Introduction: Economic Growth, Cultural Change, and the Making of the Modern World

THE PROBLEM OF WESTERN WEALTH AND WHERE IT CAME FROM

At some point in the not-too-distant past, a watershed occurred in world history, which some have called the “great divergence” (Pomeranz 2000). In the Middle Ages, tales of the fabulous wealth of the East – China and the Indies – dazzled Europeans. From the stories of Marco Polo to the stream of silks, porcelains, jewels, and other luxuries flowing along the Silk Road of trade routes through the Middle East, Asia seemed to be the font of wealth. From Constantinople to Cathay, Europeans believed that vast populations, stunning cities, and swarms of traders produced unimaginable wealth. Finding a way to reach and obtain a share of that wealth became the goal of Europe’s states, and its most daring explorers, in the fourteenth through nineteenth centuries. Yet by the twentieth century, this relationship had been profoundly reversed. Instead of bywords for wealth, the vast populations of China and India became known for horrific poverty. At the beginning of the twenty-first century, while the populations of the United States and the leading European nations enjoy per capita output of roughly $100 (U.S.) per day, tens of millions of east and south Asians subsist on incomes of two or three percent of that amount. Instead of daring explorers seeking the riches of the East, we now see daring streams of immigrants from Asia seeking their way to the riches of the West.

Whether this great change, and the yawning gap that has opened between the wealth of the West and the poverty of the East, is seen as source of pride or guilt by those in the West, explaining the change itself remains perhaps the central question facing the social sciences today. Whether in history, economics, political science, or sociology, scholars have been seeking to explain how the West grew rich, and to distill lessons from that experience that might help impoverished populations in other regions of the world.

Yet so far, the social sciences have not succeeded as well as we would hope. Theories and explanations of the divergent trajectories of the West and “the rest” have emerged and multiplied, so that instead of a clear explanation, we have many conflicting points of view that seemingly give opposed and contradictory accounts of this change. As we shall see below, we have explanations based on institutions, on culture, on geography, on demography, and other factors. In practical terms, all of the policy prescriptions for economic development outside the West based on such theories have failed to close the gap between the West and the rest. Although living standards have generally risen around the world,

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mainly due to the spread of Western-produced medicines, food crops, and fertilizers, the internal generation of exponential economic growth still seems elusive for many peoples and nations. While a few non-Western nations have achieved spectacular economic success, such as Japan, parts of China and islands of Chinese (including Hong Kong, Singapore and Taiwan), and South Korea, many more nations remain mired in poverty. Despite decades of efforts involving global banking and lending institutions and international foreign aid, the populations of Africa, the Middle East, South and Southeast Asia, Central Asia, and Latin America still face a yawning gap between their economic productivity and that of the leading nations of the West (Birdsall 2002). Attacks have been launched – both in street protests and in academic circles – against precisely those experts and institutions that are held to best embody our practical wisdom on how populations grow rich, such as the World Economic Forum, the World Bank and International Monetary Fund (Stiglitz 2002).

In the chapters that follow, after briefly reviewing theories of economic growth and the great divergence, we shall look more closely at the empirical facts of growth – how it occurred, when it occurred, and where it occurred. We shall find that most of our current theories fit poorly with the empirics of growth. It is thus not terribly surprising that they remain contradictory and difficult to reconcile, and have not proved a sound basis for policies to foster growth.

In this book, I shall take as my main two stalking horses for studying the empirics of economic growth the histories of Britain and of China. This of course results in an inexcusable neglect of Africa, Latin America, India, Japan, Southeast Asia, the Middle East, and the rest of Europe, and I will in fact comment on all of these regions and the critical role they have played in world economic history. However, to trace the detailed facts of economic growth over several centuries in even two distinct territories is daunting enough, and the choice of England and China provides two areas for which the demographic and economic history is among the best detailed. Moreover, even those global economic histories that claim to contrast “Europe” and “Asia” in fact rely overmuch on comparisons drawn from England (or perhaps England, Holland, and Northern France) and China – or even small parts of China, such as the Yangzi delta. I hope that by being explicit about my limited comparisons, it will make clear the cautious and limited validity of any conclusions I draw, and leave the way open for further regional and global comparisons to improve and correct this analysis.

Most importantly, England and China represent opposite poles of the great divergence – the seats on the seesaw of economic change, if you will. England, on the outer edge of Europe and long considered even by other Europeans as a laggard in the production of wealth compared to such regions as northern Italy, France, and the Low Countries, came by the 1870s to be regarded as the richest

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and most powerful country in Europe, the model for the creation of wealth. China, which had long considered itself the center of the political and economic universe, one of the great civilizations of Asia and the world, came by the 1870s to be militarily and economically over-run – by England! – and regarded even by other Asian nations as enfeebled, impoverished, and impossibly backwards. Most of the theories of economic growth and the great divergence that we shall discuss below were in fact based on understandings of England’s great success, and China’s relative failure. It thus seems appropriate that an effort to revisit and revise those theories be based on the best empirical data for the cases that they tried to explain.

THEORIES OF THE RISE OF THE WEST

Theories of the rise of the West take a wide variety of positions on how the West obtained its wealth. Most modern economists argue that the West created its own wealth, pulling itself up by its bootstraps and creating a new trajectory for itself, while the rest of the world remained mired in a traditional situation of modest growth, frequently punctuated by crises, reversals, and stagnation. By contrast, historians inspired by the views of the great 19th century social critic Karl Marx often argue that the West grew rich mainly at the expense of others, by drawing wealth from the worlds’ other peoples through trickery and violence, slavery and exploitation. Many scholars, going back at least to the early 19 th century German sociologist Max Weber, have argued that distinctive elements in the religions or broader cultural frameworks of the West enabled it to accumulate and produce wealth in ways unrivalled in other cultures. Still other scholars focus more on material factors, such as characteristics of the ecology and natural resources, and especially the balance between these and the growth of population, as creating markedly different conditions for growth in Europe versus other regions.

In fact, these rough distinctions are not exclusive, and individual scholars have often advocated several or some combinations of these factors. However, to facilitate discussion, I shall take each of these broad kinds of arguments in turn. For shorthand, I label these schools of explanation “the four A’s” of the rise of the West: Accumulation, Aggression, Attitude, and Abstinence.

ACCUMULATION IN THE RISE OF THE WEST

A number of authors have stressed a kind of foundational, wealth-leads-to-more-wealth view, in which Europe is seen as having certain advantages that allowed or encouraged exceptional accumulation of productive capital.

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In some accounts, the key advantages initially accrued to agriculture, where innovations that provided higher productivity produced larger surpluses. These in turn allowed labor to be released from agriculture to engage first in craft production, and then in factory work. In addition, the boost to agricultural productivity allowed the work-force to grow without a severe fall in incomes per capita, thus sustaining both the health and productivity of the labor force, while also maintaining their purchasing power and allowing for growing markets and demands for manufactured goods. In this view, an “agricultural revolution” that boosted productivity to new, higher levels, was an essential and facilitating element that spurred the rise of the West (Jones 1974, Brenner 2002, Overton 1996).

These boosts in agriculture in the West, and the absence of an equivalent effect in the East, are often considered to be inherent in the trajectories of rain-fed wheat/corn (e.g. European) vs. monsoon/irrigation-fed rice (e.g. Chinese) systems of agriculture. Because the latter is clearly capable of producing much higher outputs of grain per acre of farmed land by increasing the input of labor, it has often been argued that Chinese agriculture inevitably tended to produce ever higher yields per acre, but at the cost of soaking up ever higher inputs of labor. As a result, it is suggested that the productivity of labor stagnated, and Chinese agriculture was unable to produce the higher levels of output per person achieved in the West (Bray 1984, 1986; Brenner 2002; Huang 1990, 2002).

Yet just because Chinese agriculture did produce higher yields per acre, there is no reason to deduce from this that for any particular time it also produced lower yields per person than European or even English agriculture. Testing this proposition requires careful attention to mixes of crops, effective average yields over time, use of human and animal labor, fertilizers, and so forth. Moreover, while we will examine this issue in more detail below, it is important to note that over long stretches of time, say the centuries from 1200 to 1800 AD, both English and Chinese population and output experienced large cycles of ups and downs, depending on weather, mortality, and political stability or crises (all of these often interlinked). In certain periods, such as after the Black Death in England, or in the recovery from the Ming-Qing transition in China, large tracts of land were open for cultivation, productivity per person soared, and incomes and agricultural output per capita appeared to be as high as they ever were in England in the 18 th

century. Yet in neither of the earlier cases did a “take-off” into exponential economic growth ensue.

