The Great Divergence is a term made popular
by Kenneth Pomeranz's book by that title,
(also known as the European miracle, a term
coined by Eric Jones in 1981) referring to
the process by which the Western world (i.e.
Western Europe and the parts of the New World
where its people became the dominant populations)
overcame pre-modern growth constraints and
emerged during the 19th century as the most
powerful and wealthy world civilization, eclipsing
Medieval India, Qing China, the Islamic World,
and Tokugawa Japan.
Scholars have proposed a wide variety of theories
to explain why the Great Divergence happened,
including geography, culture, institutions,
colonialism, resources, and "accidents of
history". Scholars also trace back the beginning
of the Great Divergence to different periods,
with many tracing it back to the Industrial
Revolution in 18th-century Britain, while
others trace it back to earlier periods of
Western history, such as the commercial revolution
and the origins of mercantilism and capitalism
during the Renaissance and the Age of Discovery,
the rise of the European colonial empires,
proto-globalization, the Scientific Revolution,
or the Age of Enlightenment. The "traditional
view", sometimes described as a near-consensus
view, is that the Great Divergence occurred
before the Industrial Revolution, with Western
European states surpassing China, Japan and
the Middle East by 1750. However, the "revisionist"
view of the "California School" estimates
that the divergence started around 1800 during
the Industrial Revolution. In the twentieth
century, the Great Divergence peaked before
the First World War and continued until the
early 1970s, then, after two decades of indeterminate
fluctuations, in the late 1980s it was replaced
by the Great Convergence as the majority of
Third World countries reached economic growth
rates significantly higher than those in most
First World countries.Technological advances,
in areas such as railroads, steamboats, mining,
and agriculture, were embraced to a higher
degree in the West than the East during the
Great Divergence. Technology led to increased
industrialization and economic complexity
in the areas of agriculture, trade, fuel and
resources, further separating the East and
the West. Western Europe's use of coal as
an energy substitute for wood in the mid-19th
century gave it a major head start in modern
energy production.
== Terminology and definition ==
The term "Great Divergence" was coined by
Samuel P. Huntington in 1996 and used by Kenneth
Pomeranz in his book The Great Divergence:
China, Europe, and the Making of the Modern
World Economy (2000). The same phenomenon
was discussed by Eric Jones, whose 1981 book
The European Miracle: Environments, Economies
and Geopolitics in the History of Europe and
Asia popularized the alternate term "European
Miracle". Broadly, both terms signify a socioeconomic
shift in which European countries advanced
ahead of others during the modern period.The
timing of the Great Divergence is in dispute
among historians. The traditional dating is
as early as the 16th (or even 15th) century,
with scholars arguing that Europe had been
on a trajectory of higher growth since that
date. Pomeranz and others argue that the period
of most rapid divergence was during the 19th
century. Citing nutrition data and chronic
European trade deficits as evidence, these
scholars argue that before that date Asia
was wealthier and more advanced, especially
China in the Yangzi Delta and India, as well
as Egypt. Others, while accepting parity of
incomes between the most prosperous parts
of China, India, Egypt and Europe in the late
18th century, trace the first significant
changes in European economies back to the
17th century. Others argue that the cultural
factors behind the divergence can be traced
to earlier periods and institutions such as
the Renaissance and the Chinese imperial examination
system.
== Conditions in pre-Great Divergence cores
==
Unlike modern industrial economies, pre-modern
economies were constrained by conditions which
greatly limited economic growth. Although
core regions in Eurasia had achieved a relatively
high standard of living by the 18th century,
shortages of land, soil degradation, deforestation,
lack of dependable energy sources, and other
ecological constraints limited growth in per
capita incomes. Rapid rates of depreciation
on capital meant that a great part of savings
in pre-modern economies were spent on replacing
depleted capital, hampering capital accumulation.
Massive windfalls of fuel, land, food and
other resources were necessary for continued
growth and capital accumulation, leading to
colonialism.
The Industrial Revolution overcame these restraints,
allowing rapid, sustained growth in per capita
incomes for the first time in human history.
=== Western Europe ===
After the Viking, Muslim and Magyar invasions
waned in the 10th century, Europe entered
a period of prosperity, population growth
and territorial expansion known as the High
Middle Ages.
Trade and commerce revived, with increased
specialization between areas and between the
countryside and artisans in towns.
By the 13th century the best land had been
occupied and agricultural income began to
fall, though trade and commerce continued
to expand, especially in Venice and other
northern Italian cities.
The 14th century brought a series of calamities:
famines, wars, the Black Death and other epidemics.
The resulting drop in the population led to
falling rents and rising wages, undermining
the feudal and manorial relationships that
had characterized Medieval Europe.According
to a 2014 study, "there was a ‘little divergence’
within Europe between 1300 and 1800: real
wages in the North Sea area more or less stabilized
at the level attained after the Black Death,
and remained relatively high (above subsistence)
throughout the early modern period (and into
the nineteenth century); whereas, on the other
hand, real wages in the ‘periphery’ (in
Germany, Italy, and Spain) began to fall after
the fifteenth century and returned to some
kind of subsistence minimum during the 1500–1800
period. This ‘little divergence’ in real
wages mirrors a similar divergence in GDP
per capita: in the ‘periphery’ of Europe
there was almost no per capita growth (or
even a decline) between 1500 and 1800, whereas
in Holland and England real income continued
to rise and more or less doubled in this period."In
the Age of Exploration navigators discovered
new routes to the Americas and Asia.
Commerce expanded, together with innovations
such as joint stock companies and various
financial institutions.
New military technologies favored larger units,
leading to a concentration of power in states
whose finances relied on trade.
France and Spain developed absolute monarchies
reliant on high taxes and state-backed monopolies,
leading to economic decline.
The Dutch Republic was controlled by merchants,
while Parliament gained control of England
after a long struggle culminating in the Glorious
Revolution.
These arrangements proved more hospitable
to economic development.
