it was also to change the makeup of politics again. A two-party system had been broadly stable, but with around three-quarters of the population now manual workers, employed by others, the working-class movement was growing.

    Beginnings of the Labour movement

    Beginnings of the Labour movement

    With the 1892 election, the split in the Liberal Party over the question of Irish Home Rule took centre stage for the party. The Liberal Unionists were aligned with the Conservatives, but Gladstone was able to form a minority Liberal government, taking office for the fourth and final time. Ireland was to dominate his agenda, but the Newcastle Programme was also to push the party in a radical direction, cementing the growing New Liberalism. Social reform was a key element as the party sought to come to terms with the growing economic and political strength of organised Labour. Yet the programme was not enacted, and if it was designed to build working-class support and prevent the formation of a separate Labour party, it was not fully successful: in 1893 the Independent Labour Party was formed by Keir Hardie, who had started out as a Liberal, among others.

    The overlap of both strains of politics was easy to see. Liberals had long been allies of Labour, and had developed links with trade unions, including the TUC. As Herbert Gladstone (a Liberal politician, and son of William) wrote at the time, “it is the duty of the Liberal party to frankly hold out the hand of friendship to Labour”. For many Liberals, there was a place for Labour within the Liberal Party, or at least within the Liberal tradition as part of a “progressive alliance”. This was in part because Labour was not really founded on a doctrine; it was essentially a pressure group whose focus was representing workers and safeguarding the unions. It did not represent an ideal, but rather an interest. The step towards an overarching ideology was made in 1918 with Clause IV’s commitment to extend public ownership. For some, the movement was a necessary response to the new capitalist economy of the industrial era: as the economist Ralph Miliband was to later write, capitalism “badly needs” Labour “since it plays a major role in the management of discontent and helps to keep it within safe bounds”.31John Callaghan, Steve Fielding, Steve Ludlam, “Interpreting the Labour Party: Approaches to Labour Politics and History,” 2003But with Britain having avoided any genuine “bourgeois revolution” in the nineteenth century, there was little genuine socialist tradition in the country. Labour was in some ways more an offshoot of liberalism than a full-blown revolutionary movement. As the historian Ross McKibbin has written, some of the penny capitalists of that era exulted in “a jaunty and attractive individualism [that] was essential to life”32McKibbin, Ross, “The Ideologies of Class: Social Relations in Britain 1880-1950,” 1993,and unionism rates were low: by 1901 only around 15 per cent of the workforce were part of a union. Industry was fragmented, and dominated by small and medium enterprise, while wages were relatively high.

    But Labour was rising, with movements such as Tom Mann’s Eight Hour League calling for working-day restrictions. Industrial action was also more common: as the historian David Powell has written, “over thirty million working days were lost in stoppages in 1893”33Powell, David, “The Liberal Ministries and Labour, 1892-1895.” History, vol. 68, no. 224, 1983, pp. 408–426. JSTOR,www.jstor.org/stable/24417598, while more than 10 million were lost in 1897 and 15 million in 1898.

    As a result, the Liberals were trying to find a balance between laissez-faire capitalism and the collectivist state. Leonard Hobhouse, who was averse to Marxist socialism and would be an influential thinker in New Liberalism, was critical of individualism and developed ideas around collectivism, in what he would later adapt to be liberal socialism. In a Fabian pamphlet published in 1995 our Executive Chairman, Tony Blair, traced the origins of New Labour to this time. As he wrote:

    “The ‘progressive dilemma’ is rooted in the history of social and economic reform in Britain. Up to 1914 that history was defined by the Liberal Party’s efforts to adapt to working class demands. This involved the gradual replacement of the classical liberal ideology based on non-intervention and ‘negative freedom’ with a credo of social reform and state action to emancipate individuals from the vagaries and oppressions of personal circumstance … The intellectual bridgehead was established by Hobhouse and others. They saw the nineteenth-century conception of liberty as too thin for the purposes of social and economic reform, so they enlarged it. They realised that theoretical liberty was of little use if people did not have the ability to exercise it. So they argued for collective action, including state action, to achieve positive freedom, even if it infringed traditional laissez-faire liberal orthodoxy.”34https://liberalhistory.org.uk/wp-content/uploads/2014/10/55_Holmes_Hobhouse_and_Hobson.pdf