In fact, Chinese agricultural productivity per worker was as high as that in England well into the 18th century. Much like the intensive commercial agriculture of 17th century Holland, but on a much larger scale, Chinese agriculture supported extensive commercial trade, networks of cities, and urban

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and rural crafts industries. Nonetheless, these never provided the foundation for rapid industrial growth.

To turn to the modern era, one of the most strikingly successful development ventures of our time is the “green revolution,” which greatly increased the productivity of crops grown in Asia, and was widely adopted in India, the Philippines, and southeast Asia. Productive commercial agriculture has also spread widely in Africa and Latin America, which now export huge quantities of coffee, cacao, palm oil, and other agricultural products. Yet while this modern “agricultural revolution” vastly increased output per person, it has not generally spurred modern industrial growth in those nations, most of which still hold large impoverished rural populations.

In sum, higher agricultural output, even if reflecting increased productivity of labor in agriculture, is not a sufficient explanation of what triggers rapid, modern-style economic growth. There is no automatic transfer of agricultural surpluses into industrial enterprises. Greater agricultural output may simply go to more food consumption, acquisition of luxuries, or greater leisure. It may surely be true that in a closed economy that cannot import food, increased agricultural output is necessary to sustain large population increases without a fall in living standards and purchasing power. Yet in fact, as we shall see below, England became ever more dependent on food imports precisely at the time of its industrial revolution. Thus even if one grants that Europeans did achieve higher agricultural output per person in the 18th century, that seems to be neither necessary, nor sufficient, to explain the amazing industrial growth of the 19th century.

Another set of scholars have therefore focused attention less on agriculture than on those material resources most critical for industrialization, such as coal and iron. England was long thought to be exceptionally fortunate in enjoying plentiful, easily accessible coal resources near good water transport in Newcastle, along with good supplies of iron, nickel, and other industrial raw materials (Wrigley 1988, Pomeranz 2000). By contrast, other countries – even those such as China, which had earlier exploited its own coal reserves – were held to find it more difficult to bring together the key resources for modern industry. In addition, the discovery of the New World – with its territories opened by depopulation to provide agricultural exports such as cotton, sugar, and tobacco to Europe, and its gold and silver mines exploited to produce easy liquid wealth – supplemented the raw mineral stocks of Britain in a way that non-European societies could not emulate (Pomeranz 2000, Frank 1999). It was an edge in having the raw materials for specific industries, namely coal and iron, and the precious metals that created ready money, that gave Europe, and England in particular, the lead in the race to industrialize.

While this approach usefully points to a specific pathway to modern economic growth, namely the exploitation of mineral resources as opposed to simply

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increasing the output of traditional agricultural activities, it too begs the question of how one goes from having a certain quantity of resources available to turning those resources into a basis for sustained and rapid economic growth. China had both cotton and coal in plenty, and had a transportation network to bring products and resources the length and breadth of its territory. From the northern peninsula of Shandong, the inland regions of Hunan and Szechuan, the hills of Anhui, the Yangzi delta, and the southern coasts of Fujien and Guangdong, the Chinese moved rice, cotton, cloth, porcelains, soycake, sugar, tea, and other products by the tens of tons (Marks 1994, Deng 1999). While Britain imported cotton and tobacco from the southern United States, so too China imported raw cotton from India, and rice from southeast Asia. More importantly, recent research ha shown that late Imperial China had an extensive internal trade in iron and steel products, mainly agricultural implements and craft tools, as well as numerous coal mines that supplied most of the cooking and heating fuel for the capital of Beijing (Fang et al., 2000). China also imported silver and copper from Japanese mines in volumes approaching those produced by Europe’s colonial mines in Latin America. There seem to be no obvious resource shortages that blocked China’s progress. Moreover, even within Europe, many areas had generous and accessible coal reserves, including Belgium, Silesia, and the Urals in Russia, and these regions had long had thriving iron industries to boot. In the 18 th century, Sweden and Japan produced arguably the world’s finest steel. Yet none of them took the early lead in industrialization. How did England gain the lead in metallurgy and steel production, simply from having – like any number of other countries – large piles of coal?

In modern times, the counterpart of this “mineral riches” story has been the efforts of those countries richly endowed with today’s black gold – petroleum – to acquire wealth. Yet for all the machinations of OPEC, most of the world’s leading oil producers, including Saudi Arabia, Iran, Iraq, Nigeria, Venezuela, remain paradoxes of poverty (Karl 1997), unable to get on and stay on the path to rapid economic growth. At various times, deposits of coal, iron, uranium, platinum, aluminum, copper, or other important industrial minerals have been touted as a means for the countries that hold those resources to gain wealth. In practice, however, it is generally the companies and countries that mine the resources and put them to productive use, not the countries that simply own them, that obtain the economic gains.

Similarly, the story of piles of gold and silver from the New World producing wealth for Europe is misleading. In fact, most of the bullion produced for the first three centuries of New World mining was exported to Asia, in exchange for those commodities – silks, porcelains, gems – that Europe could not produce or obtain on its own. China and India became the world’s great destinations and sinks for silver (Flynn 1996), with billions of pieces of eight, Dutch guilders, and British

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pounds finding their way there in the sixteenth through nineteenth centuries (Chaudhuri 1963, 1968). In fact, over the course of the sixteenth and seventeenth centuries, silver was increasingly exported directly from Mexico to China across the Pacific by the Manila galleons, bypassing Europe altogether (Flynn and Giraldez 1995). If acquiring wealth in bullion from the New World was a factor in the creation of modern economic growth, it should have been China, not Europe, where growth surged ahead.

The notion that having, or accumulating, key industrial materials is a path to economic growth thus seems confounded by experience, both historical and modern. Raw materials – whether agricultural produce, minerals, cotton, wood or other fuels, tobacco, even tortoise shells and elephant tusks – have been traded around the world for many centuries. Yet countries that were once heralded for the richness of their agricultural produce or mineral wealth – from Haiti’s sugar to Peru’s silver to Nigeria’s oil – have most often become startlingly poor despite, or even because of, the easy wealth obtained on or in the ground (Sokoloff and Engerman 2002).

Therefore other scholars, such as Doug North and his collaborators (North 1981, 1990; North and Thomas 1973; North and Weingast 1989), have stressed that what mattered was not agricultural productivity or raw materials themselves, but the accumulation of useful capital. They have argued that without institutions to assure that people can enjoy the fruits of their labor and the gains from trade, both labor and trade will be stifled or directed toward immediate pleasures rather than long-term gains. In particular, there is always a risk that the enormous power and appetite of the state will endanger the private production and accumulation of wealth (Hall 1985). For North and his collaborators, only where a legal/institutional system arises that protects private property and persons from arbitrary exploitation, seizure, or taxation, can capital accumulation attain the momentum needed to propel modern economic growth.

There are two versions of the story regarding the accumulation of capital. One stresses the constraints imposed on states by the plural state structure of Europe as a whole; the other emphasizes domestic institutions that constrain rulers within particular states.

Scholars who stress the importance of Europe’s division into competing states (Collins 1986, Chirot 1985, Mann 1986) contrast this condition with the ideological and political unity of the great empires of Asia, e.g. the Chinese, Mughal, Ottoman, and Saffavid. They argue that a plurality of states provided both an “escape hatch” and “lottery” benefits. Given interstate competition, individuals threatened in one state can always escape to another; thus no state could readily destroy capitalist enterprise altogether. Competition instead encouraged states to shelter their capitalists, the better to draw on their resources (Baechler, Hall, and Mann 1988). In addition, even if some states should screw

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things up – clamping down too hard on free enterprise, or stifling thought with state-imposed orthodoxy – the consequences could not be too severe, since another state was always there to try an alternative path. With enough states competing against each other, but none quite succeeding in dominating the rest, there was a long-term potential for a winning combination of economic and political conditions to emerge in at least one society.

