The Power of Paper. How the Developments in Paper Making Influenced Human Capital and Fostered Economic Prosperity

Academic Paper, 2020

8 Pages, Grade: 1,3


1. Introduction

The Second Industrial Revolution (1870-1914) describes the rapid industrialization of the economy and huge developments in people’s daily life due to enormous technological innovation. Therefore, it is oftentimes also called the science based revolution (Mokyr, 1998). One of the many important innovations was the development of modem paper making. This innovation reduced the cost of producing paper tremendously, stopped enormous paper shortages from the beginning of the 19th century, and increased the durability, as well as stability of the paper (Innis, 1942). According to Kuznets & Murphy (1966), modem economic growth depended on the growth of knowledge and human capital. Therefore, through fostering this growth, developments in paper have had a strong effect on the economic prosperity of a nation. This effect can for example be seen in the ancient Egyptian culture, which developed and used the papyrus as their paper and consequently managed to become one of the most advanced societies of that time (Wiedeman, 1983). The importance of paper can also be seen when we compare the developments in Europe and North America to Asia. Here the rise of books and newspapers did not occur at the same rate as in the Western World and led to a long time laggard economic development in those countries (Baten & van Zanden, 2008). In order to gain more insights into the linkages between developments in paper making and economic prosperity, this paper addresses the following research question: How did the developments in paper making influence human capital and foster economic prosperity?

In order to answer this research question, this paper will first analyze the developments in paper making and link them to the rise of newspapers and books. Afterwards, it will link the rise of newspapers to developments in education and literacy. Finally, these developments will be connected to the concept of human capital and economic prosperity. Lastly, this paper will provide a conclusion of the main findings.

2. Main Part

The following framework will be used to analyze the above-mentioned research question.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Graphical display of the impacts of paper making

2.1. Improvements in Paper Making and Increase of Newspapers & Books

As illustrated in figure 1, this paper will first start by analyzing the improvements in paper production and their effects on the newspaper and book industry. Reductions in the cost of making paper through new innovations were enormous. Newsprint costs declined from 12 cent per pound in 1872 to 0.8 cent per pound in 1897 (Innis, 1942). This was achieved due to new combinations of mechanical wood pulp with sulphites, which replaced paper production from rag and drove down costs as well as increased durability and stability of the paper (Innis, 1942). The soda process was one of the multiple chemical combinations developed during the 19th century, however all of them made use of boiling the pulp in a digester (Valente, 2010). Therefore, the developments in the paper industry can be related to the chemical dye industry and show that also the paper making process was part of the “science based” revolution. It is likely that also paper producers implemented research laboratories to forester innovations and improve their products (Homburg, 1992). The invention of the usage of fibers from wood were necessary for the further developments and impacts of paper.

However, namely the combination with other innovations was important for the breakthrough of paper (Mohajan, 2020). The most important related innovations were in the printing machines. One of them was the steam driven rotary printing press in the end of the 19th century which was a machine with two reels and able to produce 24,000 copies of eight pages an hour, while a machine with eight reels was even able to increase this output eight times (Musson, 1958). This revolutionized printing, as it was done before on a rate of 200 impressions per hour and at the end of the second industrial revolution in thousands per hour (Musson, 1958). The reduction in the cost per paper and the increased durability of the paper, as well as the reduction in printing costs and the increasing efficiency and capacity in printing were crucial for the emergence of many newspapers and books in the Second Industrial Revolution (Innis, 1942).

Another important development for the emergence of multiple newspaper companies was the abolition of taxes on knowledge. This occurred in Europe at the beginning of the Second Industrial Revolution, for example in England with the Education Act of 1870 (Innis, 1942). These developments occurred through the progress of liberalism and political awareness of citizens (Musson, 1958). This reduced the influence of the government on the newspaper companies and made it cheaper for them to produce newspapers (Innis, 1942). Therefore, the supply of newspaper companies increased tremendously and reduced the monopolistic structures in the market, as well as increased the coverage of news publishing within a country (Pfann, 2020). Through extensions of railroads and telegraphs, newspapers were able to source their information wider and more rapidly and sell their newspapers faster and broader (Innis, 1942). As discussed above, the improvements in paper production led to an increase in the number of newspapers and books.