At the end of the 16th century London and
Antwerp began pulling away from other European
cities, as illustrated in the following graph
of real wages in several European cities:
The West had a series of unique advantages
compared to Asia, such as the proximity of
coal mines; the discovery of the New World,
which alleviated ecological restraints on
economic growth (land shortages etc.); and
the profits from colonization.
=== China ===
China had a larger population than Europe
throughout the Common Era.
Unlike Europe, it was politically united for
long periods during that time.
During the Song Dynasty (960–1279), the
country experienced a revolution in agriculture,
water transport, finance, urbanization, science
and technology, which made the Chinese economy
the most advanced in the world from about
1100. Mastery of wet-field rice cultivation
opened up the hitherto underdeveloped south
of the country, while later northern China
was devastated by Jurchen and Mongol invasions,
floods and epidemics. The result was a dramatic
shift in the center of population and industry
from the home of Chinese civilization around
the Yellow River to the south of the country,
a trend only partially reversed by the re-population
of the north from the 15th century. By 1300,
China had fallen behind Italy in living standards.In
the late imperial period (1368–1911), comprising
the Ming and Qing dynasties, taxation was
low, and the economy and population grew significantly,
though without substantial increases in productivity.
Chinese goods such as silk, tea and ceramics
were in great demand in Europe, leading to
an inflow of silver, expanding the money supply
and facilitating the growth of competitive
and stable markets.
By the end of the 18th century, population
density levels exceeded those in Europe. China
had more large cities but far fewer small
ones than in contemporary Europe. The traditional
view is that the Great Divergence between
China and Europe had begun by 1750, before
the Industrial Revolution. Revisionist scholarship,
however, estimates that the Great Divergence
did not begin until the 19th century, during
the Industrial Revolution.
=== India ===
By the 1500s, India benefited from extensive
external and internal trade. Its agriculture
was highly efficient as well as its industry.
Unlike China, Japan and western and central
Europe, India did not experience extensive
deforestation until the 19th and 20th centuries.
It thus had no pressure to move to coal as
a source of energy. From the 17th century,
cotton textiles from Mughal India became popular
in Europe, with some governments banning them
to protect their wool industries. In the 18th
century, India was the most important manufacturer
in world trade, producing about 25% of the
world's industrial output in 1750, with Mughal
Bengal in particular being globally dominant
in industries such as textile manufacturing
and shipbuilding.In early modern Europe, there
was significant demand for products from Mughal
India, particularly cotton textiles, as well
as goods such as spices, peppers, indigo,
silks, and saltpeter (for use in munitions).
European fashion, for example, became increasingly
dependent on Indian textiles and silks. In
the 17th and 18th centuries, India accounted
for 95% of British imports from Asia, and
the Bengal Subah alone accounted for 40% of
Dutch imports from Asia. Amiya Kumar Bagchi
estimates 10.3% of Bihar's populace were involved
in hand spinning thread, 2.3% weaving, and
9% in other manufacturing trades, in 1809-13,
to satisfy this demand. In contrast, there
was very little demand for European goods
in India, which was largely self-sufficient,
thus Europeans had very little to offer, except
for some woolen textiles, unprocessed metals
and a few luxury items. The trade imbalance
caused Europeans to export large quantities
of gold and silver to India in order to pay
for Indian imports.
=== Middle East ===
The Middle East was more advanced than Western
Europe in 1000 CE, on par by the middle of
the 16th century, but by 1750, leading Middle-Eastern
states had fallen behind the leading Western
European states of Britain and the Netherlands.An
example of a Middle-Eastern country that had
an advanced economy in the early 19th century
was Ottoman Egypt, which had a highly productive
industrial manufacturing sector, and per-capita
income that was comparable to leading Western
European countries such as France and higher
than that of Japan and Eastern Europe. Other
parts of the Ottoman Empire, particularly
Syria and southeastern Anatolia, also had
a highly productive manufacturing sector that
was evolving in the 19th century. In 1819,
Egypt under Muhammad Ali began programs of
state-sponsored industrialization, which included
setting up factories for weapons production,
an iron foundry, large-scale cotton cultivation,
mills for ginning, spinning and weaving of
cotton, and enterprises for agricultural processing.
By the early 1830s, Egypt had 30 cotton mills,
employing about 30,000 workers. In the early
19th century, Egypt had the world's fifth
most productive cotton industry, in terms
of the number of spindles per capita. The
industry was initially driven by machinery
that relied on traditional energy sources,
such as animal power, water wheels, and windmills,
which were also the principle energy sources
in Western Europe up until around 1870. While
steam power had been experimented with in
Ottoman Egypt by engineer Taqi ad-Din Muhammad
ibn Ma'ruf in 1551, when he invented a steam
jack driven by a rudimentary steam turbine,
it was under Muhammad Ali of Egypt in the
early 19th century that steam engines were
introduced to Egyptian industrial manufacturing.
Boilers were manufactured and installed in
Egyptian industries such as ironworks, textile
manufacturing, paper mills, and hulling mills.
Compared to Western Europe, Egypt also had
superior agriculture and an efficient transport
network through the Nile. Economic historian
Jean Batou argues that the necessary economic
conditions for rapid industrialization existed
in Egypt during the 1820s–1830s.After the
death of Muhammad Ali in 1849, his industrialization
programs fell into decline, after which, according
to historian Zachary Lockman, “Egypt was
well on its way to full integration into a
European-dominated world market as supplier
of a single raw material, cotton.” Lockman
argues that, had Egypt succeeded in its industrialization
programs, “it might have shared with Japan
[or the United States] the distinction of
achieving autonomous capitalist development
and preserving its independence.”
=== 
Japan ===
Japanese society was governed by the Tokugawa
Shogunate, which divided Japanese society
into a strict hierarchy and intervened considerably
in the economy through state monopolies and
restrictions on foreign trade; however, in
practice, the Shogunate's rule was often circumvented.
