GREAT DIVERGENCE
When was the Great Divergence?
Needham’s Puzzle- if China used to be ahead, why was there no Chinese IR?
- 1200- 1400: China was richer (“Song Peak”) and more technologically developed than
Europe
• 4 Great Inventions: Paper, Gunpowder, Printing, Compass
• Consolidation of political powder in emperor’s hands
• Tax system based on registration and assessment of privately-held land
• Merit-based civil service staffed by commoners instead of aristocrats
• Use of written examination to create a pool of candidates for official appointments
• Shift to an agricultural regime based on small holder ownership and tenancy
• Expansion of markets for commodities and factors
• Penetration of money in commercial exchange and the extensive development of
private commerce
- By 1850: Europe, esp. North western Europe, richer and more technologically advanced →
Take off of EU incomes, education, technology, infrastructure
- Europe was the first to reach sustained economic growth
- Emerging gaps in incomes and technology between East and West, North and South
- China did not have the correct institutional framework to sustain the higher productivity and
improved efficiency seen during the initial Song Period
Schools of Thought
1. Classic View
- Evidence of Ancient Wealth in China: Marco Polo (European) found it impressive &
sophisticated (1271-1295)
Consistent with modern evidence
2. California School (late divergence 1800 onwards) - Pommeranz (2000)
- China at least as rich as Europe until the late Ming
• Comparative levels of Technological and economic development until the late Qing
dynasty (1800)
• Per capita food consumption and the purchasing power of wages measured in terms
of calories was as high as Yangzi Delta region of China as in the most developed
parts of Europe as late as the end of the 18th Century
- Difference emerges due to industrial revolution and first globalisation→ Globalization:
Imperialism (fleets of ship), Emergence of coal; China more focused on developing inwards
while Europe made use of the interconnectedness of the world
- Rejects LR features of cultural/Institutional explanations
3. New Revisionists (early divergence 1600 or earlier)- Allen, Broadberry & Gupta
- Parts of Europe always richer than China → Parts of Europe & parts of Asia (China) move in
different ways (Which parts were richer changes)
- Europeans had higher wages, more and better access to manufactured goods, higher levels
of urbanization, long before the late Qing dynasty and the industrial revolution
, Wages
Bob Allen (2011)
- Real wages converted into a common commodity (Silver) which was traded internationally
(Between 1375 to 1800)
- Real wages- assess Standard of Living → How relatively ordinary people lived
- Built the “bare bones” survival basket → 1940 calories per day (No luxury items)
- Calculate cost of living: collects prices of the basket of goods in various cities, in local prices
and converts them to silver prices and metric units
- Calculated welfare ratio: divide silver wage by the cost of “bare bones” survival basket:
Expressed how many times an adult male could buy the subsistence basket for themselves
and their families with the wages they earn
o Chinese wages were well below those of London and Amsterdam, though they were
comparable to poorer parts of Europe (Ex Milan) and India
o Difference due to European advance rather than decline of China
o Suggests that great divergence happened from 1400 → People in India/China could not even
afford 1 basket by 1800s while people in London could afford more than 3 → Price gaps
between Europe and China really opened up from the mid 19th Century
o Link to Malthusian School of Thought:
• Everyone surprisingly rich in 1400 due to plague (Positive Check)
• Relieved Malthusian Pressure → More land and capital per person → Incomes rise
• Returns to low wages from 1500 – 1700
• Allen suggest that Malthus was partly right – Wages in most of the world for most of
1400-1900 were barely enough to survive
• The plague-driven wages boom of the 1300s evaporates under population growth →
Except in London and Amsterdam (Richer northwestern countries), possible due to
steps towards industrial revolution
Broadberry &Gupta (2006)
- Argue for early divergence (1500 to 1800)
- More and earlier divergence in SILVER wages than grain
- Grain wages measure food availability- show agricultural efficiency
- Silver wages measure access to consumer goods- show purchasing power
- Grain wages in China was comparable to those in north-western Europe (87% of Britain in
1550-1650) → Roughly equivalent SoL in terms of nutrition
- Silver wages were a fraction of north-west European levels → High silver wages reflected
commercialism =/= Access to food; Not simply a monetary phenomenon, but reflected high
productivity in traded goods sector →More traded goods and levels of urbanization suggest
higher level of production of non-agricultural production
- As workers move further from subsistence, they purchase fewer nutritional goods and more
manufactured goods and services (Engel’s Law)
- Chinese consumers- well off in food, not manufactured goods/services
- Gap between the ‘silver wage’ & ‘grain wage’ as an indicator of the level of development:
- Comparable levels of grain wages cannot be used to conclude level of development:
European workers are paid far more in terms of silver -> higher SoL in terms of
manufactured goods and access to services (Chinese Silver wages only 39%)
- Craft and Harley: Britain development was due to a shift of labor out of agriculture,
accompanied by extensive urbanization (Similar to less developed Europe, China and India
had a high share of agriculture in economic activity, combined with natural advantage of
high yield of rice)
When was the Great Divergence?
