The purpose of this volume is to advance our understanding of industrial development by describing the progress of what economists call the ‘factors of production’, i.e. the inputs out of which food, clothing, and shelter are made. It is by no means clear, however, that the increase in our ability to produce food, clothing, and shelter that we call ‘the industrial revolution’ was a direct result of an increase in the factors of production. In fact, the relation between the traditional factors of production – land, labour, and capital – and the ability of an economy to produce is far more complex than the use of the words ‘inputs’ and ‘outputs’ might suggest. We therefore introduce the discussion of the factors of production by an attempt to set forward the relations between these factors and industrial development that is the subject of this book.

It is a great abstraction to talk of the economy as a whole and of only a few factors of production. The uses of such an abstraction are obvious: it enables us to make generalizations, to compare countries with each other, and to direct our research into areas of potential usefulness. But there are also limitations to this usefulness, limitations that are directly related to the ability of this abstraction to tell us something interesting about a complex world. The relationship between the factors of production and the process of industrialization to be described shortly holds good only under a variety of restrictive assumptions.