From 725-1974, Japan experienced GDP per capita
growth at an annual rate of 0.04%, with major
periods of positive per capita GDP growth
occurring during 1150-1280, 1450-1600 and
after 1730. There were no significant periods
of sustained growth reversals. Relative to
the United Kingdom, GDP per capita was at
roughly similar levels until the middle of
the 17th century. By 1850, per capita incomes
in Japan were approximately a quarter of the
British level. However, 18th-century Japan
had a higher life expectancy, 41.1 years for
adult males, compared with 31.6 to 34 for
England, between 27.5 and 30 for France, and
24.7 for Prussia.
=== Korea ===
In its earlier days, Korea had healthy international
trading relationships, receiving merchants
from as far as the Middle East. Because of
its strategic value to its neighboring countries,
however, Korea had been invaded several times
during its Goryeo and Joseon eras, starting
with the Mongol invasion in the 13th century.
Though repelled due to its strong navy and
aid from China, the Japanese invasions in
the late 16th century were particularly devastating
to the peninsula and it never truly recovered
until the modern era. Due to relatively frequent
invasions, increased Western colonization
of Asia, and the arrival of Christian missionaries,
Korea began a long period of isolationism,
maintaining diplomatic relationships primarily
with China only. For the rest of the Joseon
period, the country was marred by economic
hardships, peasant revolts, and political
factionalism until it was annexed by Japan
in the early 20th century.
=== Sub-Saharan Africa ===
Pre-colonial Sub-Saharan Africa was politically
fragmented, just as early modern Europe was.
Africa was however far more sparsely populated
than Europe. According to University of Michigan
political scientist Mark Dincecco, "the high
land/ labor ratio may have made it less likely
that historical institutional centralization
at the “national level” would occur in
sub-Saharan Africa, thwarting further state
development." The transatlantic slave trade
may have further weakened state power in Africa.
== Possible factors ==
Scholars have proposed numerous theories to
explain why the Great Divergence occurred.
=== Coal ===
In metallurgy and steam engines the Industrial
Revolution made extensive use of coal and
coke - as cheaper, more plentiful and more
efficient than wood and charcoal.
Coal-fired steam engines also operated in
the railways and in shipping, revolutionizing
transport in the early 19th century.
Kenneth Pomeranz drew attention to differences
in the availability of coal between West and
East. Due to regional climate, European coal
mines were wetter, and deep mines did not
become practical until the introduction of
the Newcomen steam engine to pump out groundwater.
In mines in the arid northwest of China, ventilation
to prevent explosions was much more difficult.Another
difference involved geographic distance; although
China and Europe had comparable mining technologies,
the distances between the economically developed
regions and coal deposits differed vastly.
The largest coal deposits in China are located
in the northwest, within reach of the Chinese
industrial core during the Northern Song (960-1127).
During the 11th century China developed sophisticated
technologies to extract and use coal for energy,
leading to soaring iron production. The southward
population shift between the 12th and 14th
centuries resulted in new centers of Chinese
industry far from the major coal deposits.
Some small coal deposits were available locally,
though their use was sometimes hampered by
government regulations. In contrast, Britain
contained some of the largest coal deposits
in Europe - all within a relatively compact
island.
Ottoman Egypt, which used steam power for
industrial manufacturing under Muhammad Ali
Pasha (ruled 1805-1848), had a lack of coal
resources. However, Muhammad Ali Pasha's prospectors
searched for coal deposits, and boilers were
manufactured and installed in various industries.
Egypt also imported coal from overseas, at
similar prices to what imported coal cost
in France, until the 1830s, when Cairo gained
access to coal sources in Lebanon, which had
a yearly coal output of 4,000 tons. Economic
historian Jean Batou argues that, in addition
to having the necessary conditions for rapid
industrialization, Egypt also had the necessary
conditions for the adoption of oil as a potential
energy source for its steam engines later
in the 19th century.
=== Efficiency of markets and state intervention
===
A common argument is that Europe had more
free and efficient markets than other civilizations,
which has been cited as a reason for the Great
Divergence. In Europe, market efficiency was
disrupted by the prevalence of feudalism and
mercantilism. Practices such as entail, which
restricted land ownership, hampered the free
flow of labor and buying and selling of land.
These feudal restrictions on land ownership
were especially strong in continental Europe.
China had a relatively more liberal land market,
hampered only by weak customary traditions.
Bound labor, such as serfdom and slavery were
more prevalent in Europe than in China, even
during the Manchu conquest. Urban industry
in the West was more restrained by guilds
and state-enforced monopolies than in China,
where in the 18th century the principal monopolies
governed salt and foreign trade through Guangzhou.
Pomeranz rejects the view that market institutions
were the cause of the Great Divergence, and
concludes that China was closer to the ideal
of a market economy than Europe.Economic historian
Paul Bairoch presents a contrary argument,
that Western countries such as the United
States, Britain and Spain did not initially
have free trade, but had protectionist policies
in the early 19th century, as did China and
Japan. In contrast, he cites the Ottoman Empire
as an example of a state that did have free
trade, which he argues had a negative economic
impact and contributed to its deindustrialization.
The Ottoman Empire had a liberal trade policy,
open to foreign imports, which has origins
in capitulations of the Ottoman Empire, dating
back to the first commercial treaties signed
with France in 1536 and taken further with
capitulations in 1673 and 1740, which lowered
duties to only 3% for imports and exports.
The liberal Ottoman policies were praised
by British economists advocating free trade,
such as J. R. McCulloch in his Dictionary
of Commerce (1834), but later criticized by
British politicians opposing free trade, such
as prime minister Benjamin Disraeli, who cited
the Ottoman Empire as "an instance of the
injury done by unrestrained competition" in
the 1846 Corn Laws debate:
There has been free trade in Turkey, and what
has it produced? It has destroyed some of
the finest manufactures of the world. As late
as 1812 these manufactures existed; but they
have been destroyed. That was the consequences
of competition in Turkey, and its effects
have been as pernicious as the effects of
the contrary principle in Spain.
