Monday, November 21, 2011

A new book on the great divergence

Dan Little discusses in Beyond divergence a new book on the great divergence Before and Beyond Divergence: The Politics of Economic Change in China and Europe by R. Bin Wong and Jean-Laurent Rosenthal.
Apart from covering a much longer period, one of the several new points seems to be:
"The competing states of Europe were frequently drawn into conflict; and conflict often resulted in warfare. R&W argue that this fact of competition had a fateful unintended consequence. It made fortified cities much safer places than open countryside. And this in turn changed the calculation about where "manufacture" could occur at lowest cost. Labor costs were higher in cities, so absent warfare, producers were well advised to pursue a putting-out system involving peasant workers (proto-industrialization; link). But with the threat of marauding armies, European producers were pushed into urban locations. And this in turn gave them incentives to develop labor-saving, capital-intensive techniques. Putting the point bluntly: China didn't have an industrial revolution because it was too safe an environment for labor-intensive production."

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