However, the contrast between European pluralism and Asian empires is overdrawn. Many regions beyond Europe had political, religious and ideological divisions as well. The Islamic world spent many centuries divided into competing Caliphates and centers – the clash of Sunni and Shia, the heterodoxies of the Sufi and Jains, the battles of Arabs, Persians, and Turks – did not create or sustain rapid economic development. Similarly, South and Southeast Asia were always divided into competing states – not even the Mughals subdued the whole of the sub-continent. Here again, the divisions between Persians and Hindus, northern and southern India, Vietnamese and Khmer, Javanese and Malay, produced conflict and trade, various modes of integration and boundary formation, but not modern industrial growth. Even in Europe, the “beneficial” aspects of multi-state divisions were most often drowned in the blood and costs of war. France, Spain, and Italy expelled their religious minorities and imposed a state orthodoxy, regardless of the economic cost. Prussia drained its economy to fuel its military machine. Russia and the Ottomans, the Poles and the Swedes, were in constant conflict for centuries without much benefit to their economies or private enterprise. If the one region that seemed to benefit from interstate political competition was an island on the fringes of continental struggles, it must be something unique to that island, rather than general qualities of interstate competition, that produced the positive effect.

Thus for North et al., while this competition is a helpful spur to improve states’ thinking about how to encourage and preserve wealth, the critical factor in sustaining growth is the domestic institutions under which capital is allocated and accumulated. Only if domestic institutions provide strong constraints against rulers’ interference with private enterprise can economies flourish. Their model for the emergence of such conditions is Britain after 1688, when Parliament imposed limits on the taxation authority of the King and created the Bank of England as a responsible manager of state debt. Thus simply dropping huge sums of money or investment (such as dams and power plants) on underdeveloped countries will not spur rapid economic growth if political institutions remain arbitrary, unpredictable, and corrupt. Transparency, predictability, and minimal costs of doing business are the keys to the production of wealth. This view has become enormously influential in recent years in thinking about economic development (World Bank Report).

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Again, however, a close look at the empirics of growth make one question whether North and others in this line of attack have identified necessary or sufficient conditions for rapid economic growth. In the extreme, it almost certainly seems true that horribly onerous, confiscatory taxation, ruthless and arbitrary government or anarchy, and runaway corruption will inhibit business activity and economic vitality. But how often have such extreme conditions actually been present, and what is the effect of a more normal range of conditions? Throughout most of Chinese history, state taxation and even elite rent extraction was modest – an almost identical fraction of output was taken as in England (we give details below). Moreover, private property rights were guaranteed by law and vigorously enforced. The result was that Imperial China enjoyed an immense volume of local and long-distance trade, with merchant consortia trading millions of barrels and bales of goods across thousands of miles and collecting millions of silver pieces in profits. The richer Chinese merchants of the 18th and 19th century in fact disposed of capital resources in the millions of ounces of silver – more than their European counterparts. Yet this vast accumulation of private wealth and large-scale private business enterprise sheltered by the state never produced modern industrial dynamics.

In fact, even a state conducive to capital accumulation does not ensure rapid growth. Consider that during the 17th and 18th centuries, the most commercially active and adept merchants, the most business-friendly state, and the best legal terms for capital accumulation and allocation in Europe were probably found in Holland (from whom England in fact copied most of its banking and business institutions and practices), which as a result enjoyed the lowest interest rates – in other words, the lowest costs for accumulating and holding capital – of any country in the world. Yet while England rose to industrial and trading domination in the 19th century, Holland crept along at comfortable, but not rapidly growing, levels of economic output, gradually falling further and further behind the British. Why did ideal conditions for capital accumulation in Holland fail to produce an industrial revolution?

Moreover, we should note that the fastest growing economy in the world for the last two decades is that of China, where transparent, stable, and non-corrupt political institutions have yet to be established. In contrast, Japan – where relatively modern economic institutions have been in place for half a century, and where the government, arguably less corrupt than it was during Japan’s economic “miracle,” has been doing all it can to protect the capital of its leading banks and companies – has experienced two decades with a complete lack of economic growth.

In sum, while North et al are probably correct in the extreme, we find in practice that rapidly growing economies, from 19th century Britain to late 20th

century China, have achieved such growth without institutions that are notably

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more favorable to capital accumulation than their immediate, and relatively less economically robust, neighbors. Once the extreme conditions of state confiscation and insecurity have been overcome, economic activity can flourish, but this does not seem to ensure any particular rate of economic growth. Rapid growth can occur under moderately flawed and corrupt institutions (as in late 20th

century China), and stagnation can occur even when capital accumulation and allocation is extremely easy and low-cost, as in 18th century Holland and late 20th

century Japan.In recent years, the focus on accumulation has therefore taken a new and

promising twist, looking not to the piling up of agricultural surpluses or raw materials, nor to the accumulation of financial and material capital, but to the accumulation of knowledge (Mokyr 1990, 2002). Following the lead of the new endogenous growth theory in economics (Romer 1986, Rosenberg 1982), which stresses that technological innovation is the critical lever for modern economic growth, Mokyr has argued that what separated the West from the rest was the former’s greater success in accumulating and deploying useful knowledge. To the extent that modern economic growth seems intimately connected with modern technology -- from steamships to jets, from paper to plastics, from machines to computers – this seems an essential truth.

Yet it also simply pushes our question regarding the rise of the West back one level: if accumulating knowledge is the basis for acquiring and accumulating wealth, how does one go about accumulating knowledge? More importantly, what knowledge precisely is it that produces economic growth? Out of the billions and trillions of bits of useful knowledge – that bees pollinate plants, that the sun is a star, that exercise is good for you, that certain mushrooms are poisonous, how did the West obtain that particular stockpile of knowledge that set it on the road to rapid and sustained economic growth? Non-western societies were not simply ignorant, and the West had huge stores of knowledge that were misleading or wrong -- such as that the earth is flat, or that all heavenly bodies travel in circles while earthly bodies fall to the center of the earth, or that bleeding is good for treating illnesses. More importantly, many of the technical advances that propelled western growth – the compass, the horse stirrup, ship’s rudders – came to Europe after they were invented in China. To this day, Chinese medicine offers insights and practical methods that are now eagerly sought and adopted by the West. When and how did the West start to acquire knowledge – and other regions not do so – in ways that produced rapid economic growth?

Again, in our own times, while education is often advocated as a panacea for economic growth, and basic literacy certainly seems essential for modern economic activity, it is still not clear exactly what to teach peoples to help them achieve economic dynamism. In recent years Latin American populations that are highly educated, such as that of Argentina, have fallen into economic chaos, while

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societies with far less education, such as Bangladesh, have done well in achieving growth. Again, the contrast between China’s achievement of the fastest growth in the world for the last two decades and Japan’s stagnation may be a matter of differences in useful knowledge, but if so, what knowledge is it?

While pointing out the role of useful knowledge in modern growth is inarguable, setting the equation knowledge = growth does not so much answer our questions regarding the rise of the West, as to simply put another term and phenomena in the same questions. When, why, and how did the West diverge from other regions of the globe in the accumulation and identification of useful knowledge? In particular, we would want to know why other societies’ vast stores of useful knowledge did not produce the same results.

In fact, we shall see that this is indeed the right question to ask, and that understanding precisely how Europe, and Britain in particular, came to lead the world in the acquisition and deployment of knowledge useful to accelerate economic growth is at the heart of understanding the great divergence. But the answers involve deeper inquiries into the history of science than most analysts of economic growth have undertaken. In particular, we shall need to learn why it was that not merely obviously useful knowledge – such as that regarding the properties of various substances or how to build various kinds of tools and machines – but ridiculous flights of fancy that fly in the face of observation and common sense – such as that the earth is spinning all of us around at over a thousand of miles per hour, that water and ice are actually made of invisible gases, and that the air around us presses on us with a force of hundreds of pounds – came to be accepted as irrefutably true. It was the latter kinds of knowledge, more than the obviously useful knowledge, that were crucial to the utter transformation of knowledge, technology, and economic production. We thus shall need to see how it happened that these wholly counter-intuitive and non-obvious claims drove out centuries of accumulated common sense and more obvious “truths.” In addition, we shall have to give greater attention to particular paths of technological innovation and development, as well as to the integration of those paths with attention to market opportunities. This is a story that we return to in chapters 8-10 below.

If we were to encapsulate all of the preceding discussion in a simple phrase, it would be that it is not accumulation, but innovation, that constitutes the central process of the great divergence. The simple accumulation of resources – whether agricultural surpluses, mineral wealth, or even financial capital – may produce individual wealth, but does not act as a springboard to sustained rapid economic growth. Rather, it is innovative ways of acquiring, utilizing, transporting, improving, and deploying those resources, involving the systematic application of modern scientific knowledge, that has been the basis for the modern wealth of nations.