=== State prohibition of new technology ===
Jared Diamond in the book Guns, Germs, and
Steel argues that explicit outlawing of new
technology was an important explanation for
the divergence. For example, in China in 1432,
a new Emperor outlawed the building of ocean-going
ships, in which China was the world leader
at the time. Diamond traces this to differences
in geography. Outside Europe advanced cultures
developed in areas whose geography was conducive
to large, monolithic, isolated empires. In
these conditions policies of technological
and social stagnation could persist. On the
other hand, Europe's geography favored balkanization
into smaller, closer, nation-states, as its
many natural barriers (mountains, rivers)
provide defensible borders. As a result, governments
that suppressed economic and technological
progress soon corrected their mistakes or
were out-competed relatively quickly. He argues
that geographical factors created the conditions
for more rapid internal superpower change
(Spain succeeded by France and then by the
United Kingdom) than was possible elsewhere
in Eurasia.
=== Innovation ===
Beginning in the early 19th century, economic
prosperity rose greatly in the West due to
improvements in technological efficiency,
as evidenced by the advent of new conveniences
including the railroad, steamboat, steam engine,
and the use of coal as a fuel source. These
innovations contributed to the Great Divergence,
elevating Europe and the United States to
high economic standing relative to the East.It
has been argued the attitude of the East towards
innovation is one of the other factors that
might have played a big role in the West's
advancements over the East. According to David
Landes, after a few centuries of innovations
and inventions, it seemed like the East stopped
trying to innovate and began to sustain what
they had. They kept nurturing their pre-modern
inventions and did not move forward with the
modern times. China decided to continue a
self-sustaining process of scientific and
technological advancement on the basis of
their indigenous traditions and achievements.
The East’s attitude towards innovation showed
that they focused more on experience, while
the West focused on experimentation. The East
did not see the need to improve on their inventions
and thus from experience, focused on their
past successes. While they did this, the West
was focused more on experimentation and trial
by error, which led them to come up with new
and different ways to improve on existing
innovations and create new ones.In the early
19th century, Egypt under Muhammad Ali began
a program of state-sponsored industrialization,
quick to adopt steam engine technology, and
manufacturing boilers for installation in
a number of industries, including ironworks,
textile manufacturing, paper mills, and hulling
mills. While there was a lack of coal deposits
in Egypt, Muhammad Ali Pasha's prospectors
searched for coal deposits in Egypt while
importing coal from overseas at similar prices
to what imported coal cost in France, until
the 1830s when Egypt gained access to coal
sources in Lebanon with its yearly coal output
of 4,000 tons. Economic historian Jean Batou
argues that Egypt had the necessary economic
conditions for rapid industrialization in
the early 19th century, and for the adoption
of oil as a potential energy source for its
steam engines later in the 19th century.
=== Wages and living standards ===
Classical economists, beginning with Adam
Smith and Thomas Malthus, argued that high
wages in the West stimulated labor-saving
technological advancements. Economic historian
Robert Allen has argued that high wages, cheap
capital and very cheap energy in Britain made
it the ideal place for the industrial revolution
to occur. These factors made it vastly more
profitable to invest in research and development,
and to put technology to use in Britain than
other societies.However, more recent studies
have depicted living standards in 18th century
China and pre-Industrial Revolution Europe
as comparable. Life expectancy in China and
Japan for adult males were 39.6 and 41.1 respectively,
compared with 34 for England, between 27.5
and 30 for France, and 24.7 for Prussia. Chinese
laborers in the Yangtze delta consumed 4,600
calories per day on average (laborers in China
overall consumed 2,637 calories on average)
compared with 2,000-2,500 calories per day
for England. According to Pomeranz and others,
there was modest per capita growth in both
regions, the Chinese economy was not stagnant,
and in many areas, especially agriculture,
was ahead of Western Europe. Chinese cities
were also ahead in public health. Economic
historian Paul Bairoch estimated that China's
GNP per capita in 1800 was $228 in 1960 US
dollars ($1,007 in 1990 dollars), higher than
Western Europe's $213 ($941 in 1990 dollars)
at the time.There have been similar findings
for India. Real wages and living standards
in 18th-century Bengal and Mysore were higher
than in Britain, which in turn had the highest
living standards in Europe. Workers in the
textile industry, for example, earned more
in Bengal and Mysore than they did in Britain,
while agricultural labour in Britain had to
work longer hours to earn the same amount
as in Mysore. In the late 18th century, Mysore's
average per-capita income was five times higher
than subsistence level, i.e. five times higher
than $400 (1990 international dollars), or
$2,000 per capita. In comparison, the highest
national per-capita incomes in 1820 were $1,838
for the Netherlands and $1,706 for Britain.Similarly
for Ottoman Egypt, its per-capita income in
1800 was comparable to that of leading Western
European countries such as France, and higher
than the overall average income of Europe
and Japan. Economic historian Jean Barou estimated
that, in terms of 1960 dollars, Egypt in 1800
had a per-capita income of $232 ($1,025 in
1990 dollars). In comparison, per-capita income
in terms of 1960 dollars for France in 1800
was $240 ($1,060 in 1990 dollars), for Eastern
Europe in 1800 was $177 ($782 in 1990 dollars),
and for Japan in 1800 was $180 ($795 in 1990
dollars).According to Paul Bairoch, in the
mid-18th century, "the average standard of
living in Europe was a little bit lower than
that of the rest of the world." He estimated
that, in 1750, the average GNP per capita
in the Eastern world (particularly China,
India and the Middle East) was $188 in 1960
dollars ($830 in 1990 dollars), higher than
the West's $182 ($804 in 1990 dollars). He
argues that it was after 1800 that Western
European per-capita income pulled ahead. However,
the average incomes of China and Egypt were
still higher than the overall average income
of Europe.
