The Great Divergence Analysis

Kenneth Pomeranz‘s The Great Divergence tries to examine the classic question of ‘How do we account for the economic divergence between Europe and Asia? He acknowledged that ‘a surge in European technological inventiveness was a necessary condition of the Industrial Revolution’, but stressed on the crucial role of ‘coal and colonies’ and their critical geographic location, in lifting the constraints for sustained growth of per capita income. First the local coal deposits in Europe were closer to the cities than in China and this gave Europe a clear advantage. Second, the off-shore colonies, in particular, the closeness of Europe to the New World resources (Jones 1981, Wrigley 1988, Allen 2009) helped Europeans to overcome the difficulties

which are important variables while considering divergence. By 1300 European political scenario was that of fragmentation while that of Chinese was of integration. Due to settled politics and reliance on agricultural taxes for revenue, there was little interference by the Chinese rulers in the development of trade whereas Europe experienced a commercial revolution dating back to the Roman era. Even the wages evidence clearly supported the Great Divergence because as early as 1650 till 1850 there was stagnation in wages in China while in Europe it saw a surge upwards (cited). Europe was involved in frequent wars and as a result the Europeans were forced to build walled cities to protect themselves and their property. This had a direct consequence on labor cost (wages) which became more expensive relative to capital (Allen 2008) . This created an incentive to use machines to save the labor costs. Thus Europe’s violent politics was responsible for its urban manufacturing and urban bias leading to a higher demand for capital markets, stimulating governments to increase investment in technical advances. In

Pomeranz’s arguments have indeed set off a chain of responses from numerous scholars . However the summary of the book by Rosenthal and Bin Wong does reduce the qualified arguments put forth by Pomeranz. Clearly distortions produced by war propelled Europe towards urbanization and capital-using technologies several centuries before 1700. By implication, one can conclude that a competitive and innovative Europe outperformed an imperial and traditionalist