Over-commitment in Britain before 1930

The ‘early start’ thesis and the proposition that it handicapped Britain’s industrial progress in the late nineteenth and early twentieth centuries has received a fair amount of attention over the last decade.1The usual approach to the early start problem is to discuss obstacles to new technological developments within mature industries in the economy (i.e. an intra-industry approach), particularly to examine how far the existence of original durable equipment in the staple industries (textiles, iron and steel, shipbuilding, and so on) slowed down the introduction of new techniques into these industries or other sectors linked directly with them. The objective in this article is to analyse the extent to which the early start proved a handicap when it became necessary to transfer resources to new industries based on major innovations of the late nineteenth century (an inter-industry approach). It is argued, therefore, that the extensive de-velopment of an old industrial structure with a high concentrationof employment within a few long-established industries may make adjustments to new technology in other industries more difficult. At first sight there might appear no problem at all; classical analysis would indicate a fairly smooth transfer of labour and capital from old sectors to new at a rate determined by differences in the respective returns on capital and prices offered to factors of production.