=== European colonialism ===
A number of economic historians have argued
that European colonialism played a major role
in the deindustrialization of non-Western
societies. Paul Bairoch, for example, cites
British colonialism in India as a primary
example, but also argues that European colonialism
played a major role in the deindustrialization
of other countries in Asia, the Middle East,
and Latin America, and contributed to a sharp
economic decline in Africa. Other modern economic
historians have blamed British colonial rule
for India's deindustrialization in particular.
The colonization of India is seen as a major
factor behind both India's deindustrialization
and Britain's Industrial Revolution.Up until
the 19th century, India was the world's leading
cotton textile manufacturer, with Bengal and
Mysore the centers of cotton production. In
order to compete with India, Britain invested
in labour-saving technical progress for textile
manufacture during the Industrial Revolution,
while implementing protectionist policies
such as bans and tariffs to restrict Indian
imports. At the same time, the British East
India Company's rule in India contributed
to its deindustrialization, with the decline
of native industry opening up a new market
for British goods. British colonization forced
open the large Indian market to British goods
while restricting Indian imports to Britain,
and raw cotton was imported from India without
taxes or tariffs to British factories which
manufactured textiles from Indian cotton and
sold them back to the Indian market. India
thus served as both an important supplier
of raw goods such as cotton to British factories
and a large captive market for British manufactured
goods. In addition, the capital amassed from
Bengal following its conquest after the Battle
of Plassey in 1757 was used to invest in British
industries such as textile manufacturing and
greatly increase British wealth. Britain eventually
surpassed India as the world's leading cotton
textile manufacturer in the 19th century.
British colonial rule has been blamed for
the subsequently dismal state of British India's
economy, with investment in Indian industries
limited since it was a colony.
=== Luxury consumption ===
Luxury consumption is regarded by many scholars
to have stimulated the development of capitalism
and thus contributed to the Great Divergence.
Proponents of this view argue that workshops,
which manufactured luxury articles for the
wealthy, gradually amassed capital to expand
their production and then emerged as large
firms producing for a mass market; they believe
that Western Europe's unique tastes for luxury
stimulated this development further than other
cultures. However, others counter that luxury
workshops were not unique to Europe; large
cities in China and Japan also possessed many
luxury workshops for the wealthy, and that
luxury workshops do not necessarily stimulate
the development of "capitalistic firms".
=== Property rights ===
Differences in property rights have been cited
as a possible cause of the Great Divergence.
This view states that Asian merchants could
not develop and accumulate capital because
of the risk of state expropriation and claims
from fellow kinsmen, which made property rights
very insecure compared to those of Europe.
However, others counter that many European
merchants were de facto expropriated through
defaults on government debt, and that the
threat of expropriation by Asian states was
not much greater than in Europe, except in
Japan.Government and policies are seen as
an integral part of modern societies and have
played a major role in how different economies
have been formed. The Eastern societies had
governments which were controlled by the ruling
dynasties and thus, were not a separate entity.
Their governments at the time lacked policies
that fostered innovation and thus resulted
in slow advancements. As explained by Cohen,
the east had a restrictive system of trade
that went against the free world market theory;
there was no political liberty or policies
that encouraged the capitalist market (Cohen,
1993). This was in contrast to the western
society that developed commercial laws and
property rights which allowed for the protection
and liberty of the marketplace. Their capitalist
ideals and market structures encouraged innovation.Pomeranz
(2000) argues that much of the land market
in China was free, with many supposedly hereditary
tenants and landlords being frequently removed
or forced to sell their land. Although Chinese
customary law specified that people within
the village were to be offered the land first,
Pomeranz states that most of the time the
land was offered to more capable outsiders,
and argues that China actually had a freer
land market than Europe.
Pomeranz does not address the most common
form of land sale, known as the conditional
sale. The conditional sale allowed the seller
to return to the buyer many years after the
sale, and many times, to demand extra payments.
He also does not account for the inability
of landlords to collect rent on second crops.However,
Robert Brenner and Chris Isett emphasize differences
in land tenancy rights. They argue that in
the lower Yangtze, most farmers either owned
land or held secure tenancy at fixed rates
of rent, so that neither farmers nor landlords
were exposed to competition. In 15th century
England, lords had lost their serfs, but were
able to assert control over almost all of
the land, creating a rental market for tenant
farmers. This created competitive pressures
against subdividing plots, and the fact that
plots could not be directly passed on to sons
forced them to delay marriage until they had
accumulated their own possessions. Thus in
England both agricultural productivity and
population growth were subject to market pressures
throughout the early modern period.A 2017
study found that secure property rights in
Europe, but not in large parts of the Middle-East,
contributed to the increase of expensive labour-saving
capital goods, such as water-mills, windmills,
and cranes, in medieval Europe but its decrease
in the Middle-East.
=== New World ===
A variety of theories posit Europe's unique
relationship with the New World as a major
cause of the Great Divergence. The high profits
earned from the colonies and the slave trade
constituted 7 percent a year, a relatively
high rate of return considering the high rate
of depreciation on pre-industrial capital
stocks, which limited the amount of savings
and capital accumulation. Early European colonization
was sustained by profits through selling New
World goods to Asia, especially silver to
China. According to Pomeranz, the most important
advantage for Europe was the vast amount of
fertile, uncultivated land in the Americas
which could be used to grow large quantities
of farm products required to sustain European
economic growth and allowed labor and land
to be freed up in Europe for industrialization.
New World exports of wood, cotton, and wool
are estimated to have saved England the need
for 23 to 25 million acres (100,000 km2) of
cultivated land (by comparison, the total
amount of cultivated land in England was just
17 million acres), freeing up immense amounts
of resources. The New World also served as
a market for European manufactures.Chen (2012)
also suggested that the New World as a necessary
factor for industrialization, and trade as
a supporting factor causing less developed
areas to concentrate on agriculture supporting
industrialized regions in Europe.