    This thinking was a political necessity: the Reform and Redistribution Acts had made courting the working-class vote crucial. The integration of Lib-Labs in the previous elections such as 1892 as a progressive alliance had been part of the attempts to ensure this. And commitments to social reform and state intervention from the New Liberals were key to maintaining Labour’s electoral support. Reflecting this new balance, the Liberal Chancellor, William Harcourt, stressed that it was “impossible to discriminate between capital and labour as the forces of national prosperity.”35Powell, David, “The New Liberalism and the Rise of Labour, 1886-1906.” The Historical Journal, vol. 29, no. 2, 1986, pp. 369–393. JSTOR, www.jstor.org/stable/2639067   

    The middle ground of the Liberals was proving more powerful in electoral terms at this time. In the 1895 election 28 candidates stood for the Independent Labour Party. All—including Keir Hardie, who had won a seat as an independent in 1892—lost, with the Conservative-Unionist coalition forming a government. For some in the Labour movement, their closeness to the Liberals was part of the problem; a more assertive approach was needed. The result was the Labour Representation Committee (LRC) being formed in 1900. They won one seat in that year’s election, which was again won by Conservative-Unionist forces. The government later split over the issue of free trade, a debate that had started with the Corn Laws, and Joseph Chamberlain led the Liberal Unionists out of the coalition in 1904. Mounting attacks by the Conservatives on free trade were also matched by those on trade unionism. Worried about the progressive vote being split, the Liberals and Labour formed an electoral pact in 1903.

    Known as the Gladstone–MacDonald pact after Herbert Gladstone, who was then the Liberals’ Chief Whip, and Ramsay MacDonald, a senior member of the LRC, the agreement helped the Liberals to a historic landslide in 1906. The LRC, which was to become the Labour Party that year, took 29 seats. The election ushered in a period of transformational change in British social policy. This started with Henry Campbell-Bannerman’s introduction of old age pensions and free school meals, and with the 1906 Trade Disputes Act restoring immunity from legal action to the unions, Labour was broadly on side with the Liberals’ reforms. Rising unemployment in the coming years would test this relationship, but Chancellor David Lloyd George’s 1909 budget truly kicked off a deep period of radical policymaking. The alliance between the parties would essentially remain in place until the onset of World War I. It was in part driven by a shared commitment to social reform as well as a visceral dislike of the Conservatives. Yet the association would be completely redrawn by the war and by divisions and opposition within Labour and with the Liberals, not least around the issue of conscription. In the aftermath of the war, Labour’s new party constitution essentially recast the party as a socialist one, with a demand for “immediate nationalisation and democratic control of vital public services, such as mines, railways, shipping, armaments, and electric power.”361918 Labour Party Manifesto,http://www.labour-party.org.uk/manifestos/1918/1918-labour-manifesto.shtml It would also seal the fate of the Lib-Lab alliance, creating obstacles that were hard to bridge.

    Reflecting on this period, the academic and former Labour MP David Marquand 37Marquand, David, “The Progressive Dilemma: From Lloyd George to Kinnock,” Heinemann, 1991 believes that Labour would have fully integrated into a progressive alliance if the war had not proved such a fault line. Ultimately Labour would enter government in 1924 under MacDonald, while the Liberals would fade, pushing the country back towards to a two-state system. And a long line of transformations with their origins in technological change would continue. By this time, the economy had dramatically altered: as the economic historian Nicholas Crafts has set out, by the beginning of World War I Britain was a leading capital exporter.38Crafts, Nicholas, “Walking wounded: The British economy in the aftermath of World War I, VoxEU.org 27 August 2014,https://voxeu.org/article/walking-wounded-british-economy-aftermath-world-war-i">

