4 comments on “The Great Divergence

  1. Pomerantz, Diamond, and their ilk strike me as drunks searching for their lost keys where the light is shining. Pomerantz is also anti-Euro-centrism, itself a good thing, taken to an extreme. We can easily observe in the modern world (e.g. East Germany vs. West, North Korea vs. South) that institutions make a very big difference.

    To believe that institutions caused the Great Divergence is not to be Euro-centric. I’d love to learn what institutions, alas now probably mostly forgotten and if not forgotten untranslated, made India and China the hotbeds of commerce in the 4th-10th centuries. But as long as researchers focus on the deceptively measurable (e.g. supplies of coal) at the expense of the important (i.e., institutions) it’ll be a long time before we know.

    England’s coal was rather far off the beaten track. It even required one of the industrial pioneers, Abraham Darby, to issue private money in order to pay his workers and get the local economy going. India and China both had very large coal reserves which they have only started to rapidly exploit in this century.

    Furthermore, the Great Divergence started a bit earlier: there is clearly divergence in productivity of higher-level institutions, such as the seafaring and the military, by the late 15th century, when tiny Portugal, rather than the vastly more numerous Arabs, Indians, or Chinese captured Malacca and took control of the India-China-Spice Islands sea trade. This was solidified by the Dutch in the 17th century. The reverse counterfactual would be a small Asian country like Sumatra or Korea taking control of Gibraltar. Nothing remotely like that ever came remotely close to occurring.

    For what it’s worth, I suspect the Divergence comes from institutions associated with decentralized printing and the mechanical clock, as well as instituions such as marine insurance and the joint stock company. The Divergence doesn’t show up in agricultural productivity until the late 18th century because everybody faced Malthusian limits until then. But it shows up in higher-level institutions at least 3 centuries earlier (and no more than 7 centuries earlier).

    Take naval might, for example. The Chinese had big ships, but so what?
    Zheng Zho (Cheng Ho) apparently did not even make it to the other side of Africa (some claim he did, but if so Chinese institutions were so poor at that time that they lost memory of it! That would be even more embarassing than what actually happened). Along the same lines, it was Europe not China that brought Eurasian culture to America, against starting in the late 15th century. Any time between then and the mid 19th century, had China or Japan been up to it, they could have settled and conquered the West Coast as the English did the East Coast, but they did not come anywhere close to such a feat.

    There were many big institutional differences between Britain and China. One example is better property rights which preserved more of Britain’s forests so that when the industrial revolution came wood was still affordable for higher-level uses such as construction material. Another is decentralized and widespread printing, the scientific revolution, and the literacy of craftsmen that led to many inventions from the 17th century onward such as the steam engine. Use of steam engines (from the early 18th century on) to pump water out of the coal mines opened up big high quality coal seams. Two more are joint stock companies and insurance.
    Alas, the literature on Chinese merchant institutions of the era, is very sparse, so one can’t be sure of these statements on the Asian side.

    If one is looking for geographic explanations, or at least explanations that have a clear geographical manifestation, this article on history, security, and productivity might ultimately explain why when it came to industrialization Britain was the first in Europe and Japan the first in Asia. (BTW, I think the example of Japan eliminates easy natural resources such as coal as an prerequisite for rapid industrialization).

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