Needham’s Puzzle- if China used to be ahead, why was there no Chinese IR?
- 1200- 1400: China was richer (“Song Peak”) and more technologically developed than
Europe
• 4 Great Inventions: Paper, Gunpowder, Printing, Compass
• Consolidation of political powder in emperor’s hands
• Tax system based on registration and assessment of privately-held land
• Merit-based civil service staffed by commoners instead of aristocrats
• Use of written examination to create a pool of candidates for official appointments
• Shift to an agricultural regime based on small holder ownership and tenancy
• Expansion of markets for commodities and factors
• Penetration of money in commercial exchange and the extensive development of
private commerce
- By 1850: Europe, esp. North western Europe, richer and more technologically advanced →
Take off of EU incomes, education, technology, infrastructure
- Europe was the first to reach sustained economic growth
- Emerging gaps in incomes and technology between East and West, North and South
- China did not have the correct institutional framework to sustain the higher productivity and
improved efficiency seen during the initial Song Period
Schools of Thought
1. Classic View
- Evidence of Ancient Wealth in China: Marco Polo (European) found it impressive &
sophisticated (1271-1295)
Consistent with modern evidence
2. California School (late divergence 1800 onwards) - Pommeranz (2000)
- China at least as rich as Europe until the late Ming
• Comparative levels of Technological and economic development until the late Qing
dynasty (1800)
• Per capita food consumption and the purchasing power of wages measured in terms
of calories was as high as Yangzi Delta region of China as in the most developed
parts of Europe as late as the end of the 18th Century
- Difference emerges due to industrial revolution and first globalisation→ Globalization:
Imperialism (fleets of ship), Emergence of coal; China more focused on developing inwards
while Europe made use of the interconnectedness of the world
- Rejects LR features of cultural/Institutional explanations
3. New Revisionists (early divergence 1600 or earlier)- Allen, Broadberry & Gupta
- Parts of Europe always richer than China → Parts of Europe & parts of Asia (China) move in
different ways (Which parts were richer changes)
- Europeans had higher wages, more and better access to manufactured goods, higher levels
of urbanization, long before the late Qing dynasty and the industrial revolution
, Wages
Bob Allen (2011)
- Real wages converted into a common commodity (Silver) which was traded internationally
(Between 1375 to 1800)
- Real wages- assess Standard of Living → How relatively ordinary people lived
- Built the “bare bones” survival basket → 1940 calories per day (No luxury items)
- Calculate cost of living: collects prices of the basket of goods in various cities, in local prices
and converts them to silver prices and metric units
- Calculated welfare ratio: divide silver wage by the cost of “bare bones” survival basket:
Expressed how many times an adult male could buy the subsistence basket for themselves
and their families with the wages they earn
o Chinese wages were well below those of London and Amsterdam, though they were
comparable to poorer parts of Europe (Ex Milan) and India
o Difference due to European advance rather than decline of China
o Suggests that great divergence happened from 1400 → People in India/China could not even
afford 1 basket by 1800s while people in London could afford more than 3 → Price gaps
between Europe and China really opened up from the mid 19th Century
o Link to Malthusian School of Thought:
• Everyone surprisingly rich in 1400 due to plague (Positive Check)
• Relieved Malthusian Pressure → More land and capital per person → Incomes rise
• Returns to low wages from 1500 – 1700
• Allen suggest that Malthus was partly right – Wages in most of the world for most of
1400-1900 were barely enough to survive
• The plague-driven wages boom of the 1300s evaporates under population growth →
Except in London and Amsterdam (Richer northwestern countries), possible due to
steps towards industrial revolution
Broadberry &Gupta (2006)
- Argue for early divergence (1500 to 1800)
- More and earlier divergence in SILVER wages than grain
- Grain wages measure food availability- show agricultural efficiency
- Silver wages measure access to consumer goods- show purchasing power
- Grain wages in China was comparable to those in north-western Europe (87% of Britain in
1550-1650) → Roughly equivalent SoL in terms of nutrition
- Silver wages were a fraction of north-west European levels → High silver wages reflected
commercialism =/= Access to food; Not simply a monetary phenomenon, but reflected high
productivity in traded goods sector →More traded goods and levels of urbanization suggest
higher level of production of non-agricultural production
- As workers move further from subsistence, they purchase fewer nutritional goods and more
manufactured goods and services (Engel’s Law)
- Chinese consumers- well off in food, not manufactured goods/services
- Gap between the ‘silver wage’ & ‘grain wage’ as an indicator of the level of development:
- Comparable levels of grain wages cannot be used to conclude level of development:
European workers are paid far more in terms of silver -> higher SoL in terms of
manufactured goods and access to services (Chinese Silver wages only 39%)
- Craft and Harley: Britain development was due to a shift of labor out of agriculture,
accompanied by extensive urbanization (Similar to less developed Europe, China and India
had a high share of agriculture in economic activity, combined with natural advantage of
high yield of rice)