    Its net property income from abroad accounted for about 9 per cent of GDP, it was responsible for more than a quarter of the world’s manufactured exports, and it share of trade in GDP (54 per cent) was greater than those of Germany (40 per cent) or the United States (10 per cent). The country was an enthusiastic participant in globalisation. Tariffs, an issue that had long beset the Conservative Party and would return in the years between the wars, were around 3 per cent on manufactures and around 1 per cent on agricultural goods. Technological investment was driving productivity, and GDP per capita was around $5,000. The country was not without challenges, but it had found a stable position: competitive industries, open to the world, not laissez-faire, but also not state-driven; and a balance had been struck between capital and labour.

    Britain was not alone in this position. Other industrial nations, such as America, Germany, France and Sweden, had begun flourishing at the beginning of the twentieth century. Alongside the widening of political participation, many people’s incomes and means of self-support also increased. The old power structures of the few had been broken down, as innovation had liberated people. This permeated nations from the bottom up, just as the potential of the new digital age will also be realised through decentralised and distributed entrepreneurship. Politics should be guiding the institutions and people towards this future, inviting experimentation and nurturing new ideas and knowledge.

    Some rhymes of history

    Some rhymes of history

    Progress is a necessity, but it is not given. It is often extremely messy. The settlement of the industrial era took a long time to find; and it would not last. Some of the tensions that were revealed throughout the process were also exposed intermittently throughout the twentieth century, as globalisation sped up, just as technological development did. The most pertinent of these is the question of jobs, particularly as technology has replaced jobs, rather than assisting in the performance of them. The Industrial Revolution was itself mostly worker-replacing, as machines uprooted employment, while the era of electrification that came in the first half of the twentieth century was primarily augmenting. It also saw the mass expansion of welfare and education.

    Issues that arose in the Industrial Revolution were to resurface in the coming decades. Speenhamland, for example, has influenced policy intermittently through the ages. As the journalist Nathan Heller has written, the US President Richard Nixon read about the issue as he was preparing a radical new poverty-alleviation programme. Worried about moral hazard and the incentives to worklessness that a guaranteed income created, he changed tack: “the beginning of a push that led the President’s program, the Family Assistance Plan, toward a work requirement—an element that he had not included until then”.39Heller, Nathan, “Who Really Stands to Win from Universal Basic Income?” The New Yorker, July 9 & 16, 2018 Issue,

    Speenhamland’s influence on American social policy continued far beyond Nixon, with the earned-income tax credit and Bill Clinton’s welfare reform. A similar system was introduced in the UK under New Labour. Laying out his vision for this in his first Budget as Chancellor in 1997, Gordon Brown stated that welfare “denies rather than provides opportunity”, and that it was time for the “welfare state to put opportunity back into people's hands.”40Budget Statement 1997,https://api.parliament.uk/historic-hansard/commons/1997/jul/02/budget-statement

    This issue has also been revisited in the discussion around Universal Basic Income. In the US, the fringe candidate in the campaign for the 2020 presidential election Andrew Yang has made UBI the centrepiece of his campaign, calling it the freedom dividend. In the UK, the Shadow Chancellor, John McDonnell, has also mooted the possibility of a trial for UBI, while various other experiments have been run in countries such as Finland, Canada and Spain. It is also the favoured policy of many in Silicon Valley, but its consequences are likely to be vast. From a moral perspective it raises questions about identity, purpose and value that many people experience as a result of work. From a societal perspective, there are huge second-order questions too: would schools continue to exist, for example, if people have no economic function and have no need to worry about an income?

    It is right that politics looks at issues like these early. They are almost certainly bound to be central to society in the coming years. Policymaking needs to be far more adaptive to deal with them. Issues such as housing and large-scale infrastructure have revealed the stasis in the UK system, with big decisions unable to be taken.

