Money doesn't objectively exist; it's purely a figment of people's imagination. This ten-trillion-Zimbabwean-dollar bill isn't money anymore, even though it used to be, and it isn't physically changed in any relevant way. The only thing that changed was how people thought of it.

It might seem strange to say that a purely imaginary thing like money could be "the driver/catalyst for everything" in industrialization, but many strange things are true. I'm writing you this note in letters of lightning far too small to see, which are persistently trembling within a few tiny slivers of quartz that can thus contain the lightning because the vital air has been removed from it—stranger still, but true, because that is how DRAM chips work.

Still, let's see if we can analyze how industrialization happens in terms of objectively existing reality rather than shared hallucinations like money—surely the picture will be partial, but it may still be useful. Industrialization itself seems to be objectively observable: it doubles people's life expectancy at birth.

Let's start with an outside view of economic production as a whole. How would we explain it to a Martian?

People work, planting and harvesting and preparing food. If they do not eat food, they die in a few months from lack of various molecules crucial to their biochemistry and energy (collectively "nutrition"). They expend energy and water and damage their bodies by working, damages which they repair automatically if they have time to rest, but which will otherwise eventually kill them. So their capacity for work is limited. Not everyone has to work, but if the people collectively produce too little food from their work, then they will start dying from lack of nutrition, and pretty soon they will all die. One old book of poetry sums this up by saying, "In the sweat of thy face shalt thou eat bread."

On the other hand, if they can make a lot of food despite their limited work capacity, more than they need to survive—a "surplus"—many of them will live for decades, they will reproduce, and their population will increase, typically by about 4% per year. Groups that manage to do this come to vastly outnumber groups that do not.

(There are some other material necessities for human survival and reproduction besides food, but none of them are different in relevant ways, so for the time being I'll stick to food.)

The other conventional factors besides labor that affect productivity are land and something called "capital". Some land yields a lot of food and is easy to plant and harvest; other land yields very little. By "capital" is conventionally meant not money but durable goods that increase labor and land productivity, such as hoes and waterwheel-driven mills for making flour. If people don't need to spend their entire labor capacity on making enough food to survive, they can instead devote some of it to making these durable goods: cords, needles, ropes, bows and arrows, shoes, knives, hoes, axes, pots, and so on. Cords and ropes enable you to climb palm trees, hang meat over a fire, or bridle a horse; needles enable you to make clothing and all manner of sturdy, flexible fiber goods; bows and arrows enable you to kill dinner at a distance; shoes enable you to walk or run longer distances; knives and axes make cooking and woodworking much easier; hoes allow you to plant much more land; pots enable not only cooking but food storage and the storage of other goods; and so on.

So these are "capital goods": once you have a surplus, then by spending some of your work creating durable goods instead of satisfying basic necessities for survival, you thenceforth multiply their possessors' future production, or at least until the durable goods stop enduring. But a hoe or a blast furnace is produced in the same way as a vegetable garden: people work to turn raw materials into the desired end product, directed by their skills and knowledge. Instead of hoeing the field today, perhaps they're hammering the hoe blade into shape or molding bricks from fireclay. Most capital goods are more or less specialized to a particular sort of production—you cannot harvest more corn by dumping blast furnaces or gristmills into the cornfield—though some are more versatile than others.

I haven't mentioned skills and energy before, but they're crucially important. A person is skilled when they can direct their work to produce their intended results with ease and precision, and labor specialization develops skill much more highly.

Energy is a fundamental physical quantity which can be converted between many different forms, including heat and kinetic energy; many kinds of work require a lot of kinetic energy and a lot of heat, and this has historically often been the limiting resource for work productivity, particularly when all the relevant kinetic energy came via people's muscles from their food, and all the relevant heat came from firewood.

The available kinetic energy for production has greatly expanded five times in the past: ox-yokes (6000 years ago), horse-collars (1500 years ago, in the Sui), the steam-engine (250 years ago), and electric dynamos and motors (140 years ago). Photovoltaic cells seem at long last to be adding a sixth item to this list now that they have finally become cheaper than steam-engines.

The available heat energy for production has greatly expanded three times: fire (400,000 years ago), oil drilling (2300 years ago), and deep-shaft coal mining (250 years ago). Again, photovoltaics are probably a huge factor here today.

So, in these terms, we can analyze industrialization as a set of several major synergistic shifts.

First, enormously increased specialization, which would have been counterproductive to effective productivity in the absence of the worldwide markets created by the British Empire and by cheaper transport via canals. The ten workers in Adam Smith's pin factory could produce 48000 pins a day, far more pins than a village could use, or maybe even a city—perhaps each household might ruin five or six pins in a day as they repaired their clothing. Without easy shipping, the tonnes of pins thus produced would be as worthless as an asteroid belt converted into paperclips.

Second, enormously increased use of capital goods enabled by that specialization—only a few decades after Smith observed his pin factories of ten or eighteen men, the whole operation became automated by cam-driven pin-making machinery, further decreasing the labor per pin, and of course the rise of the spinning-machines and jacquard and other automated looms is even more notorious.

Third, as improved capital goods like the cotton gin and the combine harvester became abundant, the planting and harvesting of larger and larger amounts of land required less and less labor, so smaller and smaller amounts of farming work per person sufficed to prevent mass starvation. This surplus manifested as a mass population migration from the countryside to the cities, where increasingly specialized capital-intensive production of all kinds was carried on by large crews of people harnessing steam power, rather than by individual farmers plowing behind teams of horses.

Fourth, invention became central to economic production in the newly industrializing countries, as it had been a thousand years before in the Song; we can think of an invention as a skill that has been digitized, expressed in words or pictures so that it can be copied, rather than having to be learned by practice. New notions of precision, innovation, specification, tolerances, and standardization became central to work in a way entirely foreign to previous generations. New notions of measurement and metaphors of clockwork universes allowed the implicit to become explicit, legible, and reproducible.

Fifth, the advent of the steam-engine, which permitted pumping water out of deep-shaft coal mines, which provided a vastly increased fuel supply.

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