=== High-level equilibrium trap ===
The high-level equilibrium trap theory argues
that China did not undergo an indigenous industrial
revolution since its economy was in a stable
equilibrium, where supply and demand for labor
were equal, disincentivizing the development
of labor-saving capital.
=== Culture ===
Rosenberg and Birdzell claims that the so-called
"eastern culture" of "respect" and "unquestionable
devotion" to the ruling dynasty was as a result
of a culture where the control of the dynasty
led to a "silent society" that "did not ask
questions or experiment without the approval
or order from the ruling class". On the other
hand, they claimed that the West of the late
medieval era did not have a central authority
or absolute state, which allowed for a free
flow of ideas (Rosenberg, Birdzell, 1986).
This so-called "eastern culture" also supposedly
showed a "dismissal of change" due to their
"fear of failure" and disregard for the imitation
of outside inventions and science; this was
different from the "western culture" which
they claimed to be willing to experiment and
imitate others to benefit their society. They
claimed that this was a culture where change
was encouraged, and sense of anxiety and disregard
for comfort led them to be more innovative.
Max Weber argued in The Protestant Ethic and
the Spirit of Capitalism that capitalism in
northern Europe evolved when the Protestant
work ethic (particularly Calvinist) influenced
large numbers of people to engage in work
in the secular world, developing their own
enterprises and engaging in trade and the
accumulation of wealth for investment. In
his book The Religion of China: Confucianism
and Taoism he blames Chinese culture for the
non-emergence of capitalism in China. Chen
(2012) similarly claims that cultural differences
were the most fundamental cause for the divergence,
arguing that the Humanism of the Renaissance
followed by the Enlightenment (including revolutionary
changes in attitude towards religion) enabled
a mercantile, innovative, individualistic,
and capitalistic spirit. For Ming Dynasty
China, he claims there existed repressive
measures which stifled dissenting opinions
and nonconformity. He claimed that Confucianism
taught that disobedience to one's superiors
was supposedly tantamount to "sin". In addition
Chen claimed that merchants and artificers
had less prestige than they did in Western
Europe. Justin Yifu Lin has argued for the
role of the imperial examination system in
removing the incentives for Chinese intellectuals
to learn mathematics or to conduct experimentation.However,
many scholars who have studied Confucian teachings
have criticized the claim that the philosophy
promoted unquestionable loyalty to one's superiors
and the state. The core of Confucian philosophy
itself was already Humanistic and Rationalistic;
it "[does] not share a belief in divine law
and [does] not exalt faithfulness to a higher
law as a manifestation of divine will."One
of the central teachings of Confucianism is
that one should remonstrate with authority.
Many Confucians throughout history disputed
their superiors in order to not only prevent
the superiors and the rulers from wrongdoing,
but also to maintain the independent spirits
of the Confucians.Furthermore, the merchant
class of China throughout all of Chinese history
were usually wealthy and held considerable
influence above their supposed social standing.
Historians like Yu Yingshi and Billy So have
shown that as Chinese society became increasingly
commercialized from the Song dynasty onward,
Confucianism had gradually begun to accept
and even support business and trade as legitimate
and viable professions, as long as merchants
stayed away from unethical actions. Merchants
in the meantime had also benefited from and
utilized Confucian ethics in their business
practices. By the Song period, the Scholar-officials
themselves were using intermediary agents
to participate in trading.
This is true especially in the Ming-Qing dynasties,
when the social status of merchants had rose
to such significance that by the late Ming
period, many scholar-officials were unabashed
to declare publicly in their official family
histories that they had family members who
were merchants. Consequently, while Confucianism
did not actively promote profit seeking, it
did not hinder China’s commercial development
either.
Of the developed cores of the Old world, India
was distinguished by its caste system of bound
labor, which hampered economic and population
growth and resulted in relative underdevelopment
compared to other core regions. Compared with
other developed regions, India still possessed
large amounts of unused resources. India's
caste system gave an incentive to elites to
drive their unfree laborers harder when faced
with increased demand, rather than invest
in new capital projects and technology. The
Indian economy was characterized by vassal-lord
relationships, which weakened the motive of
financial profit and the development of markets;
a talented artisan or merchant could not hope
to gain much personal reward. Pomeranz argues
that India was not a very likely site for
an industrial breakthrough, despite its sophisticated
commerce and technologies.Aspects of Islamic
law have been proposed as an argument for
the divergence for the Muslim world. Economist
Timur Kuran argues that Islamic institutions
which had at earlier stages promoted development
later started preventing more advanced development
by hampering formation of corporations, capital
accumulation, mass production, and impersonal
transactions. Other similar arguments proposed
include the gradual prohibition of independent
religious judgements (Ijtihad) and a strong
communalism which limited contacts with outside
groups and the development of institutions
dealing with more temporary interactions of
various kinds, according to Kuran. According
to historian Donald Quataert, however, the
Ottoman Middle East's manufacturing sector
was highly productive and evolving in the
19th century. Quataert criticizes arguments
rooted in Orientalism, such as "now-discredited
stereotypes concerning the inferiority of
Islam", economic institutions having stopped
evolving after the Islamic Golden Age, and
decline of Ijtihad in religion negatively
affecting economic evolution. Economic historian
Paul Bairoch noted that Ottoman law promoted
liberal free trade earlier than Britain and
the United States, arguing that free trade
had a negative economic impact on the Ottoman
Empire and contributed to its deindustrialization,
in contrast to the more protectionist policies
of Britain and the United States in the early
19th century.In his book A Farewell to Alms,
Gregory Clark argues that the human psychological
traits (such as literacy, numeracy, and delayed
gratification) needed for the divergence spread
in England between 1200 and 1800 "at least
culturally and perhaps also genetically".