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To cite one telling example, the modern confrontation between East and West is often summed up in the story of the opening of Japan by the naval forces of the United States under Commodore Matthew Perry. Up until Perry’s expedition in 1853, the Japanese had repulsed all foreigners and banned European ships from their shores. Yet Perry’s ships overcame Japanese resistance precisely because they did not sail into Tokyo (then Edo) harbor – they steamed in. Perry commanded a fleet led by three modern steam frigates, whose huge black smokestacks (the Japanese called his fleet the “black ships”) drove paddle wheels that allowed his fleet to defy winds and tides in bringing their guns tightly to bear on Japanese defenses. The Japanese, quite literally, had never seen anything like it. It was their amazement at this new technology, as much as the presentation of force itself, that persuaded the Japanese to open their ports and sign a treaty (one of whose main provisions was that foreign ships should be allowed to obtain Japanese coal!). New technology was the fulcrum on which the balance of East and West turned in the 19th century.

Yet oddly enough, most theories of the rise of the West focus almost entirely on accumulation, and treat the process of innovation as unproblematic or tangential to the origins of self-sustaining exponential economic growth. Rather, it seems generally assumed that if enough of the right stuff is somehow in place – agricultural surpluses, disposable incomes, institutions favorable to capital accumulation, worldly knowledge – then the right technological discoveries to underpin further progress will inevitably be made. A recent review of a new textbook in economic history makes this crystal clear:

The main thrust here is the circumstances which made the industrial revolution possible, in other words that fostered the technological breakthrough underpinning the emergence of mass production and distribution. The talk is of growth of food surpluses, the development of markets and long distance trade, the establishment of institutions favorable to complex but stable economic relationships, and the rise of a moderately comfortable standard of living for a considerable part of the population. (Reis 2002, reviewing Hansen 2001).

In other words, while recognizing that the Industrial Revolution constituted a technological breakthrough, this breakthrough is explained simply by presenting the conditions that supposedly “fostered” it, namely the accumulation of food surpluses, favorable institutions for economic activity, and comfortable incomes. How people learned the fundamental laws of nature and came to apply them to better their condition is not considered a significant part of the story! This is the pattern of explication for the origins of modern economic growth in current

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economics, and perhaps accounts for the straits in which modern development economics finds itself today.

Why this emphasis on accumulation? I believe it is because behind the view that the accumulation of agricultural and/or mineral wealth or capital or knowledge is all that is needed to set societies on the path to rapid growth and further prosperity lies the gross misconception that throughout most of history, people have been so poor, or so exploited and oppressed, or so ignorant of the world around them, that it is inconceivable that they would innovate in important technologies and produce rapid per-capita economic growth. In its grossest form, this view contrasts well-off, industrious, inquisitive post-Medieval Europeans with all the barely subsisting, enervated, and ignorant peoples of other times and places.1

Yet this is a sad disservice to the builders of the pyramids; the aqueducts and roads of Rome which spanned Europe from Scotland to the Bosporus; the great medieval cathedrals; the art and architecture of the Renaissance; the great bronze Buddhas of medieval Japan, or any of the dozens of other cases where we can see great surpluses mobilized with extraordinary practical skill. Historians and economists have generally treated these and all other great accomplishments of pre-industrial civilizations as the results of self-glorification by a tiny elite, who accomplished these feats by brutally stripping the tiny surpluses of millions of impoverished masses. Or, ignoring the fact that enormous economic activity providing workers, tools, and the means to feed them was required for such monuments, argued that the very existence of such monuments shows an otherworldly obsession with things other than economic wealth (as if the mansions of today’s rich, the exotic construction of the Gehry Museum in Bilbao, or the enormous spires of Mormon churches arising throughout the world indicated that 20th century peoples are unconcerned with the acquisition and pursuit of wealth). The notion that these achievements could be the fruits of relatively prosperous societies celebrating their success seems ruled out of court.

Yet there is a way to test these competing views, and that is by examining data on the productivity, life-span, government taxation, and other concrete elements that defined life in major pre-industrial civilizations. If we find that most pre-industrial societies did in fact experience bouts of rising productivity, relatively high living standards, and conditions favorable for mass accumulations of capital and complex economic activities, without continuing on to self-sustaining exponential growth, we shall have to realize the poverty of the view that

1 The otherwise often brilliant and insightful work of David Landes (1998, pp. 20-21) is marred by just such a presentation: “Europeans won [by growing] taller and stronger. … Healthier Europeans lived longer and worked closer to their potential.”

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accumulation is sufficient to explain growth, and give more attention to factors more directly linked to specific technological breakthroughs.

I have spent this much time on issues of accumulation in the rise of the West because when we turn to other theories – those emphasizing Western aggression and exploitation, cultural attitudes, and abstinence in regard to consumption and reproduction – we shall find that they too are in essence theories about accumulation. All argue that by some means, the West tended to accumulate more material wealth than other regions of the world, and it was this edge that gradually launched Western peoples toward economic and political domination of the world. They therefore, by more circuitous routes, recapitulate the argument from accumulation given above, and just as profoundly neglect the critical role of innovation, and the products of particular sequences of innovations and applications that had critical consequences. Let us examine the leading examples of such theories and see why this is so.

AGGRESSION IN THE RISE OF THE WEST

The literature on western imperialism is daunting in its volume – both the volume of weighty tomes written on the subject, and the volume of the cries against injustice and exploitation rising from their pages.

Hardly anyone would doubt today that the record of western imperialism is morally outrageous – despite the pious aims of bringing Christian virtue and civilization to the world, the depredations of western slavers, the space cleared by their germs and livestock, and the transfer of human and material wealth from non-Western societies compares with the onslaughts of the Mongols, Huns, Vikings, and other infamous barbarians. One could well argue that in their impact on climate, and their dominance of world trade, Western nations continue to damage, deplete and deprive the rest of the world. But our aim here is not to pass moral judgment on the West, however deserved. Rather, our goal is to ask how is it that while the Mongols, Huns, and other wide-ranging conquerors and destroyers never grew into wealthy industrial civilizations, the English did.

There are two main views on how aggression and exploitation enriched the West. One view, rooted in Marx’s notion of “primitive accumulation,” is that the West simply stole the capital and wealth needed to create an industrial revolution by exploiting the rest of the world. That is, given that all countries were basically, in their own domestic economy, too poor to finance the investments required to transform production, it was the prodigious profits gained from colonial exploitation and trade that fueled the industrial revolution. Gold and silver from Latin America, sugar from the Caribbean, slaves from Africa, riches drained from India and China – these were the resources upon which industrial empires rose.

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Note that this is yet another version of the view that whoever piles up enough wealth will naturally move to industrialize. In this case the key element of wealth, however, is not merely surpluses of natural resources or capital per se, but in particular the free capital acquired in great concentrations by those engaged in colonial enterprises.

It is in fact true that colonial enterprises generated enormous profits. The sugar planters of Haiti became the richest men in France; the Spanish who exploited the wealth and populations of Latin American became as rich as dukes if not kings; and the British freebooters who pillaged India acquired noble titles and the estates to underwrite them. Nonetheless, decades of research have failed to demonstrate any linkage – direct or indirect – between these colonial fortunes and the growth of industrial enterprise. Colonial fortunes were much like winning lottery tickets or finds of mineral wealth; instead of leading to continued and dedicated efforts to build wealth, such sudden fortunes more often led to dissolute spending. The nations and peoples who took the early lead in empire-building and importation of colonial wealth – Spain and Portugal in the New World, the Dutch in East Asia – did not become the leaders of industrialization, but instead lagged behind the industrial leaders of the 19th century. Who were among those 19th century leaders, aside from Britain? Switzerland, for one – a country whose colonial enterprises and profits were non-existent.

Even in Britain, the building of industrial enterprises was financed almost entirely by pooling family incomes and reinvested profits of small manufacturing enterprises. Sugar barons from the Caribbean neither ran nor invested in cotton mills – they invested conservatively in land and government bonds. It was most often members of obscure religious sects who relied on local and domestic sources of credit to build small but rapidly growing industrial enterprises who were the founders of industrial fortunes. In short, the origins of industrial growth did not lie among the fortunes of colonial plunder.

The second view, which originated as dependency theory and developed into world system theory (Frank 1974; Wallertstein 1980, 1984), is that the West grew rich not because of windfall profits, but because it set up a system for the continuous transfer of resources from the non-West to the West, becoming the core of an evolving world-system that transferred wealth from the periphery.

