Boyle 2008mt Ghxviii the Great Divergence

8/3/2019 Boyle 2008mt Ghxviii the Great Divergence

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Michael Boyle Hertford College

European concentration, conflict and competition in relation to the great divergence

In the late 18th and early 19th centuries, the economic and geo-political structure of the globe was

dramatically altered, and a new world order was created that would last the best part of two hundred

years. More significant than that, however, was a technological revolution, which, despite beinginitiated in the tiny island of Great Britain, opened up the possibility of modernisation and

development to the rest of the world forever. This was the era of the 'great divergence', a term

coined by K Pomeranz in reference to the separation of the economic trajectories of Europe and

China. Nevertheless, one must not be tempted into thinking that this parting of the ways was the

result of some intercontinental slugging match between west and east. Economic development was

never geographically uniform across either China or Europe; modernisation was initially a highly

localised phenomenon before it was disseminated around a large land area. The key locations for

our study are north-west Europe (around Britain and the Low Countries) and, in China, the Kiangan

region on the Yangtze delta. This essay will first attempt to establish that there was a divergence in

economic fortunes between these two areas (and the wider continents of which they were a part)

and that it ultimately resulted not from variances in intellectual, political or even naturalenvironments, but the exceptional technical progress made in Europe. The source of this European

inventiveness is in some ways impossible to truly determine, but I argue that the geographical and

political closeness of the competing European powers encouraged innovation and the rapid adoption

of new technologies. This competition therefore pushed Europe to a higher state of technical

development than its eastern counterpart, China.

The existence of a 'great divergence' rests upon two assumptions. These are, firstly, that at

the start of the period, the economic fortunes of China and Europe were roughly equivalent in the

18th century and, secondly, that, by the end of the 19th, the west had not only overtaken, but

developed a significant lead over, the east. The second of these assumptions is indisputable at the

start of the twentieth century, European industry was mechanised and highly efficient a machine

operator in Lancashire could churn out the finest textiles 400 times faster than a highly skilled

traditional Indian artisan;1 westerners (either in Europe or the 'new-Europes' of North America or

Australasia) controlled vast global trade networks exchanging unprocessed eastern commodities for

value-added processed goods; European institutions from Christianity to the printed newspaper

were spread around the world; and British GDP per capita was roughly ten times that of China, a

country by the point on the cusp of Malthusian crisis. And from the early 19th Century, the Islamic

world had broken several hundred years of haughty intellectual isolation (stemming from its evident

cultural, and assumed religious, superiority in the medieval period) to investigate the powerful

forces at work in the European economy. European studies of economics were for the first time

translated into Arabic, Persian and Turkish, while knowledge of European languages became seen

as desirable, and eventually necessary, for the privileged classes. Our first assumption also seems tobe confirmed by historical data. While European traders struggled to produce anything other than

gold bullion that was valued by their 18th century trading partners, India produced perhaps as much

as two thirds of global manufacturing exports, largely due to its highly developed textiles sector.

Meanwhile, the figures for life expectancy and income per head in Britain and China were

approximately equal in 1800.2 The historical evidence, therefore, appears to correlate with our

assertion of a 'great divergence' between east and west.

* * *

However, our first assumption (and consequently our temporally specific great divergence

thesis) was rejected by EL Jones in his 1981 book entitled 'The European Miracle'. Jones was one

1 J Darwin,After Tamerlane

2 K Pomeranz, The Great Divergence


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of a number of historians to argue that the dramatic events of the 19 th century were in fact merely

the culmination of a long term process of gradual economic change that in Europe extended back

three hundred years or more. Jones consequently argued that by the 18th century, Europe had laid

the foundations for a dynamic market based economy, and was in this respect already more modern

than the eastern half of Eurasia. In supporting this argument, Jones pointed to European culturaladvantages - the Protestant work ethic first outlined by Weber but dating back to the Lutheran

reformation, and the European family structure, which was supposedly a fertility restraint that

precluded a subsistence crisis and allowed for greater investment in human capital. Jones also

recalled the argument made by D North that the political structures of north-west Europe, born in

the fires of constant competition and regular conflict with neighbouring states, limited the absolute

authority of national rulers and so ensured greater security of property rights. Property rights are of

course an essential prerequisite to economic exchange, and the developments identified by North

could be connected to the growth of the European financial sector (as they enshrined the security of

credit), and the flourishing of invention in the 19th century (the patent system at least began to

guarantee intellectual property over innovations). One could equally include the proto-

industrialisation model expounded by F Mendels as providing evidence that the evolution of amodern, industrial economy had already begun in the early 18th century. This theorem extrapolates

from the English pattern of development to suggest that the appearance of rural cottage industry is a

direct and necessary precursor to urban factory industry, and as such is part of the same process.

Yet we must question any suggestion that the economic growth of Europe at this point either was

part of a long term path to modernity or was even exceptional for the time.

