October 27, 2003

Origins of the Industrial Revolution

Carol Shiue from U. Texas came through today to challenge the current orthodoxy that good institutions --> security of property rights --> expanded trade --> industrial revolution in northwest Europe. Her point? China's internal trade and market functioning in the eighteenth century look as secure and as well-functioning as northwest Europe's. Security of property, market-supporting institutions, and an efficiency-functioning and marketized commercial economy may well be necessary prerequisites for an industrial revolution, but they aren't sufficient.

Carol Shiue and Wolfgang Keller (2003), "Markets in China and Europe on the Eve of the Industrial Revolution" (Austin: U. Texas). Abstract: Does trade cause growth? How about the Industrial Revolution itself? A widely-held view is that the more efficient markets in Europe provided an important reason for why the Industrial Revolution began its spread in the late eighteen century from Europe and not from China. Many reasons have been proposed for this supposed market efficiency gap: geography, culture, nationality, population, institutions, and historical "accidents" like the conquest of the Americas. In this paper we compare the actual efficiency of markets by examining data on the spatial dispersion of grain prices from the fifteenth to the early twentieth century. This analysis is made possible by a new consistent and detailed set of grain price data covering about 60% of China in the eighteenth century--a part of China larger than Western Europe, and one that then contained one-fifth of the world's population.

Posted by DeLong at October 27, 2003 05:03 PM | TrackBack

Comments

Kenneth Pomeranz pursues a similar theme in 'The Great Divergence'. The reasoning is sound but it misses the point.From the middle of the 17th century, the scientific revolution was proceeding apace in Europe while in China it had come to a halt. The great economic advance of the 19th century owes more to this than to marketing logistics which were certainly no better in Western Europe than in the Yangtse basin, the comparable region of China.

Posted by: Reghall on October 27, 2003 06:10 PM

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I have always taken it for given that the Chinese state's anti-bourgeois ideology meant that taxes would be increased whenever the capitalists got too uppity (either by trying to gain political power, or by shows of wealth more ostentatious than the mandarins could afford). I've never seen this idea justified or argued; I thought it was a truism.

The path of success for the bourgeoisie was supposedly to buy land and then educate the sons to be public officials. (Steensgaard, I think says that in Portugal and Spain talent and investment were channeled into the military instead of productive enterprise).

Mark Elvin, The Pattern of the Chinese Past, blames the "high-level equilibrium trap" which meant that China reached a relatively high level of prosperity by diligent exploitation of all available resources, without being able to progress from there except in small increments. Lack of scientific inputs was one reason, overpopulation (or saturation) probably another, and the taxation of successful enterprises and redistribution of the proceeds a third. Haven't read that book in a long time though.

Apparently around ?1700--?1800 Chinese population increased manyfold (5x?). Needham (I think) attributed it to the introduction of yams and potatoes (that's where you put the "e" in BTW, in plurals) because they provided a backup crop to rice. I read Needham a long time ago too.

Posted by: Zizka on October 27, 2003 07:27 PM

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link (includes full article):
http://poverty.worldbank.org/library/view/14036

Pomeranz's book gets a name-check.

on a first skim, I'm not too excited about drawing any broad conclusions from this paper. I'm just not surprised to read, "that the bulk of the market's improvement took place only once modern growth had started indicates that most of the improvements in the degree of market integration in the 19th century in Western Europe may be largely a consequence of industrialization rather than a cause."

then, I'm not an economic historian. do some of them really argue that Europe industrialized when it did because it had arbitrageable long-distance trade?

Posted by: wcw on October 27, 2003 07:37 PM

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Property rights and free trade facilitate human creativity, but they do not cause it. People outside of economics are surprised to find that economists would believe otherwise, as if human psychology only recently started. Personally I vote for: a) "membership in the body of God" and b) Judeo-Christian eschatology, slowly giving way (over a thousand years) to a) individuation and b) forward-looking Baconian experimentation. The Chinese were still in a Confucian traditionalism.