This world system began in the 16th century with western European nations – especially Holland – dominating the Baltic trade and leading German and Polish land barons to sell their gain for Dutch imported goods and manufactures. This produced higher incomes and profits for the Dutch, who became the leading merchants, warehousers, shippers, and financiers of Europe, a Europe now transformed into a differentiated world-system that centered at first on Antwerp, then Amsterdam. Even Spanish silver imports from the New World were drawn into this system, as the New World became another peripheral region whose

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wealth was siphoned into Europe. British efforts to compete with the Dutch led to greater exploitation of the Atlantic trade, creating a new triangle of West African/North American/Latin American trade whose profits exceeded those of the Baltic, and shifted the center of the world-system across the Channel to London. Eventually, even the Indian Ocean trade and the China trade were incorporated into this system, all sending greater and greater profits to Europe. Exploiting its central and superior position in this system, Europe was able to use its leverage to force its manufactured products onto subject regions, creating more profits for itself by driving out indigenous manufacturing throughout the world. At the end of the 19th century, Europe therefore stood alone as the sole manufacturing power at the apex of a global economic system it had built to enrich itself.

This is a heady story, and would explain much about the shape of the world today if it were true. Unfortunately, it runs into trouble with both basic history and basic arithmetic. In regard to the arithmetic, careful calculations of the amount of net profit derived from colonial operations by Britain show surprisingly small values – not much more than five percent of its domestic GDP (O’Brien 2000). After deducting the costs of imperial administration, the net gains to Britain from its empire in India were not much greater than its gains from exploitation of its nearer empire in Ireland. Indeed, as we shall see below, it was the grain of Ireland that was crucial to feeding England’s 19th century masses, not the wealth of India. The fabled riches of colonial administration provided some pocket money to European rulers, and enriched thousands of colonial adventurers. Yet these marginal gains were in no way sufficient to transform domestic economies involving millions of workers – which is what industrialization accomplished.

A more dramatic claim of world-system or aggrandizement claims is that European powers dominated global trade, and thus suppressed and drove out indigenous manufacturers in Asia. They thereby artificially created markets for their own products and gained unfair profits which transformed them into dominant manufacturers. It turns out that this is simply bad history. First, European powers did not gain control of Asian trade until relatively late, after 1850. Prior to that point Europeans were simply modest players in a vast intra-Asian trade that dwarfed their activities. Japanese, Indian, Ottoman and Chinese merchants continued to convey huge volumes of silk, silver, and spices throughout Asian waters, while Asian states sharply limited and confined European activities. In India, Europeans never captured more than 10% of the pepper trade (Subrahmanyan 1990); in China, they were confined to a few treaty ports; in Japan to only one (Nagasaki). It was only after the opium wars in the 1840s, and the opening of Japan in 1854, that Europeans gained increasingly open access to the most lucrative markets.

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Second, it is simply untrue that industrialization was founded on Europeans driving domestic producers in India and China out of textile production. What European factory manufacturers did was drive Indian and Chinese textile manufacturers out of the latter’s export markets, replacing the vast European imports of silks, calicoes, and porcelains with the output of European textile mills and ceramics factories. This happened because the European factories, from the late eighteenth century, finally began to produce viable goods to compete in their own market with the products of Asian manufacturers. But even so, prior to the late nineteenth century European manufacturers never produced the volume, nor gained the distribution, to replace indigenous production of cloth and other daily necessities in India or China. Up through the late eighteenth and early nineteenth centuries, China’s cotton producing regions continued to produce more cotton cloth than all the mills of Manchester.2 In fact, in the early nineteenth century, China was still exporting over several million bolts of cotton cloth a year to American and European merchants (Li 1998, p. 109). It was only with the advent of modern steam-powered textile factories, railways and steamships in the late nineteenth century that European-produced thread and then textiles took over from indigenous production in most of Asia. In other words, the suppression of indigenous textile industries in Asia, like the opening of major Asian trade centers to Europeans, took place after Europe’s industrialization, not before. The causal sequence was the other way around.

Furthermore, even if European colonial powers had by fiat been able to halt Asian producers from exporting textiles, this does not explain how European factory production arose. If Europeans were powerful enough to simply reverse the flow of textile exports by force, why was there any need for factory mechanization? Why not simply increase the volume of workers in traditional factories? No need to strive to make cheaper goods if international markets were rigged to be non-competitive! If anything, it was European’s inferior position in global trade that spurred the efforts to displace Asian imports with domestically-produced goods that could compete in quality and price (Frank 2000).

But how was it that British enterprises were so successful in transforming the costs and scale of textile production, despite a serious lack of experience with cotton compared to China and India? It was Chinese producers who had the greatest volumes of cotton production and long-distance trade in the late eighteenth and early nineteenth centuries. Water mills and windmills, like stirrups, rudders, and compasses, all appear to have originated in the East and migrated westward. Why did factory manufacturing and steam power move in

2. In the mid-19th century, the commercial cotton-producing regions of the lower Yangzi basin produced about 250,000 tons of ginned cotton; England’s total imports of ginned cotton in 1850 were rather less, at 222,000 tons.

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the opposite direction? Europe’s role in global trading networks will not give us the answer.

ATTITUDE IN THE RISE OF THE WEST

Recognizing that the accumulation of resources, capital, indeed all forms of wealth, has been widespread throughout civilizations in history, another group of scholars has asked us to focus more on how, rather than on how much, wealth is accumulated and utilized as the key to the rise of the West. In other words, they ask us to focus on attitudes toward wealth creation and wealth deployment to differentiate Europe from other world regions.

The discourse on attitudes displays a confusing array of claims. In a now-discredited version, it was once argued that western “values,” as such, in contradistinction to Hindu, or Confucian, or Islamic values, conduced to more successful business behavior. The enterprising success of Confucian centers such as Hong Kong, Singapore, Taiwan, and of South Korea, and of the uniquely Japanese blend of Shinto/Samurai/Zen virtues, as well as the contrasting economic failures of Christian societies in Latin American and socialist societies throughout eastern Europe, have demonstrated rather soundly that there is more to economic success or failure than western values or their absence. (Indeed, for a while before Japan’s recent slump, some scholars were turning this around and claiming that “Asian values” provided a superior basis for modernization!).

Behind such simplistic discussion of values, however, lie more serious and profound arguments that do relate to the issues of innovation. A number of historians and economists have suggested that western Europeans were distinctively curious, rational, and above all else, highly disciplined in their search for wealth and knowledge (White 1962, Landes 1998). Europeans thus were primed to discover and use scientific insights before other peoples. These arguments built mainly on the work of Max Weber (1958, 1978), in his treatises on the Capitalist Ethic and the Spirit of Capitalism and Economy and Society. While some of Weber’s claims are simply another restatement of the accumulation thesis – namely that Protestants were more diligent in accumulating and conserving their wealth and thus acquired the capital to spur modern economic growth – this is the least interesting of Weber’s claims. More important is his argument that western Protestant sects encouraged a uniquely disciplined, methodical, and unmagical approach to living, gaining, and spending. This notion of a uniquely rational western approach to nature then was developed by Merton (1978) into a thesis that modern science had its roots in the Protestant reformation, and its revolt against received wisdom and authoritative truths in favor of an ethic of individual belief, faith, and discovery. Most recently Deepak

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Lal (1998) has argued that it was precisely the combination of discipline and individualism that undergirded the development of modern science and hence modern industrial development. “Weber was right” claims Lal, although he traces the origins of western individualism back to developments in the Catholic Church and cannon law under Gregory VII, treating the Protestant ethic of a millennium later as merely a refinement.

This line of argument has the virtue of making the origins of modern science a central issue in the rise of the West. Since modern science did arise uniquely in Western Europe, this raises the question of whether it was something of a chance development, or whether it was somehow inherent, or at least rendered more likely, by cultural (or political or institutional) factors unique to Europe and absent elsewhere. While the origins of modern science are a key issue that will be examined in greater detail below, we can here point out some of the difficulties with the Weberian line of argument, to clear the way for what will follow.

Part of the problem is the confusion among such terms as “European science,” “science,” and “rationalization,” treating all these terms as synonymous or nearly equivalent. That is, only Europe is treated as having science, and science is seen as the ultimate in rationality; therefore to explain science, one only needs to explain the origins of a rational approach to understanding nature. If only European thinkers were deeply rational, only Europe would (inevitably and naturally) develop modern science.