A shorter online version of Clark's work can
be found here: http://faculty.econ.ucdavis.edu/faculty/gclark/papers/Capitalism%20Genes.pdf
=== 
Political fragmentation ===
Economic historian Joel Mokyr has argued that
political fragmentation (the presence of a
large number of European states) made it possible
for heterodox ideas to thrive, as entrepreneurs,
innovators, ideologues and heretics could
easily flee to a neighboring state in the
event that the one state would try to suppress
their ideas and activities. This is what set
Europe apart from the technologically advanced,
large unitary empires such as China. China
had both a printing press and movable type,
yet the industrial revolution would occur
in Europe. In Europe, political fragmentation
was coupled with an "integrated market for
ideas" where Europe's intellectuals used the
lingua franca of Latin, had a shared intellectual
basis in Europe's classical heritage and the
pan-European institution of the Republic of
Letters.
Economic historian Tuan-Hwee Sng has argued
that the large size of the Chinese state contributed
to its relative decline in the 19th century:The
vast size of the Chinese empire created a
severe principal-agent problem and constrained
how the country was governed. In particular,
taxes had to be kept low due to the emperor's
weak oversight of his agents and the need
to keep corruption in check. The Chinese state's
fiscal weaknesses were long masked by its
huge tax base. However, economic and demographic
expansion in the eighteenth century exacerbated
the problems of administrative control. This
put a further squeeze on the nation's finances
and left China ill-prepared for the challenges
of the nineteenth century.One reason why Japan
was able to modernize and adopt the technologies
of the West was due to its much smaller size
relative to China.The historian Jeffrey G.
Williamson has argued that India went through
a period of deindustrialization in the latter
half of the 18th century as an indirect outcome
of the collapse of the Mughal Empire, with
British rule later causing further deindustrialization.
According to Williamson, the decline of the
Mughal Empire led to a decline in agricultural
productivity, which drove up food prices,
then nominal wages, and then textile prices,
which led to India losing a share of the world
textile market to Britain even before it had
superior factory technology, though Indian
textiles still maintained a competitive advantage
over British textiles up until the 19th century.
Economic historian Prasannan Parthasarathi,
however, has argued that there wasn't any
such economic decline for several post-Mughal
states, notably Bengal Subah and the Kingdom
of Mysore, which were comparable to Britain
in the late 18th century, until British colonial
policies caused deindustrialization.
Stanford political scientist Gary W. Cox argues
in a 2017 study,that Europe's political fragmentation
interacted with her institutional innovations
to foster substantial areas of “economic
liberty,” where European merchants could
organize production freer of central regulation,
faced fewer central restrictions on their
shipping and pricing decisions, and paid lower
tariffs and tolls than their counterparts
elsewhere in Eurasia. When fragmentation afforded
merchants multiple politically independent
routes on which to ship their goods, European
rulers refrained from imposing onerous regulations
and levying arbitrary tolls, lest they lose
mercantile traffic to competing realms. Fragmented
control of trade routes magnified the spillover
effects of political reforms. If parliament
curbed arbitrary regulations and tolls in
one realm, then neighboring rulers might have
to respond in kind, even if they themselves
remained without a parliament. Greater economic
liberty, fostered by the interaction of fragmentation
and reform, unleashed faster and more inter-connected
urban growth. Justin Yifu Lin argued that
China's large population size proved beneficial
in technological advancements prior to the
14th century, but that the large population
size was not an important factor in the kind
of technological advancements that resulted
in the Industrial Revolution. Early technological
advancements depended on "learning by doing"
(where population size was an important factor,
as advances could spread over a large political
unit), whereas the Industrial Revolution was
the result of experimentation and theory (where
population size is less important.
=== Representative government ===
A number of economists have argued that representative
government was a factor in the Great Divergence.
The argue that absolutist governments, where
rulers are not broadly accountable, are bad
for property rights and innovation, and that
they are prone to corruption and rent-seeking.
Representative governments however were accountable
to broader segments of the population and
thus had to protect property rights and not
rule in arbitrary ways, which caused economic
prosperity.
=== Globalization ===
A 2017 study in the American Economic Review
found that "globalization was the major driver
of the economic divergence between the rich
and the poor portions of the world in the
years 1850-1900." The states that benefited
from globalization were "characterised by
strong constraints on executive power, a distinct
feature of the institutional environment that
has been demonstrated to favour private investment."
=== Chance ===
A number of economic historians have posited
that the Industrial Revolution may have partly
occurred where and when it did due to luck
and chance.
== Economic effects ==
The Old World methods of agriculture and production
could only sustain certain lifestyles. Industrialization
dramatically changed the European economy
and allowed it to attain much higher levels
of wealth and productivity than the other
Old World cores. Although Western technology
later spread to the East, differences in uses
preserved the Western lead and accelerated
the Great Divergence.
=== Productivity ===
When analyzing comparative use-efficiency,
the economic concept of total factor productivity
(TFP) is applied to quantify differences between
countries. TFP analysis controls for differences
in energy and raw material inputs across countries
and is then used to calculate productivity.
The difference in productivity levels, therefore,
reflects efficiency of energy and raw materials
use rather than the raw materials themselves.
TFP analysis has shown that Western countries
had higher TFP levels on average in the 19th
century than Eastern countries such as India
or China, showing that Western productivity
had surpassed the East.
=== Per capita income ===
Some of the most striking evidence for the
Great Divergence comes from data on per capita
income. The West's rise to power directly
coincides with per capita income in the West
surpassing that in the East. This change can
be attributed largely to the mass transit
technologies, such as railroads and steamboats,
that the West developed in the 19th century.
The construction of large ships, trains, and
railroads greatly increased productivity.
These modes of transport made moving large
quantities of coal, corn, grain, livestock
and other goods across countries more efficient,
greatly reducing transportation costs. These
differences allowed Western productivity to
exceed that of other regions.Economic historian
Paul Bairoch has estimated the GDP per capita
of several major countries in 1960 US dollars
after the Industrial Revolution in the early
19th century, as shown below.
