Review of Pomeranz book
Source Louis Proyect
Date 01/04/28/00:50

Kenneth Pomeranz, The Great Divergence: China, Europe, and the Making of
the Modern World Economy. The Princeton Economic History of the Western
World. Princeton, NJ: Princeton University Press, 2000. x + 382 pp.
Appendices, Bibliography, and Index. $20 Cloth ISBN 0-691-00543-5.

Reviewed for H-World by Peter C. Perdue,, Department of
History, MIT.

Title: Lucky England, Normal China

Explanations of the Industrial Revolution abound. The debate over its
origins has been called a well-squeezed lemon, yielding few new drops of
insight. Ken Pomeranz's brilliant analysis, however, fundamentally
reorients discussion of this hoary question by placing it in a comparative
global framework.

It is not easy reading. Close argumentation is joined to meticulous
empirical comparison, derived from the best, most up-to-date studies of
China and Europe. Although he does not introduce new primary sources, he
gleans valuable data from many monographs. He focuses mostly on England and
the lower Yangzi delta of China [Jiangnan] from the sixteenth to eighteenth
centuries, but sometimes includes all of Europe, China, Japan, India, and
the New World. The main thesis is, nevertheless, quite clear: that China,
and Europe were basically similar in nearly all significant economic
indices, including standard of living, market development, agrarian
productivity, and institutional structures that affected growth. This
fundamental similarity invalidates arguments stressing deeply rooted
European singularities. The "great divergence" -- a sudden, unexpected leap
by England ahead of the rest of Eurasia beginning around 1800 came from two
fortuitous circumstances: convenient coal supplies and access to the
abundance of the New World. This huge windfall allowed England to escape
the ecological trap toward which the entire continent was headed. The
geological contingency which put coal and the Americas closer to the
western than the eastern end of Eurasia dramatically reversed the fate of
its regions.

Building on regional socioeconomic studies of imperial China, Pomeranz
methodically bats down five categories of arguments for European
uniqueness, referring to demography, markets, luxury consumption, labor,
and ecology. In each case, he carefully teases out which differences
matter. For example, many credit the much touted European demographic
system, featuring late marriage, low percent married, but unrestricted
fertility within marriage, with keeping down European populations. Asians,
by contrast, were viewed as breeding heedlessly because of early and
universal marriage. But, fertility control within marriage kept Chinese
populations below their maximum, too, ensuring them life expectancies equal
or greater than most of Europe, and roughly comparable standards of living.
The special European demographic structure was not, in the end,
economically significant.

Allocation of capital, labor, and land by competitive markets in China was
if anything freer than in Europe. Imperial China, by and large, had free
labor, substantial migration, frequent land sales, and enforceable property
rights, which allowed efficient resource use, while even in the most modern
parts of Europe, entailment restricted land sales, and urban guilds
restricted craftsmen. In the rest of Europe, much more severe controls,
from apprenticeship to serfdom, severely constrained investment and kept
urban-rural income gaps high. Given these barriers, it is hard to make a
case that income inequalities were any larger in China than in comparable
regions of Europe.

Alternatively, others argue that Europe benefited not from its freedoms,
but from its constraints. Large scale monopolistic merchants and luxury
consumption by aristocratic and urban elites could have been the motor of
industrialism. But China, too, had both merchant dynasties and crazes for
fashionable goods. One example not cited by Pomeranz supports his point.
Many believe that Nathan Rothschild, who died in 1836, was the richest man
in the world, but his fortune pales by comparison with that of his
contemporary Wu Bingjian, the Canton merchant known to Europeans as Howqua.
Rothschild held capital equivalent to 5.3 million U.S. dollars in 1828,
while Wu's wealth amounted to 56 million American dollars, more than the
entire Rothschild family. Did Wu simply invest his fortune in land? No, he
actively managed much of his portfolio by investing with the Forbes family
of Boston. In any case, capital was not the limiting factor for early
industry, since the cost of establishing a factory was low. Land and
materials were far more important.