However, every link in this chain of reasoning is mistaken. In fact, there were many different, quite rational, “sciences” within Europe and outside Europe, not all leading to the development of “modern” science. Moreover, many of the most critical developments in the growth of what we now recognize as modern science grew out of enterprises that we would now consider firmly irrational. To begin with, modern European science did not spring forth from a pristine line of development insulated from other cultures. It arose instead from a particular blending of ancient Greek, Indian, and Islamic sciences. Each of those latter had in fact been largely based on rational argument and careful empirical observation. Aristotelian physics and logic were wholly rational and empirical. Ptolemaic astronomy, for the most part, exemplified non-mystical, empirical and mathematical science. Yet Aristotelian physics and Ptolemaic astronomy persisted for over a thousand years in the West with little change, not giving rise to modern science. Quite the contrary, it was only with their overthrow that the march to modern science was begun. Islamic optics and anatomy were the eminently rational and empirical basis for the later advances of Newton and European medicine – but why it was the latter and not the former that evolved toward modern science cannot be determined by focusing on putative differences in rationality, which were absent.

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Conversely, if we look at the developments that led to modern science in Europe, Copernicus’s decision to create a solar-centered model of celestial motions, and Kepler’s search for a “music of the spheres,” were driven more by aesthetic considerations than rational needs. Newton’s postulation of a mysterious unseen force, acting instantaneously over enormous distances, labeled “gravity,” was seen as such a mystical, faith-driven leap by other leading natural philosophers (including Huygens and Descartes) that they found it difficult to accept as a rational element in scientific discourse. Newton himself had no such problems, for as we now know, he was driven mainly not by what we would think of as “rational” investigations, but by devotion to alchemy and the interpretation of biblical revelation, so much so that his innovations in physics were almost a sideline (Dobbs 2000).

David Landes (1998) and Alfred Crosby (1997) have taken the rationality argument in a suggestive direction by arguing that where Europeans excelled all other societies was in their fascination with exact measurement – of time (through increasingly precise and elaborate clocks and watches), and of space (through cartography based on subdivided grids and measures of latitude and longitude). Pointing out the efforts of the ancient Alexandrians, and the work of medieval map-makers and clock-makers that built on their efforts, they suggest that remarkable advances in precision measurement unique to Europe created the foundations for modern science.

Yet again, the story they tell pays far too little attention to comparable developments outside of medieval and post-medieval Europe. In the first century B.C., Cicero commented on mechanical devices that, at the turn of a lever, accurately depicted the motions of the moon, sun, and five visible planets around the Earth (using the epicyclic models of Hipparchus and Apollonius, which were later developed into the Ptolemaic model of the solar system.) Such precise clockwork mechanisms have been dredged from the bottom of the Mediterranean.3 Yet elaborate clockworks were neither necessary nor sufficient to advance scientific thought. Despite their marvelous mechanical devices, and their measurements of the size, shape, and weight of the earth, the Greeks, Romans, and indeed Europeans clung to the Ptolemaic cosmology for more than a thousand years. When Galileo finally began to challenge the prevailing notions of relative motion and inertia, he did so by analyzing measurements made with the

3. One such device, known as the Antikythera mechanism, was discovered in 1900, in the wreck of an ancient cargo ship off the Greek island of Antikythera. Initially analyzed by Derek Price of Yale University, and more recently re-examined with the help of tomographic analysis of X-rays by Michael Wright of the Science Museum in London and Allan Bromley of Sydney University, a functioning reconstruction of the device has been created and is on display at the Technopolis museum in Athens (The Economist Sept. 21, 2002, pp. 75-76).

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help of simple water-clocks, no more accurate than those used in China and Europe for centuries.

For that matter, the Chinese also had mastered the art of grided map-making and precise location of global positions and longitude far earlier than Europeans. In 1300 B.C., Chinese astronomers had calculated the solar year as equivalent to 365.25 days, and the lunar month as 29.53 days (joining other ancient peoples, such as Babylonians and Mayans, in producing more exact calendars than those used in the West millennia later). In 462 A.D. the Da ming almanac devised by Zu Chongzhi gave the length of a year to be 365.242815 days. In the West at that time, the most accurate was Ptolemy's 365.2467 days (Thurston 1994). Evidence is now accumulating that early Chinese maps were marvels of the cartographer’s art (see the example in Figure I.1).

In sum, all civilizations -- ancient and modern European, Islamic, Hindu, and Chinese – made scientific advances based on empirical observation and rational analysis and contained elements of mysticism and faith wrapped up with natural inquiries. Europeans were not markedly different in this regard. Nor were individual European scientists and philosophers any more markedly individual in their work than their Chinese and Islamic counterparts, who also cultivated originality and individual reputations (but whose reputations are much less known to Westerners; see Collins 1998). In the later Middle Ages Europeans recognized many Islamic scholars as the greatest scientists of their day. If this changed in the sixteenth and seventeenth centuries (and it did), this was not simply a matter of long-standing differences in the degree of rationality or empirical study in Western and non-Western societies.

It is true that Protestantism made a difference, but it is not simply that Calvinists were more disciplined students of nature or opponents of received authority, and thus readily paved the path to industrialization. In some parts of Europe, Protestant discipline took the form of creating bureaucratic and obedient state structures (Gorski 1999). In these same areas, Lutheranism supported the idealist philosophies of Kant and Hegel. The only place where Calvinists controlled the national church – Holland, where the Dutch Reform Church dominated – became notably hostile towards much scientific thought in the late 17th and early 18th centuries, to the point where Descartes had to flee, and the teaching of Newton’s physics became more abstract, arcane, and confined to universities. In England, it was not only Calvinists but also Anglicans in the Royal Society and all sorts of dissenters (Newton was a closet Unitarian) who were involved in pushing scientific inquiry into new, and more fruitful paths. Even in Catholic France, scientific discovery flourished in the eighteenth century, particularly in chemistry and mathematics – yet for at least another two generations France fell economically ever further behind England.

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In short, in order to understand the rise of European, and specifically English, dominance in manufacturing and economic growth in the nineteenth century, we cannot simply point to generalized tendencies toward rationality or individualism in Protestantism as sufficient explanations. Science was a many-stranded stream that flowed in different directions at different times and places, even though fueled everywhere by a mix of rational individualism, faith, and passion. What we need to understand is specifically what happened to the stream of scientific development in seventeenth and eighteenth century England that set it on a different course from what had happened elsewhere in the world, and even from elsewhere in Europe. And we further need to know how such scientific development was tapped to create economic power on a heretofore unparalleled scale.

ABSTINENCE IN THE RISE OF THE WEST

Before getting on with our story of how the West rose, one other set of explanations for Western superiority needs to be considered.

From the time of Herodotus describing the Persians, to Marco Polo describing the capital of the Great Khan, to twentieth century travelers’ encounters with India and China, Western writers have been impressed by the sheer scale of Asian societies compared to their own. Numberless armies, teeming cities, vast fleets of trading vessels, and dense populations fill their accounts. Over time, this description came to be interpreted as a primary cause of European superiority. That is, because Europeans were better at controlling their reproductive growth, they remained less of a burden on their native soil, better able to accommodate animals and their draught power, and better able to accumulate surpluses and wealth. By contrast, the unhindered growth in numbers, the huge populations and population densities that characterized Asian societies, were considered a barrier to ever moving beyond mere subsistence, as all gains in gross output would soon be overtaken by growing numbers. It is an irony that just at the time Malthus was warning Europe about such a fate (which he explicitly noted would be to follow the Asian path), Europe was on the verge of escaping from such Malthusian constraints for good.

The belief that Asian economies were bound by Malthusian pressures while European (or at least Northwestern European) populations were not, received a powerful boost from new research on European population and family structure, especially that carried out by the Cambridge Group for the History of Population and Social Structure, led by Peter Laslett, E.A. Wrigley, and Roger Schofield (Laslett 19??, Wrigley and Schofield 1981). Their work revealed a distinctive pattern of English family formation and dynamics, in which it was clear that

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western European families generally lived in nuclear households with few extended family members; that family formation occurred at relatively late ages, well after puberty (in the early twenties for women, the early-to-mid twenties for me) and that a substantial portion of women never married at all (Europe’s spinsters.). In addition, rates of marriage were quite responsive to levels of real wages, so that if real wages were to fall, family formation and hence childbearing tended to decline to help conserve available resources. This clearly contrasted with the Asian, and more specifically the Chinese, family structure. In China, women typically married early, soon after puberty, and marriage was virtually universal. The young brides typically moved into their husband’s parents’ household, where they lived and worked under the direction of the husband’s parents (and the wife particularly under her mother-in-law). This early and universal marriage pattern, in contrast with the late and variable marriage pattern prevailing in Europe, clearly (it was argued) led to untrammeled and hence far higher fertility. The more rational and responsive European demographic system was held to be a “low-pressure” system, which conserved resources, while the Chinese demographic system was held to be a “high-pressure” system which squandered them. Even scholars who admired the high level of productivity and technical achievement of the late Imperial Chinese economy, such as Elvin (1973), nonetheless argued that China’s untrammeled population growth led it into a capital-exhausting, growth-inhibiting, high-level equilibrium “trap.”

