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Babbage's Legacy: The Origins of Microeconomics in On the Economy of Machinery and Manufactures
Author(s) -
Ozgur Mustafa Erdem
Publication year - 2014
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/sjpe.12047
Subject(s) - economies of scale , division of labour , economics , economy , scale (ratio) , industrial organization , microeconomics , market economy , geography , cartography
Abstract British mathematician C harles B abbage (1791–1871) spent immense energy to build mechanical calculating engines. Hoping that it might help him in designing and building his engines, he visited numerous workshops and factories in both E ngland and C ontinental E urope. One of the consequences of these visits was his On the Economy of Machinery and Manufactures, published in 1832. Through his observations, B abbage grasped the advantages of machinery and economies of scale. In micro terms, he acknowledged the cost‐reducing features of economies of location, vertical integration, and division of labor – beyond A dam S mith's analysis – as well as the efficacy of clustering. He also pointed out the relationship between firm size, economic crisis, and innovation.