The Industrial Revolution is a phrase invented by Arnold Toynbee, and now generally used to indicate those economic changes which turned England from an agricultural into an industrial community. The period during which these changes took place cannot from the nature of things be definitely fixed; but usually it is taken to extend from about the middle of the eighteenth century to the close of the reign of George III. Two points, however, must be remembered: first, that there was a commercial as well as an agricultural and an industrial stage of development; and secondly, that this period contains merely the central and crucial years of a process of specialization and expansion which occupied centuries of English economic history. There was also before the agricultural stage a pastoral stage; but that lies beyond the scope of English history, because both the English people and the Celts they conquered had passed out of the pastoral stage before recorded English history begins. Each of these stages corresponds to a different social organization: the pastoral stage was patriarchal, the agricultural stage was feudal, the commercial stage was plutocratic, and the industrial stage leads towards democracy. The stages, of course, overlap one another, and every national community to-day is partly pastoral, partly agricultural, partly commercial, and partly industrial. We can only call a nation any one of these things in the sense that they denote its dominant characteristic.

This evolution has been the result of man's increasing control over nature. In the pastoral stage he takes of the produce of nature, providing little or nothing himself. In the agricultural stage he manipulates the soil and subdues it, he harnesses the wind and the streams to grind his corn, and to water his land; Providence may have placed all things under his feet, but he takes long to discover their use and the means to use them. In the commercial and industrial stages he employs the wind and water, steam and electricity, for transport, communications, and manufactures. But he can only develop this mastery by the interdependent processes of specialization, co-operation, and expansion. A lonely shepherd can live on his flocks without help; a single family can provide for its own agricultural subsistence, and the normal holding of the primitive English family, the "hide" as it was called, was really a share in all the means of livelihood, corn-land, pasture-land, rights of common and of cutting wood. This family independence long survived, and home-brewing, home-baking, home-washing, are not even now extinct. Each family in the primitive village did everything for itself. When its needs and standard of comfort grew, increased facilities beyond the reach of the individual household were provided by the lord of the manor, as, for instance, a mill, a bakehouse, a wine-press. Indeed, the possession of these things may have helped him into the lordship of the manor. Certainly, some of them are mentioned in early Anglo-Saxon days among the qualifications for thegnhood, and when the lord possessed these things, he claimed a monopoly; his tenants were bound to grind their corn at his mill, and so forth. But there were things he did not care to do, and a villager here and there began to specialize in such trades as the blacksmith's, carpenter's, and mason's. This specialization involved co-operation and the expansion of household economy into village economy. Others must do the blacksmith's sowing and reaping, while he did the shoeing for the whole village.

Thus village industries grew up, and in unprogressive countries, such as India, where, owing to distance and lack of communications, villages were isolated and self-sufficing, this village economy became stereotyped, and the village trades hereditary. But in western Europe, as order was slowly evolved after the chaos of the Dark Ages, communications and trade-routes were opened up; and whole villages began to specialize in certain industries, leaving other commodities to be produced by other communities. For the exchange of these commodities markets and fairs were established at various convenient centres; and this in turn led to the specialization of traders and merchants, who did not make, but only arranged for the barter of, manufactures. Through the development of local industries and markets, villages grew into towns, and towns expanded with the extent of the area they supplied. A town which supplied a nation with cutlery, for instance, was necessarily bigger than a town which only supplied a county. This expansion of markets meant that towns and cities were more and more specializing in some one or more industries, leaving the great majority of their needs to be supplied from elsewhere; and the whole process was based on the growing complexity of civilization, on the multiplying number of implements required to do the work of the world.