This research seemed to decisively explain Europe’s early advantages in resource accumulation. So much so, that even as it became recognized that England itself went through perhaps its greatest spurt of population growth just as it was about to enter industrialization (hence Malthus’ dire warnings), this “demographic revolution” was seen not as a hindrance to English economic growth, but rather as its fruit. That is, the enormous growth of England’s population from 1750 to 1850 was seen as proof of the higher productivity and income produced by England’s economy, for how else could such population growth have been supported? Indeed, how could it even have occurred without major increases in income given the English system’s ability to respond to economic change by reducing marriage and hence population growth? By contrast, it was held that China’s population growth had always been relatively rapid, eating up any gains and preventing economic growth. Thus Fang (2000) argued that China’s transition to capitalism was delayed precisely because while China’s population had been growing rapidly since the 12th century, England’s rapid growth only began seven centuries later. Other scholars (Chao 1986) have argued that this surplus of human labor resources meant that China suffered from a chronic labor surplus, driving down wages and eliminating any need to even consider investment in labor-saving technologies.

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And yet, a funny thing happened when historical demographers actually started compiling empirical records of family structure in late Imperial China. They found that although it was true that marriage was early and universal, as the Cambridge demographers had said, the completed family size in late premodern China was about the same as that of the west, at roughly five individuals per family. Moreover, in reconstructing total population growth rates, they found that the total increase in China’s population from the fourteenth to the eighteenth century was about the same, or even slightly less, than that of England! (Lavely and Wong 1998, Lee and Wang 1999).4 In other words, while the details of family structure were indeed different, the bottom line results in terms of population growth in China were roughly the same as that in Europe.

How was this possible? It turns out that while the European family system is designed to control fertility by controlling access to marriage – but allows unlimited or natural fertility between married couples – the Chinese family system is designed to control fertility by controlling fertility within marriage, while allowing for unlimited access to marriage. China did not lack a system for fertility control after all; it just had a different system than that of Western Europe.

In fact, the age-specific fertility of women in China was found to be generally less than that of European women in similar historical periods (Lee and Wang 1999). Although Chinese women married young, the interval from marriage to first birth was much greater in China than in England. In addition, spacing between births was considerably greater. Finally, women completed childbearing, on average, at an earlier age in China. In part this was because of strong cultural demands in China that widows not remarry, but remain chaste. In contrast, European widows were allowed, even encouraged to remarry and bear children. Thus China did have a counterpart to European “spinsters,” in its “chaste widows.” Chinese men also spent long periods away from home, sojourning in cities. While in Europe men generally migrated to cities before marriage, and either stayed there when married or went home to wed, and thus had relatively late marriages, in China the pattern was for men bent for urban migration to marry first, and then set out to work. But either way, the result was long periods of forced abstinence. Finally, although marriage for mature women in China was nearly universal, controls on access to marriage did exist, in the form of female infanticide. While in Europe, during hard times marriage rates would go down, in China, infanticide rates would go up. The results, though they appear more brutal to us in China, were the same – population growth in the next generation would be less during times of material hardships

4. China’s population c. 1400 was approximately 80 million; by 1750 it was approximately 200 million, a gain of 150%. England’s population c. 1400 was about 2 million, by 1750 it was about 5.5 million, an increase of 175%.

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In sum, the belief that China’s unchecked, headlong demographic growth doomed it to lack economic development was founded on error. Once understood, the operation of both European and Chinese family systems, though quite different, can be seen to bear similar results. In both England and China prior to 1800, long-term growth rates and completed family sizes were very nearly the same. We shall look more closely below at comparisons of population growth in China and England, and in particular at the causes and consequences of England’s “demographic revolution.” At this point, suffice it to say that any simple notions of Chinese living in a “high pressure,” permanently Malthusian state of crisis, while only western Europeans prudently limited population growth, are simply mistaken.

TOWARD A NEW UNDERSTANDING OF THE RISE OF THE WEST

What then is left in understanding how Europeans, and particularly England, became the leaders of modern industrial development and came to economically dominate the globe?

Clearly, we need to look beyond mere accumulation of agricultural surpluses, mineral resources, or capital. Understanding how Europeans gained the knowledge to deploy those surpluses, resources, and capital in innovative and enormously efficient ways is the critical factor that we need to grasp.

In addition, we cannot presume that Europeans succeeded in gaining and deploying that knowledge simply because they were more rational, or had fewer children, or had different “values,” than non-Europeans. These simplistic generalities are either wrong or do little to help us understand what specifically happened to set 18th and 19th century England apart from other societies around the world, most of which were more powerful and more economically advanced at the onset of the 1700s.

One last factor, not yet mentioned, clearly did set England apart – that is the establishment of “liberties.” The development of parliamentary rule and an independent judiciary as a permanent check on the monarchy, rather than as simply protector of elites’ local privileges or intermittent adjunct to royal power, as a result of the military and religious struggles of the 17th century in England, was indeed unique. These political conditions stood in contrast to opposite developments both elsewhere in Europe and in the rest of the world. Even more important, perhaps, but intimately bound up with these changes, was the role of liberty of conscience – the official religious tolerance begun in 1688 and later extended in a manner that was also unique in Europe.

Many scholars have pointed to “liberty” or “liberties” as the foundation of modern economic development (Lal 1998, North 1990, Hoffman and Norberg

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1994), a tradition championed especially by philosophers and economists such as Popper, Hayek, and Friedman. This belief is closely tied to current views that “free market democracy” is the best system for bringing economic growth to the developing world. However, the champions of liberty are somewhat vague on exactly how the origins of liberty gave rise to modern economic growth. While it may be true for all times and places that governments that squelch independent thought and punish innovation are unlikely to produce scientific progress and rapid economic development, does simply allowing liberty ensure any particular kind of progress or growth? As we have pointed out before, Holland in the 17 th

century had among the greatest liberties in the world regarding individual actions and the accumulation and deployment of capital, but by the later 18 th century it had become an economic laggard, and its once proud lead in technology had been surrendered. The youthful United States had perhaps the greatest bounty of liberty (excluding, sadly, the southern slaves) for its adult males of any country in the world from the 1770s to the 1820s. Yet it produced only one original scientist of note – Ben Franklin – who spent much of his time in Europe. Many countries around the world have aped U.S. or British political institutions, with greater or lesser degrees of success. But in doing so they have often unleashed corruption, elite struggles, and ethnic conflicts instead of gaining orderly political competition and restrained majority rule. As the recent fate of Argentina has shown, the return of democracy and liberty is not always followed by prudent economic decision-making and sustained prosperity.

We shall indeed make liberty and the political changes of 1688 a central part of our story of the rise of the West. However, we need to go beyond simply pointing to liberty as unleashing some primal urge to innovate and grow. Rather, we need to understand the specific pathways that launched Britain on its trajectory of industrialization and rapid economic growth. Those specific pathways – involving the development of modern science, its application to engineering problems, and their deployment in manufacturing, transport, and throughout the economy – no doubt were enabled by the growth of liberties, but were not automatically called forth by them. In particular, 17 th and 18th century Britain developed an “engineering culture” that, however founded in prior European intellectual advances, was unique to Britain and depended on a specific networking of certain groups of individuals and their diverse interests and knowledge. This “engineering culture,” which at first had no counterpart elsewhere in Europe, was hardly a necessary product of European culture as a whole. Rather it arose out of a peculiar combination of events and social and intellectual developments that occurred in Britain, and which it is the task of this book to explore.

The following chapters are organized into three parts. Part I conducts a ground-clearing operation. In Chapters 1 through 3, I take on three commonly

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cited events that are held to herald, or have brought about, the rise of the West: the price “revolution,” the agricultural “revolution,” and the demographic “revolution.” Each of these is commonly held to mark a radical break with the premodern past. However, a close examination of the empirical evidence demonstrates that none of these events in fact constituted a “revolution.” Rather, they were rooted in the mechanisms of preindustrial economic systems, and had counterparts in other societies and other time-periods. Those readers who are not economic historians (or who have not been unduly influenced by them) may wish to skip parts of this section, which contain some technical material necessary to overcome long-standing beliefs. However, the conclusions of each of these chapters is important to understand how deeply 18th century England was still grounded in preindustrial economic patterns dating back to the Middle Ages or even earlier.