Other arguments focus on the cost of labor. Did China's low-wage, dense
populations discourage labor-saving innovation? Or were Chinese women
forced to spin and weave in their households for wages below subsistence?
Pomeranz finds male and female textile workers' wages roughly equal, and
not noticeably less than Europe's. Europeans did send more women to
factories than China, but Chinese women sold their household products on
competitive markets for fairly high prices. Again, the European difference
does not matter.

Finally, both ends of Eurasia were running into severe resource limits by
1800. The most original part of Pomeranz' argument is his effort to compare
the degree of scarcity of productive resources like land and forests in
Europe and China. He finds that China was not worse off than Europe at this
time [contrary to common wisdom], but both were nearing exhaustion. China
did suffer severe environmental deterioration in the nineteenth century,
but Europe had a very narrow escape.

I find the evidence for these similarities convincing, and their
implications large. The Industrial Revolution did not grow smoothly out of
long term European superiority. England was instead a "fortunate freak"
[207] whose coal supplies, close to abundant water and accessible ports,
made the steam engine economically feasible. China, whose main coal
deposits were in the northwest, far from its textile manufacturers in
Jiangnan, had no use for a steam engine, and no reason to overcome the huge
cost of getting coal to the lower Yangtze. Such very local accidents of
geology had a powerful effect on creating the preconditions for the first
industrial breakthrough.

But the Industrial Revolution was both local and global. The leitmotifs of
the book are the relationships between contingency, coercion, and global
conjunctures. Although he stresses accidents, Pomeranz does not reject
large-scale explanations. He invokes three kinds of contingency, each of
which is linked to global processes: windfalls, unintended consequences,
and the "Panda's Thumb" phenomenon, in which resources and organizations
created for one purpose are diverted to serve an entirely different one.
(As Stephen Jay Gould explains, the giant panda's thumb evolved not from a
finger bone, but from the wrist).(Gould 1980, 22) New World silver, timber,
sugar, and cotton were unexpected windfalls, but the resources alone were
not the key. Instead it was the unintended consequences of New World
colonization that mobilized them to solve Europe's ecological crisis, and
European chartered trade companies were the Panda's Thumbs that collected
these resources. Created not for accumulating capital, but for conquest,
these quasi-private entities were given free reign to engage in the piracy
and commerce needed to compete with more experienced and efficient Asian
traders and run Caribbean plantations. Only much later did this
organizational form, transmuted into the corporation, become the most
efficient method of mobilizing capital for large industrial enterprises.

These trading companies projected European interstate rivalries overseas,
connecting the European state system to global economic dominance. Military
competition is universal, and China was no pacifist empire either. Where
Europeans stood out was in the active protection of their commercial
representatives abroad. China, by contrast, did not use its vast state
power to protect merchants who settled in Southeast Asia, even when they
were massacred by rivals. Here geopolitical strategy enters the economic
story. Chinese dynasties from the fifteenth century on focused nearly all
their military attention on Central Eurasia, where the nomadic warrior was
the main threat. In Central Eurasia, the empire used force and diplomacy to
ensure that frontier merchants could trade China's textiles for one
essential product: horses. Other merchants had little strategic importance.

Colonization linked geographical contingencies, coercive capital
organizations, and global conjunctures. But the most important benefits for
Europe came not from Asia, but from the New World. The Caribbean and
Brazilian plantation complex, and the southern American cotton and tobacco
production system, were indispensable in providing the resources necessary
for industrialization. Pomeranz revives older interpretations of the
triangle trade with a new ecological twist. More important than profits
were the "ghost acres" freed up by the ability to use the American lands.
Sugar, timber, and cotton, if grown in Europe, would have used 10 to 15
millon acres, or two-thirds of England's total arable land, according to
Pomeranz's calculations. This very special form of colonial exploitation
radically distinguished the New World peripheries from the old. Because
slaves needed large imports, grain and timber exports from North America to
the Caribbean gave Northerners the income to buy British manufactures.
Chinese frontier settlers, by contrast, established themselves as
independent farmers with state support, and soon developed "import
substitution" rural industries that competed with the lower Yangtze,
reducing its linkages to the periphery.