Posted by: Lee A. on October 27, 2003 09:02 PM

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Ah,yes. The old conundrum of the source of Western Europe's rise to global hegemony, the white man's burden, etc. There's no one answer, of course, historical contingency, overdetermination, etc. But, if I were to nominate a candidate in the reductive explanation sweepstakes, my choice would be feudalism (sic!). Yes, feudalism, the product of the utter collapse of Classical civilization under the barbarian onslaughts, the worst possible political and economic system known to man, until Stalin invented the worker's monarchy. But feudalism, though economically autarchic, was a highly decentralized system of political/military competition, which generated a centrifugal tendency, as manifested in the Crusades, which first reconnected Western Europe to trade and to its prior cultural inheritance in the 12th century renaissance. Later, when feudal politico-military competition consolidated into absolutist manarchies qua incipient nation states, partly through a de facto alliance with the emergent proto-capitalist mercantile bourgeoisie, these were, in turn, formed out of and partially dependent upon highly diverse, particularized social alliances, which did not forsake their dynamism. And it should be pointed out the business practices such as banking and contract law first developed out of the requirements of business/trade itself relatively independently from state authority, before linking up with the universal powers of the latter. And such was the state of play that, despite the lingering idea of the Imperium Romanum, which was to reek its havoc, no one source of state power could become predominant. All this contrasts with the patrimonial empires in China and the Arab/Ottoman lands, wherein there was a universal and uniform, but highly centralized authority, that imposed itself upon localities, but left the underlying social structures of the localities to themselves, without bringing them independently into interaction with each other. And is it entirely coincidental that the first non-Western country to successfully modernize/industrialize was Japan, which had a similar feudal system? Perhaps this illustrates an evolutionary principle, that initial endowments do not necessarily determine long-run success: feudal Europeans were the furry little rodents in the age of imperial dinosaurs.

I don't think the 17th century science is a good explanatory candidate, since it was a narrowly diffused, elite affair, if one sticks to the image of science's autonomy, and all the inventions that lead to industrialization occurred outside its domain. Unless one attributes them to a general secularization of worldview, in which case one might as well cite the Reformation, in which case we are back to Max Weber's Protestant ethic. But then religion always is the wild card.

Posted by: john c. halasz on October 27, 2003 11:32 PM

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The obsession with finding explanations for single, unrepeatable historical events is the main reason why I've never been able to give economic historians the respect that they probably deserve.

Posted by: dsquared on October 28, 2003 12:39 AM

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Like dsquared, I don't think the search for necessary and sufficient prerequisites for an industrial revolution will be successful, simply because of the meaning of the word "revolution". If it would, that would be a fabulously good thing though.

Posted by: Mats on October 28, 2003 12:55 AM

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Mats, dsquared, I guess neither of you read john c. halasz's post? :) He points out another potential industrial revolution example. You are of course correct in general about one of the main problems of all social science. Limited and not perfectly comparable test cases. Japan had the ability to copy what the European's were doing. Its development was not independent of the world around it. Causality is therefore difficult to determine.

Frankly, the principal difference between Chinese and European development was the presence and absence of competition between political states. Every few hundred years China would fall into decay, be overrun, develop highly sophisticated technologies, become more or less invincible and then repeat the process. European states that didn't keep up are generally no longer on the map. Balance of power politics kept most of the rest going. The competition impelled states to adopt practices that worked.

I'll steal quotes from john for the remainder of the causation. "A general secularization of worldview,...the Reformation," and "...Max Weber's Protestant ethic" played the very unpeatable role of religious wild card.

Posted by: Stan on October 28, 2003 07:21 AM

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I typed out a response last night, but about a minute after I clicked "post" the Delong website apparently went down, so my message was lost in cyberspace. (There's a ditty in there somewhere.) So I guess I'll try again.

Contingent concatenations and combinations of events in socio-cultural evolution, i.e. history, can result in the formation and emergence of novel socio-structural configurations that are distinctive in their properties and capacities and irreducible to their antecedents. And while such emergent formations are not, in principle, absolutely irreversible, nor guaranteed in their continued predominance, they are, in principle, analytically distinguishable in their functions and operations from the particularities of their history. Such would be the case of the rise to global hegemony of Western Europe on the basis of industrial modernity. Given that 1) a large proportion of currently breathing humanity remains without the benefits of the charmed circle of industrial modernity, however dubious those benefits may seem to those within that circle, and 2) the hegemony of the West has given rise to the conceit of Western superiority, in various guises, racialist and otherwise, historical reflection upon the conditions of the emergence and "nature" of industrial modernity in Western Europe is not without its relevance. Not the least of which is a disruption of the specious present, into which its pervasive functionality lulls us as a merely causal continuum, into an awareness and accounting of its ongoing operations.

