K. Pomeranz, The Great Divergence: China, Europe, and the Making of the Modern World Economy (USA: Princeton University Press, 2000)

[page 3] The 19th and 20th C social sciences sought to find the difference between Europe and the rest of the world. It sought to answer the question “why did Europe develop?” Different theories have been proposed; some argue that Europe developed by exploiting its colonies and living off the surplus. Others emphasise the exploitation of Europeans and the productivity enhancements the Industrial Revolution brought.

[4] Contrary to many arguments, Europe and Asia were very similar up until 1800. Europe was less labour intensive than Asia and more capital intensive, but was reaching ecological limits which would cause it to switch to more labour intensive forms of production. (Capitalism is a system which seeks to reduce the amount of labour input for each product output, i.e. it strives to be less labour intensive than before) In the 18th C resource extraction from the New World helped keep European labourers off the fields and in factories.

The core regions of Europe and Asia were similar in their institutions and endowments. This mean that a comparative approach will not reveal why one region forged ahead and the other fell behind. Therefor we need to look at how the regions interacted. The pre-1800 world was polycentric. Lots of the earths conjunctions worked to the European’s favour rather than the Asians’. This was not because the designed them, but was a quirk of fate.

[5] Much scholarship has fallen into a World System Theory mould or put European success down only to internal factors. Neither approach is satisfactory. Sadly, recent scholarship has given undue attention to internal factors and downplayed external events. Three ways stand out:

  1. Recent scholarship has found “capitalism” in the west as far back as the Dark Ages, making Europe’s path look unique. However, similar “capitalisms” can be found in India, China and Japan’s past.
  2. The above led to dominance being given to internal european processes. But this ignores too much of the New World’s role in the Old. This is ideologically convenient for boosters of neoliberal capitalism.
  3. Industrialisation was initially a British phenomenon which then spread  to the rest of Europe. however, literature treats industrialisation as a European phenomenon. This makes extra-European connections seem less important; New World played a large role in the first industrial revolution in Britain. Empire has been treated as something created by superiority, rather than as something which helped create the superiority.

[6] We also have unuseful use of European level units of comparison. England is not comparable to China as a unit. China is continental in size, whereas England is 2/3 of a medium sized island off the coast of continental European. [7] Therefore, it makes sense to compare subregions in China with the individual countries and regions of Europe. For example the Yangzi Delta is imilar in many ways to European states like Holland and the UK.

[8] Reciprocal comparisons needed to avoid biases sources. Both sides are deviations from the expectations of the other.

[9] A series of reciprocal comparisons between Europe, India, China and Japan produce several similarities in agriculture and proto-industrial development as late as 1750. We should not confuse the point at which Europe became the wealthiest area of the world with the point at which it broke out of a Malthusian world into one of sustained per capita growth. Manu places reached the same limit of economic development as Europe had. Europe grew because of historically contingent events, like the location of coal and the opening of the New World. The idea the without the New World or coal that Europe would have developed nonetheless is not supported by pre=1800s stagnation in living standards vis a vis the rest of the Old World.

[10] Jones argues that preindustrial Europe was far ahead of the rest of the world in the accumulation of human and physical capital. It is argued that the demography of Europe and economic behaviour of european individuals left enough surplus for non-farm industrial workers to exist. However, comparisons between Europe and Asia show that European social patterns and demography were not unique.

There were booms in Asia and productivity improving innovations which raised per capita income. We must look at a Fall of Asia as well as a Rise of Europe. Asia was not at its population density maxima in the 18th and 19th C, there was room to expand. Do not ignore the tremendous resources inflow from the New World to Europe. This was different to frontier expansion in Europe or Asia. The clearing of the German forests for arable land and wood has parallels in Bengal, but there is no Asia equivalent for the bounty the New World Provided.

[12] You cannot attribute a fall of Asia to its coming to its Malthusian limits. China was only as full as large parts of Europe was – i.e. Britain. If Europe was not at crisis at the end of the 18th C then neither were large parts of Asia

Sugihara has argued that Europe became more capital intensive than Asia around 1500 as Asia became more labour intensive (although our author dates this divergence to around the 18th C). A large source of Europe’s GDP growth in the early modern period came from exporting manufactures to the large markets which Asia’s “industrious revolution” had created.

[13] However, the differences in the way labour was used was not essential but was contingent on a number of events. Population distribution, due to market distortions, made population growth in developed areas more likely relative to undeveloped areas in Europe rather than Asia, leading to the capital intensity of production to increase.

[14] Braudel, Wallerstein, Chaudhuri and North pay less attention to the levels of wealth with which Europe entered the 18th and 19th C and more to the institutions which existed. European institutions, allegedly better protected private property etc, better rewarded those who efficiently used labour, land and capital than Asian institutions. [15] Brenner makes a similar but potentially complementary argument. The divergent regimes are the result of class struggle:

  • In Wester Europe the peasants won the first round against their land lords after the black death, freeing them from coerced labour; in eastern europe the serfs lost.
  • In France the smallholders won the second round and big landowners and small holders were left with little incentive to improve the quality of the land. In England big landowners won and improved productivity while freeing labour for the factories.

This left England most resembling a neoclassical economic model of free markets and led it to develop first and most strongly.

Braudel and his school instead focus on the retained wealth of a small number of landowners and capitalists. This wealth was often accumulated by force. This capital was then invested in productive endeavour, beginning development. For Wallerstein it is the interaction between Eastern and Western Europe that signals the beginnings of a world economy.

There are problems with all these Eurocentric stories, but institutions do matter a great deal for development. There is little evidence that European institutions were much better than Asia ones until the Industrial revolution was underway. There was no decisive lead in capital stock or institutions with respect to the most advanced regions of Japan or China.

Industrialisation outside England was limited until the 1860s so a broad european miracle seems less convincing. People in other parts of the world acted in the same ways as Europeans to reduce their fertility (to boost per capita, not just total consumption and investment). Technological innovation had given Europe an edge by 18000, but alone this was not enough to cause an industrial revolution. 

[18] Consumption patterns differentiate Europe, China and Japan from the rest of the world, but not from one another. Increased productivity in these regions routinely increased demand and consumption patters which favour europe seem to stem from external factors.

Europe’s financial markets were more efficient, but there was no developmental bottleneck which advanced financial products could relive at this early stage. Direct competition between european and asian merchants did occur, and when it did and the Europeans were not allowed to use force the Europeans possessed no obvious advantage. Land and energy were the most important constraints on early development, exactly the things relieved by New World products.

New legal forms in Europe (limited liability etc.) did matter for developemtn. But these were not enough to prompt development. Overseas interstate [20] rivalries did matter.

There were further econoligcal barriers to further growth in all the most densely populated, market driven and commercial areas of Eurasia. All areas attempted to relieve pressure through trade with the rest of the Old World. But lack of demand in the Old World meant that it was difficult to development large scale manufacturing. Europe’s land constraint was eased by a shift from wood to coal and by large imports (ghost acres) or food and non-food agriculturals from the New World. The New World also provided a large market for manufactured goods.

The New World slave periphery was different to China’s hinterland because it relied on manufactured imports in a way which China’s interior (with its proto-industry) did not. This dynamic continued well into the 19th C, from indipendence, emancipation and beyond.

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About Left Outside
I blog, I drink, I study at the LSE, I work at a wine shop.

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