Template-type: ReDIF-Paper 1.0
Author-Name: Robert C. Allen
Author-Workplace-Name: New York University ABU Dhabi, UAE
Author-Email: bob.allen@nyu.edu
Title: The Hand-Loom Weaver and the Power Loom: A Schumpeterian Perspective
Abstract: Schumpeter’s ‘perennial gale of creative destruction’ blew strongly through Britain during
the Industrial Revolution, as the factory mode of production displaced the cottage mode in
many industries. A famous example is the shift from hand loom weaving to the use of power
looms in mills. As the use of power looms expanded, the price of cloth fell, and the ‘golden
age of the hand loom weaver’ gave way to poverty and unemployment. This paper argues
that the fates of the hand and machine processes were even more closely interwoven. With
the expansion of factory spinning in the 1780s, the demand for hand loom weavers soared in
order to process the newly available cheap yarn. The rise in demand raised the earnings of
hand loom weavers, thereby, creating the ‘golden age’. The high earnings also increased the
profitability of developing the power loom by raising the value of the labour that it saved.
This meant that less efficient–hence, cheaper to develop--power looms could be brought into
commercial use than would have been the case had the golden age not occurred. The
counterfactual possibilities are explored with a model of the costs of weaving by hand and by
power. The cottage mode of production was an efficient system of producing cloth, but it
self-destructed as its expansion after 1780 raised the demand for sector-specific skills, thus
providing the incentive for inventors to develop a power technology to replace it. The power
loom, in turn, devalued the old skills, so poverty accompanied progress. 
Classification-JEL: N63, N34, O31
Keywords: technological change, invention, technological unemployment, creative destruction
Length: 30 pages
Creation-Date: 2016-03-03
Number: _142
File-URL: http://www.economics.ox.ac.uk/materials/papers/14421/142marchallen.pdf
File-Format: application/pdf
Handle: RePEc:nuf:esohwp:_142