Lessons From The Industrial Revolution

It was the Google of its day…

Yesterday, the FT carried a very sobering article about the end of the Middle Class in America.

It profiled several formerly Middle Class working families, all of whom are seeing both their jobs and their way of life disappearing.

It is not coming back.

The economy of the country and the world has changed. However, that change represents great opportunity.

The last time such a massive transformation happened was probably the Industrial Revolution.

Then, Britain, a small island with very limited resources was able to become the most powerful and robust economy in the world. So powerful that they would grow to dominate the planet for nearly 300 years.  At their peak, this small Island with less than 2% of the world’s population would represent nearly 25% of the world’s wealth and rule a quarter of the planet.

How did they do that?

The British were the first to embrace the Industrial Revolution. And they did it with a vengeance.

But the Industrial Revolution was also a massively dislocating event.  Stockings, for example, used to be knitted by hand. It took nearly a week to make one pair of stockings. They were very expensive, and the skills to do them took years. The people who were stocking knitters made a nice living based on their craftsmanship.  Most of them were concentrated around Nottingham, England.

When Richard Arkwright started building his water-looms for mechanized weaving, stockings were one of the first things he manufactured.  He could turn out a pair of stockings in a few minutes, and he could do them by the hundreds.

The stocking makers were suddenly unemployed.  Their centuries old craft, suddenly worthless.

Think of them as the journalists of the 18th Century.

What was once a high paying craft and skill which could earn them a good income was almost overnight worthless.

From the perspective of a stocking weaver, things looked very bad.  From the perspective of a newly middle class factory owner, things could not have looked better. And indeed, the British became weavers and cloth-makers for the world – and built an industrial and financial empire on that new technology.

Today, we all have pretty much all the cheap stockings and cloth that we need, and what we do need, we get from China and India, which also are starting to manufacture cars and Apple iPhones.

What we are in need of today is content. Lots of content.

1,000 cable channels, iPhone, iPads and computer screens that have to be filled. All the time.

Content is today’s stockings.

It used to be an expensive and complex and difficult craft.

It doesn’t have to be.

With your home video camera and your laptop you can create content for a much much lower cost than the craftsmen.

The combination of things like Final Cut Pro or HD iPhones or Youtube are the Arkwright’s Mills of the 21st Century.

The future now as the future then lay in cheap mass production – high volume, low cost.

Because the appetite is certainly there.

In the 17th Century, one owned one pair of stockings for a lifetime, and kept them for a lifetime.

The idea that you would throw out a pair of socks because they have a small hole in the toe – or that you would walk into the Nike store and buy a dozen sports socks for the cost of a lunch would have been sheer insanity. Yet here it is.

The idea that a movie studio like Dreamworks produces perhaps a dozen films a year, or that cable channels rerun and repeat cable content ad infinitum will also one day be seen as sheer insanity.

The day is coming when it will be as cheap and simple to produce video content to fill all those screens as it is to produce socks.

And that is the great opportunity for the next level of the American economy.

But, as with the weavers in Nottingham, it will be painful to get there… for some.