    Politics also needs a clearer picture of what is happening under the surface, as an excessive focus on the macro level often fails to deal with underlying concerns that can boil over. Today, the force of this has been felt through political oscillations such as Brexit and populism. Partly this has been driven by economic factors: for example, David Autor, David Dorn and Gordon Hanson have written about this in their “China Shock” paper 41David H. Autor & David Dorn & Gordon H. Hanson, 2016. "The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade," Annual Review of Economics, vol 8(1)., causing economists to think more about the distributional aspects and labour market flexibility in the modern economy. Throughout most of the modern economic era, people have not made substantial alterations in their employment—switching, for example, from making car parts in a factory to serving fast food—but the shifting nature of work today has begun to change this. The pace of new types of jobs being created has increased, but so too has the half-life of skills needed to do them. What have been concentrated disruption effects could become more widespread and could collide with cultural transformations as the world continues to open up.

    For proponents of technological change, globalisation, free trade and open and liberal economies, this raises questions about how to continue to look both at the edges, to see where parts are fraying, as well as the whole picture. For example, the discussion around the Transatlantic Trade and Investment Partnership included a consideration of labour standards that went well beyond those in previous trade agreements, but this is unlikely to assuage fears many face about the precariousness of work. Nor are technocratic details likely win in a debate against “Make America Great Again”, which tapped into some of the emotions of the age.

    Progressives need to be much quicker in addressing issues such as education, training, social welfare and the stasis in living standards some are experiencing. The response to this should not be trying to take greater control, to combat and slow down events that are rarely driven by policy, but rather by people. Nor is eroding people’s living standards by de-growthing the right way forward. During the nineteenth century, the economist Alfred Marshall observed that humans desire “not merely larger quantities of the things he has been accustomed to consume, but better qualities of those things; he desires a greater choice of things, and things that will satisfy new wants growing up in him”42Marshall, Alfred, “Principles of Economics,” 1890. The same still holds true, and it is right that the value of GDP as a standalone metric is being called into question; in particular, a greater examination of and focus on happiness is important. But people will still want to see progress, even if not entirely material.

    The fundamental question for progressives is how to achieve this. Technology will be key. It has suffused every part of our society in a much larger way than the Industrial Revolution did, and it will continue to pervade every part of our lives. It should therefore be central to politics in the future.

    Reordering institutions today

    Reordering institutions today

    At its most fundamental this will require reordering institutions so that they are of this age. The speed at which the market has optimised, individualised and tailored our lives has been extraordinary. So too has the pace at which we have reduced the amount of cash in our economies: Sweden, for example, has seen a 50 per cent decrease over the last decade. But government is essentially the same and people’s sense of disconnection from it is growing. The idea of government as platform has been partly pursued in the UK, based on entrepreneur and tech theorist Tim O’Reilly’s proposal that it should become the “vehicle for coordinating the collective action of citizens”43O’Reilly, Tim, “Government As a Platform,”https://www.oreilly.com/library/view/open-government/9781449381936/ch02.html, aggregating demand for common needs while disaggregating supply in local delivery.

    This new theory of state rejects the old orthodoxies about the size of government and what it does and doesn’t control. Instead, government sets the standards and builds the basic ecosystem on which others innovate. It requires government to reject command and control and decentralise power, just as the great reform acts of the industrial era did. This is necessary to create the dynamism needed in modern economies, but it will also be demanded by the people if the pace of change of society continues to misalign with that of politics. The perpetual vortex that has been created by Brexit was in some ways intended to stave off these demands, but people will be less forgiving if growth and living standards erode and government has done very little to address the fundamental issues in society.

    Part of this reordering will be necessary to realise the potential of frontier technologies, not least artificial intelligence. There are already many instances of where AI can be applied in ways that make the human mind obsolete, with consequent fears that automation will spill further and further up the skills chain. Jobs and opportunities will almost certainly be created, but the future of work is an issue that needs to be addressed. Radiologists, for example, are already at risk, while surgeons may have a couple of decades left as the masters of their craft. Google’s recently announced breakthrough in quantum computing could also push the technological curve even further out.

    What might this mean for public policy?