For a start, one must be sceptical of arguments centred around cultural differences; they can

only ever have oblique, indirect and therefore ambiguous effects. This is most tellingly

demonstrated by debates surrounding the impact of Confucian ideals - a deep respect for authority,

the subjugation of the individual to the needs of society - on East Asian economic growth. (Note

the implication that Confucianism represents a deviation from the Western norm.) These attitudes

have been blamed for Chinese economic stagnation after 1400 despite the fact that they also

prevailed during the period of technological vitality that preceded it. And to make matters worse,

they have since been identified as a motor for the Japanese economic miracle since the second

world war! The potential economic impact of family structures is also uncertain. For example, the

tendency for Chinese families to outsize European ones has been criticised for reducing possible

investment in human capital. I could be argued, however, that they provided a free and accessible

source of child care, and so had the opposite effect. In any case, it is dangerous to generalise that

China was closer to a subsistence crisis than Europe as much of the country could accommodate

population increases, a fact noticed by the Qing administration itself. The Chinese state positively

encouraged internal migration from populous areas to depopulated ones over 10 million people

were persuaded to relocate by the payment of travel costs and the offer of start up loans.The institutional argument, particularly with regard to the development of credit markets

may seem convincing to a western reader, but the idea that liberalism and economic development

go hand in hand reflects a narrow minded, teleological attitude. True, restraints on governmental

authority are one way to secure property rights and develop financial institutions, but they are

certainly not the only way. As long as the interests of ruler and ruled are aligned in support of a

stable and secure economic system, the relative power of either party becomes insignificant. This

was visibly demonstrated by late 19th century Europe's most successful economy, Germany, and is

again evident in modern day China. And we should not forget that Britain, that great bastion of

parliamentary democracy, did not acquire universal suffrage until 1918.

Finally, the assertion that proto-industrialisation inevitably leads to modernity has been

disproven by the fact that China had in fact a more complex rural industrial base than Britain in the18th century but failed to experience a resultant development in urban manufacturing (the very

essence of the great divergence). In fact, it has been argued that China reached a 'high level


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equilibrium trap' in which the traditional economy of the late 18th and early 19th century, with its

integrated national markets and efficient uses of organic energy, was productive enough to sustain

population increase and so provided little incentive for technological improvements. When one

considers the fact that proto-industrialisation implies rural development when industrialisation

implies urban development, it becomes clear that, far from engendering western style industrialgrowth, proto-industrialisation necessitates a dramatic structural transformation in the economy.

This did occur in Britain, but only due to exceptional circumstances, to which I shall now turn.

The one area in which a case could be made in support of the very long run industrialisation

thesis is that of the British agricultural revolution. The British agrarian economy was able to

escalate its productive capacity by 250% in the years 1500-1750 while the fraction of the population

working on the land declined from 74% to a mere 45%.3 This, it is true, could be attributed to the

enclosures of vast swathes of the country and the resulting application of animal capital to it, but

debate remains concerning the true impact of the privatisation of the country's land markets. In any

case, this modern agricultural sector was not visible in the majority of Europe and so cannot be

applied to the great divergence debate in general. In France, one of the more developed countries in

the continent, agricultural productivity, rural to urban migration and the liberalisation of landmarkets all stagnated in the period, while in Spain, hereditary inheritance continued to dominate and

so prevent the efficient allocation of resources. Upon close inspection, Chinese agriculture

appears rather similar to that of Europe in the period. Productivity, buoyed by the application of

fertilisers and an efficient system of irrigation waterways the latter of which feudal relationships

in France inhibited - tended to match or even better European levels. In the Yangtze basin farmers

were able to specialise in cash crops and draw in food and supplies from other regions,

demonstrating market integration and the prospect of Smithian growth.4 At the same time, the

system was not free from imperfections, as can be seen in the theoretical first refusal held by locals

on property put up for sale, which, like hereditary inheritance in Spain, reduced efficiency.5

(Alternatively, it could be argued that such a system reduced the transaction costs of land exchange,

thereby encouraging mutually beneficial trade.) To conclude, differences in the pre-industrial

Chinese and European economies were, with the possible exception of Britain, not sufficient to

suggest that they had reached differing stages of development.

* * *

It now therefore seems safe to say that there was indeed a great divergence in Chinese and

European economic trajectories in our period, although we may feel a little uncomfortable with

making generalisations about such large and diverse geographical areas. We must now seek an

explanation for this phenomenon. By far the most significant aspect of European modernisation

was the shift from a reliance on organic energy (particularly man or animal power and wood) to oneof mineral energy, specifically coal. The use of coal and steam power, by vastly increasing the

economy's energy capabilities, offered Europe a long term (though perhaps not permanent) escape

from the Malthusian subsistence trap. It facilitated the exponential expansion of the workforce, the

development of myriad new technological innovations and the growth of pan-continental lines of

communication and transport. In doing so, it vastly reduced the costs of international trade, which

brought further stimuli to the European economy by opening up ever cheaper sources of raw

material inputs for industry, and creating ever increasing demand for industrial exports. The new

technologies allowed small numbers of Europeans to exert imperial control over much of Asia and

(admittedly with the significant support of several million enslaved African workers) to make

