ABSTRACT
The importance of capital formation for growth has been largely accepted by all economists and historians since Adam Smith. Moreover, there is scepticism that capital accumulation per se will necessarily produce growth. Many economists now believe that the rate of growth is a function of the rate of technical change and its application to industry. The analysis of eighteenth-century social change and its relationship to eighteenth-century economic growth depends not only on detailed research by the historians but also on the theoretical guidance of economists and sociologists. Adam Smith argued that the division of labour is limited by the extent of the market. The importance of a high level and expansion of demand for growth was firmly postulated by Adam Smith. This chapter summarises the economic historians' theories about the origins of the industrial revolution, with a survey, with some help from the economists, of the forces making for growth in the eighteenth century.
