Marshallian Industrial Districts: The Case of the Lancashire Cotton Industry in the Inter-War Years

Abstract

Alfred Marshall's description of industrial districts has been used to support the argument that local agglomerations of industry can offer powerful external economies and encourage technical dynamism. This paper argues, however, that Marshall's favourable representation of industrial districts followed from his evolutionary and organic theory of economic and social progress. Industrial districts were used to demonstrate that the growth of the social organism meant differentiation and integration. Marshall's consequent exaggeration of the efficiency and potential of industrial localizations is highlighted by the example of the Lancashire cotton industry. Marshall praised the organization of the cotton industry but, in the inter-war period, rather than being a source of vitality and economy, the geographical separation and specialization of spinning and weaving intensified the industry's problems and demise. In the context of declining exports, the organization of the industry allowed an intense internal competition which acted against rationalization, investment and cooperation. In some ways, localization furthered a deterioration of industrial relations but this was not a case of obstructive trade unions suffocating inherently progressive industrial districts.