Consequences of Accident:

Pomeranz' provocative insights bring the Industrial Revolution debate up to
date. Arnold Toynbee, who coined the term in 1884, saw it as a sharp
discontinuity, characterized by free competition and the steam engine. The
"early modernist" interpretation that arose in the 1970s saw it as evolving
slowly out of centuries of special European development. The cycle of
interpretation has returned to its origins, but with a difference. The
great divergence now once again looks later, more sudden, and less "deep"
than the early modernists believed. The crucial factors are now ecological,
not technological or cultural, and vitally dependent on the "global
conjuncture" that united the peoples of the world, not on their separate
cultures. Interaction, ecology, and contingency have replaced separation,
civilizational dichotomies, and determinism.

Stressing contingency also means rejecting the faith of classical economic
theory in the determination of equilibrium by large-scale balancing of
supply and demand. Newer economic theories, however, do recognize the large
effects of small events, bringing economics closer to history. As Paul
Romer, founder of New Growth Theory, has stated, "We must confront the fact
that there is no special logic behind the world we inhabit. Any number of
arbitrarily small perturbations along the way could have made the world as
we know it turn out very differently. We are forced to admit that the world
as we know it is the result of a long string of chance outcomes." [Romer
1994, cited in Lewis 2000, 252]

Pomeranz' argument has two other targets: those who see Western Europe as
the only dynamic society before 1800, and those who see the Industrial
Revolution as merely a shift in dominance within an integrated global
system. The abundant evidence of similarities deals a heavy blow to
Eurocentric interpretations, but I expect that the debate will not end.
Diehards can always look for other unique factors. Recently, for example,
many economists have recognized the significance of information to economic
growth. Some have already begun to argue that Europe accumulated a larger
stock of applicable technical knowledge than China by 1800. But once again,
this may be a distinction without a difference. We do not know which
knowledges really matter for economic growth, and how much of them Chinese
and Japanese possessed. The pendulum will keep on swinging, as Europeanists
proffer other special features while Asianists find their equivalents in
Asia. But the more important implication is that England could just as
easily have become Jiangnan, trapped in an ecological cul-de-sac. She had a
narrow escape.

World historians ought to pay special attention to the implicit challenge
to world system theorists. Much of this theorizing looks back from the
twentieth century, as Marx looked back from the nineteenth. The conspicuous
rise of Asia in the late twentieth century has led to a new recognition of
the dominance of Asian economies in the past. [Frank] The system theorists
share with the Eurocentrists a sense of long-term inevitability. They
likewise give privileged attention to core areas, which diffuse impulses of
change to the periphery. Now, in their view, the global economy has
returned to a "natural" state that was interrupted by the nineteenth and
twentieth-century imperialist interludes.

Such retrospective prediction is alien to the perspective of this book,
which instead looks forward from the eighteenth century, when the future
was no more obvious than it is today. We, too, should be prepared for more
surprises. Extend the metaphor of exploration to the microscopic realm of
biochemistry and the macroscopic realm of outer space, and we will find
more windfalls, which will be exploited by contingency and coercion with
global implications. Pomeranz' brilliant analysis will not end the debate
on this subject, but he brings it up to the twenty-first century, a time of
unprecedented global linkages accompanied by great uncertainty. No one
interested in economic history, Asian history, or world history can ignore
his powerful argument.


Frank, Andre Gunder. 1998. ReOrient: Global Economy in the Asian Age.
Berkeley: University of California Press.

Gould, Stephen Jay. 1980. The Panda's Thumb: More Reflections in Natural
History. New York: Norton.

Lewis, Michael. 2000. The New New Thing: A Silicon Valley Story. New York:

Romer, Paul. 1994. "New goods, old theory, and the welfare costs of trade
restrictions," Journal of Development Economics, 43/5-38.

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