    What might this mean for public policy?

    In many ways, the potential impacts of technology are unforeseeable. This is why Malthus and many after him have failed to account for technological change. But discounting or dismissing its potential has tended to be a poor guide to the future. Technology is going to reshape the public sphere and its services: the question is how.

    In the short term, schools and education establishments are likely to continue to divert from their traditional form. Pupils will no longer all need to sit and listen and learn at the same speed. Instead, education could be personalised at scale so that it is no longer the preserve of the wealthy. It can also augment the experience, with nearly infinite resources and new applications changing the way we learn. Understanding the history of the French Revolution could be a VR experience, while platforms can create digital spaces for collaborative learning. This would not mean replacing teachers, but simply working in unison with technology to allow teachers to spend more time on the issues that truly transform individual students’ experiences.

    In health, as well as interpreting medical scans, skin lesions and retina scans to screen and triage people, deep learning has also been applied to predict clinical outcomes from electronic health records, to process massive datasets from genome sequencing and for use in drug discovery that could revolutionise pharmacology. Palliative care can be more precise with the application of new devices, but limitations around bias, accuracy and privacy and security require data systems and structures to be reordered. Within a generation technology could change our care infrastructure; hospitals may be necessary only in emergency cases, as new technology can predict and prevent illness without the need to visit a doctor. There is also a possibility that medical care can be provided on a far greater global scale, making it a much wider public good. But data access and governance will be key to achieving this.

    In transport, autonomous vehicles (AV) will completely reshape our infrastructure and urban planning as we know it, while new technologies such as those being developed by Lilium could see alternative modes of transport in the very near future. Cars are hugely inefficient: they are idle for the majority of the time; parking density is a problem; and congestion and pollution are by-products. Infrastructure is also hugely expensive. But all of this can be addressed by policy. The political calculus, however, is difficult. To many members of the public, autonomous vehicles are still a thing of sci-fi; questions about ethics, liabilities and a new social contract are not being discussed in small villages, for example, where the car is an integral form of mobility. For many is it understandably an enjoyable and liberating possession, so redesigning systems and cities built around the car will be no small feat. But pilots are happening all around the world, and the question with AV is when, not if. There will be an inflection point, which will see a dramatic change in a very short period of time.

    How we create energy and use resources can also be drastically altered. Climate change is a pressing issue, but it is not intractable. It is a subject in which the narratives are often binary: doom and gloom, or denial. Some Conservatives started in the former camp: in a speech in 1990 at the 2nd World Climate Conference, Margaret Thatcher said, “The danger of global warming is as yet unseen, but real enough for us to make changes and sacrifices, so that we do not live at the expense of future generations.”44Margaret Thatcher, Speech at 2nd World Climate Conference,As with many on the right, she was later to change tack when climate change became entangled with anti-capitalist politics, putting conservatives in the odd position of being anti-preservationist. But there is a way to reconcile both points: things are bad, but they can get better. Technology is key to ensuring that positive change occurs. This was at the heart of the 1980 wager between the economists Paul Ehrlich and Julian Simon. They bet whether the price of resources—copper, chromium, nickel, tin and tungsten—would rise over the next decade. Simon was the optimist and the victor, and would likely be again today if he made the same bet. Developed nations’ growth is increasingly decoupling from the use of resources, there has been a huge growth in renewable energy, and more than $30 trillion of funds are held in sustainable or green investments.

    The latest Bloomberg New Energy Outlook45https://about.bnef.com/new-energy-outlook/ predicts that solar power, which accounts for about 2 per cent of energy production today, will be up to 22 per cent by 2050, and wind, which today stands at 5 per cent, will reach 26 per cent. The fall in cost in both of these technologies since 2010 has been 85 per cent and 49 per cent respectively. But electricity represents only about a quarter of carbon emissions, and innovation is essential. AI is being applied to increase the efficiency of energy as it is currently delivered, maximising the use of the grid and attempting to minimise the impact of data storage centres. New technologies are also being developed, while existing ones such as solar, geothermal, wind and storage are increasingly being optimised and rethought, with replacements for lithium-ion batteries, for example, being explored. But even if efficiency increases, we need to cognisant of biophysical reality of our world: every effort must go into minimising environmental degradation. We cannot rely on the possibilities of technology alone. As the Nobel Prize winning economist Paul Romer has put it, policy choices really matter and the “what the theory of endogenous technological progress supports is conditional optimism, not complacent optimism.”46https://paulromer.net/conditional-optimism-technology-and-climate/