His estimates show that the GDP per capita
of Western European countries rose rapidly
after industrialization.
For the 18th century, and in comparison to
non-European regions, Bairoch in 1995 stated
that, in the mid-18th century, "the average
standard of living in Europe was a little
bit lower than that of the rest of the world."
=== Agriculture ===
Before and during the early 19th century,
much of continental European agriculture was
underdeveloped compared to Asian Cores and
England. This left Europe with abundant idle
natural resources. England, on the other hand,
had reached the limit of its agricultural
productivity well before the beginning of
the 19th century. Rather than taking the costly
route of improving soil fertility, the English
increased labor productivity by industrializing
agriculture. From 1750 to 1850, European nations
experienced population booms; however, European
agriculture was barely able to keep pace with
the dietary needs. Imports from the Americas,
and the reduced caloric intake required by
industrial workers compared to farmers allowed
England to cope with the food shortages. By
the turn of the 19th century, much European
farmland had been eroded and depleted of nutrients.
Fortunately, through improved farming techniques,
the import of fertilizers, and reforestation,
Europeans were able to recondition their soil
and prevent food shortages from hampering
industrialization. Meanwhile, many other formerly
hegemonic areas of the world were struggling
to feed themselves – notably China.
=== Fuel and resources ===
The global demand for wood, a major resource
required for industrial growth and development,
was increasing in the first half of the 19th
century. A lack of interest of silviculture
in Western Europe, and a lack of forested
land, caused wood shortages. By the mid-19th
century, forests accounted for less than 15%
of land use in most Western European countries.
Fuel costs rose sharply in these countries
throughout the 18th century and many households
and factories were forced to ration their
usage, and eventually adopt forest conservation
policies. It was not until the 19th century
that coal began providing much needed relief
to the European energy shortage. China had
not begun to use coal on a large scale until
around 1900, giving Europe a huge lead on
modern energy production.Through the 19th
century, Europe had vast amounts of unused
arable land with adequate water sources. However,
this was not the case in China; most idle
lands suffered from a lack of water supply,
so forests had to be cultivated. Since the
mid-19th century, northern China's water supplies
have been declining, reducing its agricultural
output. By growing cotton for textiles, rather
than importing, China exacerbated its water
shortage.
During the 19th century, supplies of wood
and land decreased considerably, greatly slowing
growth of Chinese per capita incomes.
=== Trade ===
During the era of European imperialism, periphery
countries were often set up as specialized
producers of specific resources. Although
these specializations brought the periphery
countries temporary economic benefit, the
overall effect inhibited the industrial development
of periphery territories. Cheaper resources
for core countries through trade deals with
specialized periphery countries allowed the
core countries to advance at a much greater
pace, both economically and industrially,
than the rest of the world.Europe's access
to a larger quantity of raw materials and
a larger market to sell its manufactured goods
gave it a distinct advantage through the 19th
century. In order to further industrialize,
it was imperative for the developing core
areas to acquire resources from less densely
populated areas, since they lacked the lands
required to supply these resources themselves.
Europe was able to trade manufactured goods
to their colonies, including the Americas,
for raw materials. The same sort of trading
could be seen throughout regions in China
and Asia, but colonization brought a distinct
advantage to the West. As these sources of
raw materials began to proto-industrialize,
they would turn to import substitution, depriving
the hegemonic nations of a market for their
manufactured goods. Since European nations
had control over their colonies, they were
able to prevent this from happening. Britain
was able to use import substitution to its
benefit when dealing with textiles from India.
Through industrialization, Britain was able
to increase cotton productivity enough to
make it lucrative for domestic production,
and overtake India as the world's leading
cotton supplier. Although Britain had limited
cotton imports to protect its own industries,
they allowed cheap British products into colonial
India from the early 19th century. The colonial
administration failed to promote Indian industry,
preferring to export raw materials.Western
Europe was also able to establish profitable
trade with Eastern Europe. Countries such
as Prussia, Bohemia and Poland had very little
freedom in comparison to the West; forced
labor left much of Eastern Europe with little
time to work towards proto-industrialization
and ample manpower to generate raw materials.
=== Guilds and journeymanship ===
A 2017 study in the Quarterly Journal of Economics
argued, "medieval European institutions such
as guilds, and specific features such as journeymanship,
can explain the rise of Europe relative to
regions that relied on the transmission of
knowledge within closed kinship systems (extended
families or clans)". Guilds and journeymanship
were superior for creating and disseminating
knowledge, which contributed to the occurrence
of the Industrial Revolution in Europe.
== See also ==
Colonial empire
Western empires
Modern history
History of Western civilization
Textile manufacture during the Industrial
Revolution
Economic history of China (pre-1911)
Joseph Needham
Eurocentrism
=== Books ===
A Farewell to Alms
Before and Beyond Divergence
The Clash of Civilizations
Civilization: The West and the Rest
The Civilizing Process
The European Miracle
Great Divergence and Great Convergence
The Great divergence: China, Europe, and the
making of the modern world economy
Guns, Germs, and Steel
The Rise and Fall of the Great Powers
The Rise of the West: A History of the Human
Community
The Wealth and Poverty of Nations
Why the West Rules—For Now
The Eastern Origins of Western Civilisation
== References ==
=== Works cited ===
== Further reading ==
Ray, Indrajit (2011). Bengal Industries and
the British Industrial Revolution (1757-1857).
Routledge. ISBN 978-1136825521.
Scheidel, Walter (2008). "From the 'Great
Convergence' to the 'First Great Divergence':
Roman and Qin-Han State Formation and its
Aftermath". SSRN Electronic Journal: 11–23.
doi:10.2139/ssrn.1096433. ISSN 1556-5068.
Grinin, Leonid; Korotayev, Andrey (2015).
Great Divergence and Great Convergence. A
Global Perspective. Springer. ISBN 9783319177793.
== External links ==
The Maddison-Project – Estimates of economic
growth between 1 and 2010