I would wish to add that (capitalist) industrialism, with its accompanying history of tendencies and efforts to repair or overcome its disruptions and dissatisfactions, is not the only distinctive feature of socio-structural modernity. Equally important and distinctive are the modern (nation-)state, with its rationalization of governance, real or potential, and the generalized institution, not just of science, but more broadly, of formal rational discourses, of which science is a type, which gives modern rationalization/rationality its distinctive directionality and scope a la Weber. (The operative word is "generalized", which distinguishes modern rationalizations from pre-modern rationalizations, which were bound to institutional particularities and confined to narrow elites.) But between these specifications of distinctive features of socio-cultural modernity, there is a broad range of politico-economic mixes; there is no one standard or "correct" recipe.

Finally, a brief epistemic comment on the status of social "science" and confusions about causality. It is events that are causal, though, in the first instance, they are contingent. Social structures do not cause, but rather constrain. It is the constraint of social structures upon the pattern of events that constitutes the distinctive features of social formations.

Posted by: john c. halasz on October 28, 2003 12:01 PM

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My theory is that other thriving but pre-industrial cultures had at most one source of caffeine. South American cultures had cocoa, Asians had tea, Africans had coffee. North American pre-Columbian cultures had none. Europe had nothing native, but with tea infiltrating, along with silk, from the East and coffee, along with "Arabic numerals" from the south, the stage was set. When cocoa came back in the early 1500's from the West, there were no persons immune from some form of the stimulant.
European industrial development was at that point unstoppable.

POLITICAL development depended upon nicotine, but that's topic for another essay...

Posted by: Pouncer on October 28, 2003 12:16 PM

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Pouncer, there's a real theory that Egyptian civilization grew from ritual centers where beer was drunk during festivals.

I also have theorized that the opposible thumb was first used for masturbation. They didn't have shovels and screwdrivers and pipe wrenches and hammers in the stone age, you know. We are definitely advantaged over all other primates in this area, and you can tell it bothers them if you go to the zoo.

Posted by: Zizka on October 28, 2003 03:34 PM

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It's worth remembering, the first round of changes in Europe preceded industrialisation proper, changes away from Europe being typical of the wider world that is. Things like enclosures etc., driving a proportion of the displaced people into towns, emigration, and other activities. (And that involves worse, not better, institutions - the displaced didn't have the right kind of secure tenure.)

Another issue was that the logic of arms races caused more technical/scientific sophistication (via cameralism and suchlike), and the countries that were relatively free of endemic warfare tended to attract flight capital on a long term basis.

And of course the story didn't even begin there, but followed an age of exploration that had led money supplies to shift about weirdly in all sorts of countries, with the middleman countries ending up with infrastructure gains. It's not a nicely set up experiment, but instead all sorts of things were going on at once.

Posted by: P.M.Lawrence on October 28, 2003 06:29 PM

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Zizka:

The opposable thumb is common to primates and is originally an arboreal adaption, since that is the origin of primates. What is distinctive to humans is the opposable pinky, which permits fine manual motor coordination, such as e.g. playing the piano. So your theory about masturbation is in need of revision. Perhaps masturbation is not a distinctively human characteristic, but only theories about masturbation are, so we can't even get that right.

Posted by: john c. halasz on October 28, 2003 06:43 PM

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In no particuar order:

Zizka: Lilly Tomalin suggested your theory a long time ago.

Mr. Halasz: about "which was to reek its havoc," that's one smelly havoc.

Dsquared: I've heard this objection before, but I don't understand it. Is it that the causes of a "single event" (the Industrial Revoloution being a rather long evert) aren't interesting? That it's not possible to investigate an event we can't repeat? If the latter, do we abandon cosmology?

Brad: tell all those people to stop coming up with new data. Every time I think I understand something, even a little, they keep ruining it.

Posted by: Jonathan Goldberg on October 29, 2003 08:07 AM

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I had forgotten that the other primates have opposable thumbs too. So I'll have to revise my data and point out that they all masturbate.

Posted by: Zizka on October 29, 2003 09:22 AM

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P.M., and the great plague loosened the bonds of serfs... There were indeed a great many necessary conditions.

john, I know a lot gets lost in translation, but I'm ashamed I understand what you are saying :). I am kidding, but I think it is worth the effort to simplify despite the loss of accuracy.

Posted by: Stan on October 30, 2003 11:04 AM

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Against my better judgement, here it goes again:

P.M., and the great plague loosened the bonds of serfs... There were indeed a great many necessary conditions.

john, I know a lot gets lost in translation, but I'm ashamed I understand what you are saying :). I am kidding, but I think it is worth the effort to simplify despite the loss of accuracy.

Posted by: Stan on October 30, 2003 12:46 PM

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