    In the longer term, the impacts of technological change are likely to be larger, even including a reimagining of the nation state. One of the impacts of the technological innovation of the Industrial Revolution was the reordering of the structures of power. Mass industrialisation lowered the cost of paper, extending the reach of media. Speaking in the House of Commons in 1787, Edmund Burke was alleged to have said that “there were three Estates … but in the Reporters Gallery yonder, there sat a fourth Estate more important far than they all.”47Carlyle, Thomas, “On Heroes, Hero-Worship, and The Heroic in History,” 1841 Radio, television and internet all changed the dynamics of this ecosystem further, with those who mastered the modern forms of communication flourishing. Social media has accelerated this process—so much so that in a recent speech48Mark Zuckerberg speech, Georgetown University,https://about.fb.com/news/2019/10/mark-zuckerberg-stands-for-voice-and-free-expression/ at Georgetown University, Mark Zuckerberg spoke about the internet essentially being the Fifth Estate, massing the mass media. The current masters of this realm in political terms are often those who combine simplicity and stridency, often with little shame. The crudest parts of politics have often been compounded.

    Having more access to information markets has brought more social symmetry, albeit with the nodes of society connected in very different ways, with interconnected groups of people who share interests finding common ground online. In turn, this has created and confirmed people’s interests. Positive movements such as Black Lives Matter have grown, while pockets of society that were previously inaccessible have climbed down from their ivory towers. Societies have opened up and redrawn their borders, importing and inputting into a vast cornucopia of ideas and information. The internet is essentially an imaginarium, in which ideas and new knowledge can be created ad infinitum. But there have been almost inescapable trade-offs, as those with pernicious or extremist views have often found new sanctuaries online, and problems that have simmered under the surface in societies for a long time have boiled over. For more closed nations, the internet has also often been a broadly centralising force: a tool with which they can exert greater control over their citizens.

    Those who believe in the open society, and the opportunity that the digital world has brought, need to raise their voices against those seeking control. They need to rethink regulation. Rather than having bureaucratic regulators designed for legacy industries, as Chris Yiu set outs in a New Deal for Big Tech, a “new approach, based on stronger accountability coupled with more freedom to innovate, is the best way to align private incentives with the public interest”. Principles should shape the digital environment, rather than overly onerous controls. The interconnected nature of the world means that this is also best applied between nations that share similar values, in a shared approach to shaping the future. The forward-looking aspect of this is key: the pace of change means that diagnoses of some of the problems of the recent past, may not still stand up. Policy should not retrofit. The debate around breaking up Big Tech is the most prominent example of this, as it is unclear what it would achieve. Nevertheless there are deep questions around competition and the current trend towards centralisation, not least with the prevalence of mergers and acquisitions and how the incumbents’ power is skewing the market. Policy must guide the path, so that innovation continues to occur and competition increases, while the downsides continue to be addressed.

    Politics itself is unlikely to be immune to reform as people become frustrated by the inability of politicians to achieve meaningful changes while everything around them continues to speed up. Part of the reaction by many politicians has been pandering, rather than the hard task of leading people through change. Relationships between the populace can be far closer today because of technology, and if harnessed well, this may facilitate a type of participatory democracy that has long been mooted. This needs to be an integral part of the political discussion today. The dislocation between change-makers and policymakers needs to be addressed, but so too does the distance of debate in politics between the issues that will fundamentally affect people and those which are either essentially trivial, or deeply troubling. Talk of a wall on the US–Mexican border, for example, energised people around crude symbolism. Adapting to the modern world and embracing the opportunities that openness can bring takes much greater political courage. Rejecting it and stirring up nationalistic fervour under the false pretence of progress will ultimately backfire.