Part II makes more explicit comparisons between 18 th century Europe and Asia, and examines the contacts between them. Chapters 4 and 5 show that in regard to agricultural productivity, long-term trends in population and prices, and involvement in international trade, major west European and Asian societies were quite similar in their achievements. Chapter 6 then gives a tough going over to the prevailing historical wisdom, which divides up world history by presuming that from the 16th century, if not earlier, Europe was forging ahead into something called “early modernity.” Instead, as Chapters 1-5 have made clear, the world – including the most advanced parts of Europe – was still clearly in a premodern mode of social and economic organization. Chapter 7 then examines the “global crisis” of the seventeenth century, which involved revolutions and rebellions across Europe and Asia, from the English Revolution to the overthrow of the Ming Dynasty. It is here that the story of liberty, and of modernity, begins, with the differing political and cultural responses to that crisis.

Part III then lays out how industrial growth finally emerged. Chapter 8 shows that industrialization was mainly a matter of breaking one huge bottleneck on premodern growth – the limits on the use of energy – and how that was overcome by the development of steam engines. I try to show that in contrast to all other explanations of the emergence of modern industrialization, only a focus on the use of steam power to transform economic production has the specificity to explain the unique divergence of England in the 19th century. Chapter 9 then argues that this breakthrough was in fact precarious, and not a determinate development of long-term trends in European history. Steam engines and their application are not something that can be derived by tinkering or rationalization of existing production. Instead, their development depends on scientific knowledge of a kind that was not at all obvious, and indeed generally overlooked throughout most of history. Rather, it was something of a “happy chance” that the specific trends in science, economic organization, and political and religious liberties

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arose and survived in England in a pattern that produced not only the steam engines, but the engineers to improve it and the entrepreneurs to apply it. This chapter argues that had events in 1688-89 unfolded slightly differently, the world as we know it might never have come about.

Chapter 10 then places England’s industrialization in global context. It argues that there in fact have been many episodes of technological advance and economic growth, driven by rational thought, acquisitiveness, and innovation. The achievements of Medieval Europe, Golden Age Holland, and Qing China are revealed to have been remarkable episodes of per-capita growth, although none led to industrialization. Thus, neither innovation nor growth themselves were new in the 18th and 19th centuries. Rather, what was new and transforming was that they became grounded in a new scientific knowledge that produced both undreamed of sources of energy, and continuing discoveries to augment the processes of innovation and growth. It was the marriage of scientific engineering and entrepreneurship that truly launched England, and then the world, on the path to self-sustaining economic growth. Chapter 11 then seeks to answer one remaining question – is it truly possible that societies, if rational and having large and complex economies, could somehow miss or forgo the advantages of industrial development? Surely, given enough time, any entrepreneurial economy would advance, step-by-step, to greater efficiency and eventually to industrialization. This argument is explicit in many accounts of Tokugawa Japan, for example, which see it as on the edge of independent industrialization if the West hadn’t intervened (MacFarlane, Landes).

Chapter 11 shows that China in fact stopped at a much earlier level. Despite having developed complex water-powered spinning machines for the fabrication of yarn, China abandoned them. Even though it had an enormous cotton-producing economy, which innovated to produce more efficient spinning and weaving technologies, it stayed away from paths that could have led to water-powered factory production, similar to that of Arkwright’s early spinning mills in England. I argue that even in preindustrial China, segmented labor markets (in this case on the basis of gender), culturally prescribed and enforced by the state, worked to limit the options open to entrepreneurs. Cultural restrictions thus closed possible pathways to greater efficiency and growth, even when no technological obstacles stood in the way. This was not simply a matter of some cultures as a whole being more inclined to innovation and progress, while other cultures were not. As we shall see below, imperial China remained strongly open to invention and technical improvement in agriculture and other areas (such as administrative organization and public welfare provision) well into the 18 th

century. Rather, it demonstrates that just as one particular element of British 17th

culture, namely the development of an “engineering culture” in a certain portion of the population, opened new paths to growth, so too one particular element of

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Qing Chinese culture, namely a particular way of gendering the markets of labor, closed others. I offer this as simply one case of the power of culture to deflect economies, and to show how precarious and fortunate the West was that one particular corner of that society happened to stumble on a formula that produced industrial growth.

In the conclusion, I reflect on the lessons of this understanding of the rise of the West for modern economic development, particularly in emerging economies. The clear lesson is that simply aiming to accumulate capital or resources is not a path to growth. Nor is simply aping western political or social institutions. Rather, liberty has to be given specific contents, and an economy put on the particular pathways for rapid economic growth.

A FEW WORDS ON METHOD

In recent years, the dominant tendency in economics has been formalism, whether in analytic models of how economies and actors are expected to behave, or in econometric models that tease out general patterns from large masses of data. In both kinds of models, the emphasis has been on general theory, that is, on patterns of behavior and development that are believed to be widely applicable across regions and time-periods. This work has strongly put the “economics” into economic history, and produced much work of great value. Yet such approaches work far less well in identifying and explaining the specific differences that separate economic behavior and development in certain times and places from others. Formal analytic models, after all, are designed to capture what is general and isolate it from contextual particulars, while econometric models aim to average out general tendencies and suppress the myriad variations among individual cases. In this book, where we are trying to understand something that happened only once in all the thousands of years of global history – the discovery of certain modern principles of physics (mainly Newton’s laws of motion and gravity, and the properties of gas pressure and vacuums), and their application to economic production through harnessing the energy of heat to create mechanical power – we need a somewhat different approach. To understand how these epochal events occurred, we need to understand how British thinkers, inventors, and entrepreneurs found themselves on a pathway that no others anywhere in the world managed to find. While readers of this book will find a few formal and econometric models introduced where they are appropriate, the emphasis in this book is instead on identifying historically-specific combinations of events, developmental paths, and contingencies that produced a unique outcome.

Our method will thus be a close empirical examination of the conditions of economic growth in Britain and other Eurasian societies, to better understand

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what was similar, what was different, and what differences were most important in putting Britain on a unique path. We will make generous use of available data, but mainly to test and refute various assertions about the uniqueness of various conditions in the West. For example, in Parts I and II, we examine monetary history, agricultural productivity, population dynamics, urbanization, trade, and manufacturing, comparing levels and trends of various factors in Europe with those in other parts of Eurasia. We show that despite claims that various elements of European economic history formed unique take-offs, turning points, or departures, in fact these elements were not unique. Rather, measured against events in other parts of Eurasia or other historical periods, we can plainly see that many of these alleged turning points were simply part of a longer-term cycle, or representative of general global trends. The basic similarity of British, or European, and other Eurasian economies up through the eighteenth century thus becomes clear.

Where, then, lay the basis for Britain’s embarkation on the path to industrialization? In rather small and unlikely differences from other major Eurasian societies. Readers familiar with the basic principles of chaos theory – that small initial differences can produce immensely large divergences in outcomes over time – will recognize the basic principle at work. Our argument is that in the course of the seventeenth and eighteenth centuries Britain, and only Britain, developed a unique combination of conditions: a particular direction in the development of experimental sciences; unusually sustained institutionalization of limited but secure toleration for free-thinking and religious heterodoxy; an extraordinary diffusion of basic scientific and engineering knowledge; and exceptional social networks that brought together natural philosophers, skilled mechanics, and business entrepreneurs in joint pursuit of projects to improve economic conditions. When these specific conditions arose, then Britain – despite starting with monetary systems, agricultural productivity, population dynamics, and levels of trade, urbanization, and manufacturing that were not at all exceptional in global context – developed into a manufacturing and military powerhouse that in slightly more than a century became the workshop of the world, and mistress of an empire on which the sun never set.

To show how this occurred, we shall have to tell stories – to put the “history” strongly back into economic history. We shall engage in what I have elsewhere called “process-tracing” (Goldstone 2003). That is, in Part III, the story of growth and the obstacles to growth is traced out in various historical contexts, to highlight what was special in the story of Britain in the seventeenth and eighteenth centuries compared with other regions and time-periods. The result is to identify the particular pathway to growth that Britain stumbled upon, involving the widespread application of modern scientific engineering to economic problems. By being the first to find its way to this specific growth path, Britain – a relatively

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small island at the far reaches of the Eurasian land mass – became the first truly modern nation, and the world’s first global military and economic superpower.

NOTES TO INTRODUCTION

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