A man whose software ate the world
In none of the above do we find any money, or for that matter any elites or banks or other corporations.  All of it could, at least hypothetically, have happened through Stakhanovite altruism or telepathic mind control, if human nature contained such possibilities.  The investment of surplus production capacity in capital goods which thenceforth further increase the production surplus, faster than the human population can increase, combined with labor specialization, urbanization, and invention, creates industrialization, and that is what creates the profligate material abundance and extended lifespans we are struggling to cope with today.<p>But of course it is not enough that such a pattern of changes improves the overall welfare; if the <i>status quo ante</i> is a Nash equilibrium, anybody who unilaterally attempts to automate pinmaking, invent cotton gins, or move to a city might merely impoverish themself and their family.  Indeed, if you merely specialize in pinmaking, surely you will have made more pins than your family needs within only a few weeks—and how will they eat this winter if you&#x27;ve spent the whole planting season making pins instead of plowing?  Even if your aunts and uncles will plow for you, they probably don&#x27;t need that many pins either.<p>And <i>this</i> is where money comes in: trade gamifies work by allowing you to cooperate productively with people you don&#x27;t trust, breaking the Nash equilibrium that keeps everybody poor, and money enormously simplifies trade.  You can ship a box of pins from your French pin factory to Spain or England or some godforsaken place like Connecticut, and receive gold in return, which you can use to buy both potatoes and better pin-making machinery.  As you said, it&#x27;s a lubricant.<p>Modern capitalism largely arose in the Industrial Revolution as a form of gambling.  Many entrepreneurs can bootstrap: a machinist can buy a lathe, a drill, a work-bench, a file, dividers, a square, etc., with his wages as a machinist&#x27;s apprentice, and as long as he has a &quot;production surplus&quot; (now, as measured in the collective hallucination of money, rather than in the increased harvests of the farmers using his machinery) he can keep improving and buying machinery to increase his productive capacity and thus his surplus, and perhaps begin to hire workers—not apprentices for a limited term, now, as in pre-capitalist craft production, but employees for life.  But a competing machinist who sells her business to capitalists (whether a few wealthy investors or many subscribers) suddenly has enormously more money with which to buy such tools, and perhaps she can win customers away from the bootstrapped entrepreneur, producing superior goods at a lower price because of her superior tools.<p>Effectively the capitalist is offering the worker a deal: the capitalist provides the tools, the worker provides the labor, and each receives part of the value produced.  In capitalism <i>qua</i> capitalism, the worker is an employee and receives a <i>fixed</i> wage, while the capitalist receives a variable profit, but of course there are lots of other variations; the machinist might take a loan from a bank or rent the tools, precisely reversing the roles, or someone who&#x27;s nominally merely an employee might receive most of their compensation in the form of incentive stock options.<p>From the point of view of economic development, these questions of how the pie is divided are minor, but they matter enormously to the participants.  This division depends mostly on cultural expectations and on the negotiating positions and skills of the parties; in an industrialized economy, the capitalist has a very strong negotiating position, since capital goods like drill presses and rail locomotives are very commonly the critical limiting factor in productivity.  For many expensive products that can be cut on a lathe, there are fewer lathes that can turn them than machinists skilled enough to turn them.  The machinist without a lathe must resort to backyard aluminum casting and hand scraping before he can start to turn parts.<p>Ultimately, though, the money is just a scorekeeping device, a lubricant.  What makes the machine shop more or less productive is not the money, but the tools it bought, which were necessarily produced by the production surplus of the existing economy.  If suddenly machine shops as a whole attract a hundred times as much investment, it won&#x27;t make their productivity skyrocket by bringing a hundred times as much tools into existence—it will just drive up the price of the tools.  Pretty soon it will drive up the prices of the machine shops&#x27; products, too, since if their management doesn&#x27;t deliver a respectable return on that investment, it will be replaced, and if that doesn&#x27;t fix it, the company will be shut down.  These higher prices will tend to <i>decrease</i> the market for the products.<p>When we&#x27;re talking about international capital flows, we also have the well-known resource curse or Dutch disease: investing a lot of money from England in US companies will tend to devalue the pound relative to the dollar, which makes US products less economically competitive and&#x2F;or UK products more economically competitive.  This is precisely the opposite of driving US industrialization.<p>— ⁂ —<p>So if some Englishman sent a bunch of money across the Atlantic to invest in nascent industrialization, that wouldn&#x27;t speed up the industrialization—unless a bunch of that money went <i>back</i> across the Atlantic to buy the capital goods needed for industrialization.  Maybe it did!  From 01780 to 01824 artisans were forbidden to emigrate from Britain, and exportation of metalworking or glass manufacturing equipment was likewise forbidden; but these prohibitions were widely flouted, and at any rate they excluded steam-engines, and they ended in 01843.  A lot of the machinery and artisans during this time went to the US.  The &quot;American System of Manufacturing&quot; was the world&#x27;s most advanced manufacturing technology by the mid-01850s.<p>More likely, though, if someone in England was investing in US industrial firms in the 01800-01850 period, they weren&#x27;t meaningfully promoting a flow of needed capital goods from England to America; they were just giving the American firms they invested in a leg up on competing American firms, and perhaps other sectors of the US economy, like the slave plantations.<p>But where does Junius Morgan come into all this?  Well, it turns out that Junius S. Morgan was born in Massachusetts in 01813; his father was a Revolutionary War veteran and one of the founders of Aetna in 01819.  Junius Morgan was a partner in various US banks from 01833 to 01853, inheriting his father&#x27;s fortune in 01847 and then becoming a partner in London&#x27;s leading <i>American</i> bank in 01854.  So <i>that</i> was when he started funneling British investors&#x27; money into American industrial companies by selling things such as railway bonds.  J. P. had nothing to do with it!  He started working with his father in London in 01857 and acting as his father&#x27;s overseas agent in the US in 01860.<p>Moreover, by this point it was no longer a question of &quot;driving industrialization&quot; in America.  The US had already been the world&#x27;s leading industrial power for decades.  The B&amp;O railroad opened in 01830, using a US-built locomotive; by 01861 it had 236 locomotives, 3451 rail cars, and 826 km of railroad, and it had many domestic competitors.  In 01830 the Liverpool and Manchester Railway, the first intercity railway and the first to be powered entirely by steam, also opened.  The US had power looms from 01815, milling machines by 01816, small arms with interchangeable parts by the 01830s, 2000 steam engines by 01838, cloth exports from the 01830s, electric telegraphs from 01844, and invented the Corliss steam engine in 01848.<p>So, Morgan was far too late to drive industrialization in the US.  He certainly did make a lot of money from it, though.  And he arguably got a lot of other people to invest in its expansion—US industry expanded a lot in the second half of the 19th century.