    Conclusion

    Conclusion

    From its beginnings with technological breakthroughs in the eighteenth century, the Industrial Revolution altered life in monumental ways. Population growth rocketed; so too did life expectancy. Economic growth took off, while the world became connected through new forms of transport. In the UK, it reshaped social policy: first labour, health and housing laws were introduced. It started a conversation that resulted in the welfare state. Ultimately, it also upended the power structures and politics that existed previously, with the extension of the franchise and the democratision of political life. But it took a long time for this to happen. Industrialisation opened up a near continual debate between old and new, tradition and modernity, open and closed. Almost every political force that thrived did so because it adapted to the needs of the modern world, understanding the change that was occurring.

    Today, the pace of change is increasing. When the Luddites who smashed frames in 1812 were shipped to Australia, the journey would have taken three months. A recently launched flight connecting London to Perth takes less than a day. Letters took days to cross Britain, whereas 23 billion texts and nearly 300 billion emails are now sent around the world every day. The rising middle class in London during the Industrial Revolution became the “new social fields for the imported pineapple to conquer,”49O'Connor, Kaori, “Pineapple: A Global History,” 2013while Amazon can today ship more than 100 million products almost instantaneously. We have more choice and are better connected than ever, and yet the forces of both left and right that are rising are both fundamentally conservative in their nature.

    Both have tapped into discontent. One is essentially nationalist, drawing on the security that people find in building group identity. This is particularly acute in times of declining control, potentially more precarious futures and continually evolving society. The left, which rose out of tackling the hardship many workers felt during the Industrial Revolution, has identified a disquiet in workers who are being left behind in the modern economy. Yet their diagnosis is to roll back time, to give the state greater control, rather than reform and modernise.

    Technology has played its part in driving these trends, but it can also be the solution. It should form the basis of how we reorder government so that it is more responsive in meeting the desires and needs of people in the modern world. Fundamental to this is ceding control and building a strong platform for others to build upon. The theory of the state has to change dramatically, so that it is about small or big, laissez-faire or interventionist, but is instead agile, easy to manoeuvre and provides the basis for innovation and competition to flourish in the economy. It needs to encourage technological development, but also its diffusion into society—building a country’s absorptive capacity. Too often, there is little focus on the latter. This will require a greater focus on human capital, including on the nature of work. There must be a continual focus on people’s lifecycle, from providing the right education at school to encouraging flexible workers who can adapt to more fluid labour markets. For political parties mass mobilisation is going to be key. They must not be constrained by the ideology of previous eras but realise that technology-led innovation guided by societal objectives is the path to prosperity and power. The climate is going to be a key concern; counter to the Industrial Revolution’s growth by extraction, the focus should be on how we dematerialise. As the digital economy researcher Andrew MacAfee has written, hardware, software and networks should be utilised so that we can adapt to using “fewer metals, minerals, fertilizer, water, cropland, trees, fossil fuels, and other resources of the earth.” Health policy, too, has long been the victim of political stasis and conservatism. We can completely reorder the system, so that it is personalised, predictive and focused on prevention rather than treatment. A precondition for this will be having a much more honest debate over access to data, which can be liberating for the individual, but is too often embroiled in scaremongering.

    All of these issues are going to be forced on politics at some point, just as the Industrial Revolution forced them on politicians in the eighteenth and nineteenth centuries. The effect of these technological trends is powerful and broad. Attempts to fight on them on fringe issues, rather than confront the major benefits they can bring, are short-termist and will ultimately backfire. Progressive politicians must therefore make technology central to their new programme, showing that they are the modernising forces adapting to the new world, rather than trying to maintain the status quo, or returning to ideas of old. They need to show they are at least in step with, or ahead of society again—because right now, politics is trying to lead from behind. And it is heading in the wrong direction.