3 R Allen, 'Economic structure and agricultural productivity in Europe, 1300-1800',European Review of EconomicHistory

4 R Bin Wong, China Transformed

5 K Pomeranz, The Great Divergence


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maximal use of the new world to the west of Europe. It was technology, and not either Empire or

geographical discovery that modernised Europe. The latter two phenomena certainly offered

significant economic benefits to Europe - either by providing raw materials, land for colonisation or

coerced and beneficial trade - but without technological improvements, Europe would have

remained a traditional, Malthusian economy, albeit with much greater breathing space.But the sudden increase in European inventiveness from the 18th century is difficult to

explain, as the concept of invention is so abstract and without obvious, direct causes. What must

initially be established is that, before the days of national research and development funding,

technological spurts were peculiarly rare occurrences in history, so it is not helpful to seek

inadequacies in the Chinese situation that precluded a period of high inventiveness. Instead, we

must look to Europe for answers. It has been suggested that supply side shortages or bottlenecks

may have promoted innovation, but this seems to apply more to the adoption of new technologies

than to the process of invention itself. In 18th century England, the use of coal for smelting was first

developed during a time of surplus charcoal, but its only proliferated decades later as the price of

charcoal escalated.6 Equally, the Chinese province of Kiangan faced serious resource stresses, yet

did not develop inventive solutions to them. It is too easy to assume that Britain was blessed withjust the right combination of resource endowments and shortages to promote industrialisation:

surely the actual path of industrialisation was influenced by the natural endowments available to the

economy. Alternatively, J Mokyr has posited that the rational, scientific spirit of the enlightenment

promoted spirit of invention which bore fruit over the following century. Certainly an increased

interest in, and understanding of, the sciences among the wider population may have had a positive

impact on the level of invention, but Mokyr's line suffers from the familiar problems associated

with all cultural arguments, and is consequently difficult to substantiate.

Our fundamental problem is that we are unable to truly explain the precise mental processes

that prompt human invention, and so cannot attribute causes to specific cases of technical

innovation in the period. Nevertheless, there is an explanation for European success in this field in

general, and it springs from the dense concentration of rival states within a relatively small

geographical area. The 18th and 19th centuries were a period of constant competition and near

constant conflict between the rival powers of Britain, France, Spain, Holland and later Germany.

No country could afford to embrace antiquated technologies and each was desperate to gain an edge

over the others. In the same way that the situation of competition may have aided the establishment

of liberal government (as D North argued), it provided a fertile breeding ground for innovations.

Ideas leaked across porous national borders as states promoted 'industrial espionage' and new

micro-inventions were constantly being developed. The result of this was that, although Britain was

the first to key technologies such as the steam engine or the railway, its European rivals were quick

to catch up, and from 1850, Britain began to lose ground. Europe saw a combination of both

political and economic competition in the period: just as nations attempted to dominate each other,firms involved in the production of goods and services battle with each other within an increasingly

competitive continental market. The modernisation of the continent as a whole was therefore

quicker than that of China, which was politically, economically and geographically isolated from

the world's competitive hub. Although we still cannot explain the increase in macro-inventiveness,

we can put the number of micro-inventions and their speedy dissemination throughout the whole of

Europe down to the sheer concentration of rival states in a modest geographical area.

Of course, with such a complex and wide ranging problem as the industrialisation of Europe

and its economic divergence from China, we must accept that our solutions will not be as simple or

one dimensional as I have suggested. For example, my thesis does not explain why Europe became

so inventive at the specific point in time that it did; after all, European states had been in conflict for

all time. To answer this, we must look further into the environment of the 19th

century, the capitalistinstitutions that fostered technological innovation in Europe and also contiguous global geopolitical

6 Hyde C, 'The Adoption of Coke-Smelting by the British Iron Industry 1709-1790',Exploration in Economic History


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developments. But we still may conclude thatEuropean and Chinese economic fortunes separatedin the 18th and 19th centuries not because of any specific inadequacies within the Chinese system but

simply because it did not experience the historically unusual event of a sudden and general leap

forward in technological progress. And although the precise cause of this occurrence in 19th

century Europe (just as in the case of the Chinese spurt in invention up until 1400) remains anenigma, it was certainly encouraged by the geographical closeness of the several European powers,and the intense economic and political rivalry between them.

2755 words

Bibliography

K Pomeranz, The Great DivergenceJ Darwin,After TamerlaneR. Bin Wong, China Transformed: Historical Change and the Limits of European Experience.

M.Elvin, The Pattern of the Chinese PastE.L.Jones, The European MiracleB.Lewis, The Muslim Discovery of EuropeJ MokyrThe Great Synergy: The European Enlightenment as a Factor in Modern EconomicGrowthR Brenner, England's Divergence from China's Yangzi Delta: Property Relations,Microeconomics, and Patterns of Development

Alternative Questions

How comfortable should we be with making continental generalisations?

Account for the rise in European inventiveness in the 18th and 19th centuries.

How modern was early 18th century Europe compared to a) the rest of the world at the time and b)

Europe in previous centuries?

How similar was the Islamic world to China before, during and after the 'great divergence'?

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Boyle 2008mt Ghxviii the Great Divergence