ABSTRACT
The coming of the industrial revolution in Britain was one of the most
important events of the late eighteenth and the nineteenth century, and it
shaped the political economy of the rest of the world for a long time to
come. Not only did it have an impact on ‘real’ economic events – how
growth occurred, the development of new forms of production, the
distribution of income and the level and organisation of world trade – it also
influenced economic thinking and the way people thought about economic
phenomena. It also shaped the policies of national states. In America, as we
saw, the so-called American system developed from a feeling of inferiority:
the aim of economic policy must be to develop industry in order to catch up
with Britain – and hopefully to pass her in the longer run. It was
acknowledged, as we saw, by most economic writers in the United States
during this period that such a catching-up effect could only be achieved
through the visible hand of the state. To this effect protectionist measures
were argued for (and accepted) from the point of view which would, after
Mill, became known as the infant-industry argument.
