The importance of services to the achievements of the industrial revolution is gradually becoming realised. Britain may have been by 1851 the ‘workshop of the world’, but it was also the pioneer service economy, with over 30 per cent of its labour force already devoted to the provision of services to domestic and overseas markets, contributing almost half of national income. Services further increased in statistical significance after 1850: by 1939, half the labour force was employed in the tertiary sector. It seems right to argue that services played an important role in the maturing of modern Britain. Yet it may also be right to argue that they played a role in slowing down British economic growth and contributing to the catch-up by other economies.

THE TERTIARY SECTOR

The boundaries of the service sector are famously imprecise, its content notoriously heterogeneous. Fisher (1952), who coined the term, ‘tertiary sector’, to distinguish services from primary (agriculture, mining) and secondary (manufacturing, construction) activities, noted that it was defined not from any positive attributes, but rather as a residual claimant, ‘a miscellaneous rag-bag into which everything has to be thrown that cannot conveniently be fitted anywhere else’. The heterogeneity is reflected in Adam Smith’s famous compilation, ‘some both of the gravest and most important, and some of the most frivolous professions: churchmen, lawyers, physicians, men of letters of all kinds; players, buffoons, musicians, opera singers, opera dancers, etc.’ (Smith 1976 [1776]: 331).