EC104 topic 2

amarjotsidhu's version from 2015-06-06 00:32

Topic 2 - The Great Divergence

Question Answer
Needham's PuzzleChina richer and more technologically developed than Europe but Europe richer by 1850. If China was ahead before, why was there no Chinese industrial revolution?
'Song Peak'(960-1279) Urbanised, sophisticated government
Great Divergenceincreasing gap between Europe and China result of English and Dutch success vs. Chinese falling behind
Classical view on Great DivergenceEvidence of ancient wealth from the voyage of Marco Polo (1271-1295). Smith and Malthus tried to explain Chinese poverty, not Chinese wealth
California school on Great Divergence(Ken Pommeranz, Andre Gunder Frank) - argue for late divergence (1800-onwards). China is at least as rich as Europe until the late Ming (17th century). Differences emerge due to industrial revolution. Rejects cultural/institutional explanations
New Revisionist view on Great Divergence(Allen, Broadberry) - argue for early divergence (1600 or earlier). Parts of Europe are always richer than China but which parts are richer changes
Wages in ChinaBob Allen calculates real wage (labour daily silver wage adjusted for cost of living) - divergence happened from 1400; plague killed lots of people everywhere which relieves Malthusian pressures, allowing incomes to rise; London and Amersterdam workers stay rich (3-4 subsistence) while everyone else returns to low wages (1500-1700) = Malthus was partly right; plague driven wages boom of the 1300s evaporates under population growth (except in London and Amsterdam)
Broadberry and Guptagrain wages measure food availability while silver wages measure access to consumer goods; earlier divergence in silver wages than Grain; Chinese grain wages are 87% of Britain in 1550-1650, Chinese silver wages are only 39% = Chinese well off in food but not manufactures and services
Maddison "guesttimates" for GDP per capita in China vs EuropeChina ahead in 1280 but income constant till 1700 with Europe overtaking it by this point
Broadberry, Guan and LiChina was rich and divergence happened early. China fell behind after Song Dnynasty, falling into Malthusian trap (GDP/capita estimates)
EuropeSouthern Europe falls behind by 1600 (ahead in 1400) ; Netherlands ahead by 1600, Britain by 1700; Britain relatively poor till 1600; Italy and Holland control world trade (= high incomes but not industrial revolution) ; no sustained growth till industrial revolution
AsiaSong dynasty China richest in Asia; India remains poor overall ; Japan has lead by 1700; Asia poorer than Europe as far back as 1400
Adam Smith on Great DivergenceEurope had good markets and good government (vs. China) = contract enforcement, infrastructure, etc.
Malthus on Great Divergencepreventative checks exist mainly in Europe only (moral restraint) ; positive checks exist in China (war, disease, etc.) which prevents economic growth = Europe has fewer people and is richer
Culturalists on Divergence(Max Wever) - Europe = capitalist, modern states with Protestant work ethic); China has Taoist culture and Confucian officialdom - constrains free enterprise and commerce, opposes technological change, focuses on family obligations and landownership (backward looking)
New Institutionalists(North, Greif) - rules of game; rise of markets, private property rights in Europe; authoritarian power = insecure property rights in China - oriental despotism ; early modern divergence (around 1500)
Malthus evidence in Song Dynastypopulation rising between 980-1279 but Song Dynasty was rich = rising population + high income = incomes not decreasing (Malthus wrong in this era)
Malthus in China in MongolMongol inerlude (1279-1368) - population fell by more than 30%, as a result of Mongol conquest brutality + Black Death.
Malthus in China after Mongolpopulation growth initially resumes (Ming dynasty) but in mid 17th century, there was a fall in population (305) due to brutality in the transition between regimes (Ming-Qing) and infectious diseases e.g. Smallpox
Malthus in China in QingChina had 381 million people by late Qing (20th century) - massive population with stable long-run living standards but incomes remained near subsistence
Malthus evaluationdoes not solve Needham's puzzle ; Europe escapes trap ; China was advanced before Ming/Qing. Doesn't tell us why China was wealthy earlier and why it falls behind
Chinese institutions - Fiscal state (Tang Dynasty: 618-907)Free labour, increased trade, taxes rather than forced labour (land ownership allowed); meritocratic bureaucracy of commoners
Chinese institutions - fiscal state (Song dynasty)sophisticated monetary and fiscal system e.g. world's first paper money, trade and land taxes - used to pay enormous tributes required to keep imperial state secure without large standing army (tributes required taxable trade = merchants became influential compared with landowners) ; Mongol interlude - severe destruction from war and plague
Chinese institutions - fiscal state (Ming/Qing: 14th - 20th century)decentralised govt., increased local admin, focus on agriculture, local markets where land could be bought/sold; low taxes -> institutions good for feeding people but not good for state building (taxation fell behind, lack of public good provision = lack of basis for economic growth) ; defence more secure till mid 19th century (European threat)
China and agriculturelimited cultivatable land; increases in yields via irrigation, draining lakes; high pressure on land vs. Europe (forests, destroyed, fallowing abandoned, no common land) = maximisation of food output needed to match high population growth; yield increased by 3/4 between 1400 and 1820 due to multiple cropping of rice, barley and wheat + intro of new crops e.g. maize, potatoes = previously useless land cultivated; pluriactive rural households did more than farming - textile and clothing, food and drink, manufacture of building materials
China and trade before 1400Song - extensive trade; China has a large trade network + large river and ocean fleets in 1400
China and trade - Yongle Emperor(1405-1422) naval expeditions led into ocean - first steps to Chinese colonialism + display of power
China and trade post Yongleafter death of Yongle, fiscal and monetary crisis (naal expeditions exacerbated problems) -> focus on domestic issues, low taxes and ending of Chinese fleets and reduction in tributes = lower international influence; shift in power from merchants to bureaucracy; internal political struggles = destruction of knowledge; regulation of trade = smuggling and trade 9by 1567, China ends prohibition on private trade)
China after Song overviewMing dyansty = focus on feeding population, retreat from outside influence; success in agriculture and defence
Levy (1953) on the decline of China from Qing eradecline from being a leading economic power = down to emergence of nepotism, corruption and other elements which prevented response to Europe
Pomeranz on Britain's head start in industrialisationBritain's head start in industrialisation down to cheap coal and superior access through colonies to land intensive goods
Brandt, Loren et al. on Song Dynastyit saw the formation of institutions, merit based civil service, development of private commerce
Brandt, Loren et al. on Ming Qingmassive population growth stable long run living standards (output kept pace with population); well developed informal finance and credit system e.g. currency exchange shops to exchange between different forms of currency (silver and copper)
Lee and Wang on China's combination of near universal female marriage and low birth ratesdown to widespread incidence of female infanticide, primitive contraception and abortions,
Brandt, Loren et al. on China's imperial systemit constrained growth. lack of an ideology which would drive growth. lack of fiscal capacity (Qing public finances in the last half of the 19th century = weak); lack of administrative structure = state not fit to implement development policies. patronage economy - lack of property rights. Interlocking elite interests (imperial household, bureaucracy and commercial elites = system resisted change that threatened the wealth of these groups)
Broadberry & Gupta on silver wages and development in Europe17th century, Southern Europe = highest silver wages but then North has highest in 18th and 19th centuries; this was down to urbanisation and non-industry development in Northern Europe
Broadberry & Gupta on Pomeranz's claim that Yangzi delta on same development level as Northern Europenothing in urbanisation ratios suggests this
Broaberry & Gupta on Asia vs Europe 1500-1800divergence well under way before 1800
Olson on democracy vs autocracydemocracy will have lower tax rates than autocrat, less redistribution and less uncertainty than the autocratic succession process