Engels' pause
Engels' pause is a term coined by economic historian Robert C. Allen to describe the period from 1790 to 1840, when British working-class wages stagnated and per-capita gross domestic product expanded rapidly during a technological upheaval.
The Industrial Revolution, which occurred between the mid-18th and mid-19th centuries, led to an increase in Britain's urban population and economic output due to the modernisation of manufacturing and technology.
[3] South African-British economic historian Charles Feinstein found in 1990 that working-class wages during that same period increased by 12%, a noticeably slower and comparatively-stagnant rate.
[2] In the years following Engels' pause and the publication of The Condition of the Working Class in England, British wages began to rise with economic output.
[1] The first explanation of Engels' pause takes a macroeconomic approach, adopting the development model created by economist W. Arthur Lewis.
The savings rate rose, as capitalists withheld part of their income and circulated the equity as investments to improve processes and develop technology.
At the beginning of the 19th century, the Napoleonic Wars raised the prices of wheat and other agricultural products and hampered the growth of real wages.
The Corn Laws, a series of tariffs on the import and export of grain which were designed to keep prices high, also ensured that wages remained stagnant.
The growing capital share of income meant that the gains from technological progress were very unequally distributed: corporate profits were captured by industrialists, who reinvested them in factories and machines.
The new urban population consisted of displaced agricultural workers, most of whom were unskilled; much of Parliament's attention was directed towards regulating and capitalising on technological developments and capital gain, and harsh treatment, long working hours and low wages were standard.
[11] Economic historians in the 20th and the 21st centuries who study the Industrial Revolution differ on whether wages remained stagnant or grew with gains from capital.
Engels' pause was accompanied by major changes in the social security and party systems, elementary schools, urban planning, public transport and many other areas of society.
[14] Economists and businesspeople have associated the trends observed in Engels' pause with present-day conditions such as the role of technology and its continuous development, inequality in the global distribution of wealth and the changing nature of the workforce.
During industrialisation, productivity began to increase as society and business were designed in accordance with the new modes of operation; this eventually led to an unprecedented period of prosperity.
Digitisation and robotisation may have begun a decades-long period of transformation comparable to the Industrial Revolution during which the basic structures of society and forms of livelihood may change and wealth may be radically redistributed.
[14] Bank of England Governor Mark Carney spoke at the April 2018 Public Policy Forum testimonial dinner in Toronto about his concern that rapidly-increasing technology in blue- and white-collar jobs would result in poor wage growth, worker redundancy and excessive capital accrual for owners of the machines.