2.2. Rise of Newspapers and Books and their Effect on Literacy and Education

As illustrated in figure 1, newspapers influenced a country’s education system directly and indirectly and increased the speed in communication and transportation enormously (Innis, 1942). The literacy within a country was influenced directly by an increasing spread of newspapers and books (Musson, 1958) as can be demonstrated by the following example. In Prussia the increasing amount of bibles and their spread increased societies literacy rates and therefore their education (Becker & Woessmann, 2009). Moreover increasing literacy rates also increased the demand for newspapers as it broadened the potential reader market rapidly (Innis, 1942). Newspaper companies even lobbied for compulsory education in the United States to increase their readers audience (Innis, 1942). The compulsory education led to further increases in peoples’ literacy.

In addition to this, the rise of the middle class and the increasing wealth and education in the lower classes raised the demand for newspapers even further (Musson, 1958). Furthermore, people started to ask political questions and became more interested in the developments in their country, which reinforced their demand (Musson, 1958). Moreover, the developments in the printing process made it possible to produce many copies of books at low prices and therefore revolutionized the education system, as now more students were able to learn together. As a consequence, further specialization in the field of education occurred (He & He, 2015). These developments advanced the effectiveness of the educational system and increased the spread of knowledge tremendously (He & He, 2015). Baten & van Zanden (2008) found out that it was difficult to assess the real development in human capital and literacy in the postmodern period and suggested that the book production is a good indicator for advanced literacy skills. They found out that an increase in book production correlates to an increase in real wages and people’s educational level. Moreover, an increase in book production and reduction in costs intensified readying activity, which then also raised the demand and willingness to pay for books (Baten & van Zanden, 2008).

Another important innovation which fostered this development was the invention of the electric light bulb by Thomas Edison in 1878. Consequently, people were now able to read also under bad natural lighting conditions, which further increased literacy and demand for books and newspapers (Mohajan, 2020).

2.3. Effects of Higher Education Levels and Literacy on Human Capital and Economic Development

Advancements in the education system and people’s literacy had immense effects on the human capital of a country and its economic developments. Becker et al. (2011) state that better educated regions within Prussia adapted to outside technological changes in a superior way and successfully used these changes as opportunities. The effects of a good basic education are far reaching, for example good quality basic education increases workers productivity and improves firms research and development and therefore the innovativeness of a country (Cinnirella & Streb, 2017). In general, economic growth in a country is enacted by two factors innovation or imitation, while the first one brings higher returns and is especially important for a long term competitive positioning (Vandenbussche et al., 2006). Therefore, higher skilled workers are needed to achieve higher innovativeness in a country. Vandenbussche et al. (2006) state that also the composition of the human capital is important and not only its growth, as higher education was more important for the skills. These skills in turn were needed in the highly innovative sectors, such as the chemical industry. Furthermore, a high level of education and knowledge increased the settlement of modem innovative industrial organizations, as they needed highly skilled workers fortheir production and management (Cinnirella & Streb, 2017). This consequently led to a self-reinforcing cycle, as the innovative firms further increased the human capital in a region, which also led to higher wages and higher levels of employment, which then led to more economic prosperity (Cinnirella & Streb, 2017). This process can also be linked to the evolution of an industry in a certain country, as the availability of skills is one of the most crucial factors in the framework of Murmann & Homburg (2001). The achievements of the Second Industrial Revolution led to an accumulation of human capital and presented the basis for a later following transition to our modem economy and its growth (Cinnirella& Streb, 2017).


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The Power of Paper. How the Developments in Paper Making Influenced Human Capital and Fostered Economic Prosperity
Maastricht University
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ISBN (eBook)
Paper, paper making, human capital, economic prosperity, second industrial revolution, industrial revolution
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Felix Pütz (Author), 2020, The Power of Paper. How the Developments in Paper Making Influenced Human Capital and Fostered Economic Prosperity, Munich, GRIN Verlag,


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