Great Divergence

The Great Divergence, coined by Samuel Huntington^[1](also known as the European miracle, a term coined by Eric Jones in 1981^[2]), refers to the process by which the Western world (i.e. Western Europe and the parts of the New World where its people became the dominant populations) during the Modern period (16th to 19th centuries) clearly emerged as the most powerful world civilization, eclipsing the Islamic empires (the Ottoman Empire, Mughal India), Tokugawa Japan, and Qing China. The process was accompanied and reinforced by the Age of Discovery and the subsequent rise of the colonial empires, the Age of Enlightenment, the Commercial Revolution, the Scientific Revolution and finally the Industrial Revolution. The Great Divergence was affected by several factors, including technology, industrialization and economics, politics and leadership, and specific ideologies.

Technological advances in railroads, steamboats, mining, and agriculture were embraced to a higher degree in the West than the East during the Great Divergence. High wages in the West caused businesses to focus efforts on engineering labor-saving machinery, while the East continued to rely on their sources of cheap labor. Shifts in government policy from interventionist mercantilism to laissez faire helped western development, while a shift from traditional confucianism to interventionist policies under the Qing Dynasty greatly restricted Chinese industrial development. Technology led to increased industrialization and economic complexity in the areas of agriculture, trade, fuel and resources, further separating the East and the West. Europe’s industrial advantages allowed it to surpass the East. Europe's use of coal as an energy substitute for wood in the mid-1800s gave Europe a major head start in modern energy production. On the other hand, China did not begin to use coal in large-scale industry until the 20th century.^[3] The West also had the advantage of larger quantities of raw materials and a substantial trading market. China and Asia did participate in trading, however colonization brought a distinct advantage to the West.^[4]

Politics and leadership, a staple in almost every country at the time of the Great Divergence, were influenced and executed in distinct manners in both the East and the West. Political ideas and lack thereof warranted either progression into the modern world, regression, or no change at all. Strong countries like Great Britain set the model for representative governments in the West. On the other hand, Japan, with its retention of traditional values and incorporation of western views was a model for countries in the East.^[5] Other countries of interest include France, Spain, China, and the Netherlands.

The most important ideologies include Laissez-faire, mercantilism, Confucianism, and materialism. Ideologies influenced government policies and social altitudes. Laissez-faire, an economic ideology, was created during the Industrial Revolution as a belief that trade and economics should exist without government interference.^[6][7] Materialism illustrated a shift towards secular thinking.^[8] Confucianism, dominant in China for millenia, stressed that every class of society should behave in accordance with moral standards and rules and was largely opposed to state interference. Mercantilism, an ideology dominant before the rise of classical liberalism, which promoted interventionist policies such as protectionism, state monopolies, and high taxes which allegedly brought economic benefits.

The term Great Divergence was coined by Samuel Huntington ^[1] (1996) and popularized by Kenneth Pomeranz in his book The Great Divergence: China, Europe, and the Making of the Modern World Economy (2000).^{[citation needed]} It describes the same phenomenon as discussed by Eric Jones', whose 1981 book The European Miracle: Environments, Economies and Geopolitics in the History of Europe and Asia popularized the alternate term European Miracle.^[9]

Broadly, both terms are meant to signify a socioeconomic shift in which Western countries advanced ahead of Eastern countries during the Modern period.^[1] Pomeranz argues in his book that the period of most rapid divergence was during the 19th century.^[3]

Beginning in the early 1800s, economic prosperity rose greatly due to improvements in technological efficiency.^[10] This increase in technology is evidenced by the advent of new conveniences including the railroad, steamboat/steam engine, and coal as a fuel source. These innovations accelerated the Great Divergence, elevating Europe and the United States to high economic standing relative to the East.^[10] Though these inventions were founded in the West, the Eastern countries still employed their uses in trade and transportation. So, a disparity arose. Both the Western and Eastern countries had access to the same technology, yet the West benefited more from its presence due to a difference in use between the two areas. The concept of comparative use-efficiency levels is used to help corroborate the West's progression ahead of the East.^[10]

When analyzing comparative use-efficiency, the economic concept of Total Factor Productivity (TFP) is applied to quantify differences between countries.^[10] TFP analysis assumes similar raw material inputs across countries and is then used to calculate productivity. The difference in productivity levels, therefore, reflects efficiency of input use rather than the inputs themselves.^[11] TFP analysis has shown that the Western countries had higher TFP levels on average in the 1800s than Eastern countries such as India or China. From this one can conclude that the West was making better use of their resources than the East, accelerating the socioeconomic Great Divergence.^[10]

Some of the most striking evidence for the Great Divergence comes from data on per capita income.^[10] The West rising to power directly coincides with per capita income in the West rising relative to the East. This change in per capita income can be attributed largely to the mass transit technology such as railroads and steamboats that the West embraced in the 1800s.^[10] First of all, construction of enormous boats, trains, and railroads required large numbers of steelworkers and engineers, all of which had to be paid. Secondly, the railroads and boats made moving huge amounts of coal, corn, grain, livestock and other goods across countries more efficient. This is one of the chief differences between the East and West in the 1800s. The West had more efficient boats and railroads which had a trickle-down effect on the efficiency of other industries.^[10]

A number of factors contribute to why the West was able to optimize its usage of new technology while the East fell behind. First of all, geographically, Europe and the United States have a large number of inland ports due to extensive, deep rivers. Steamboats were therefore not limited solely to coastal ports. Pittsburgh, PA for example, became an epicenter for steel distribution towards the end of the 1800s due to its rivers.^[12] This argument is difficult to make, however, because China had a very extensive system of internal canals at the time linking the inland land masses to the coast.^[13] Also, due to regional climate, European coal mines were wetter than the arid Chinese mines. Water could easily be pumped out of European mines using steam engines, but ventilating Chinese mines to prevent explosions was much more difficult.^[13] Another key factor was the prohibition placed on mining by the Manchus of the Qing Dynasty after they completed their conquest of China in the mid-1600's (a policy which reversed previous laissez faire policies), which crippled Chinese industrial development.^[14]

The advancements in railroads were compounded by advances in agriculture, causing the West to be fed to the point of huge surpluses. This meant less time spent feeding nations and more time spent on per capita income increasing business ventures for the West.^[13]

Perhaps the most important difference between the East and the West which drove the West to such success was the difference in wages.^[13] Wages in the West were much greater than those in the East.^[13] This put economic pressure on the West. In order to compete the United States and European countries would have to find ways to reduce the amount of labor needed to run their businesses. This meant investing in and searching for new technology to reduce the need for people.^[13] This focused engineers on adapting to new machinery and to efficient land use practices. Instead of using wood for fuel which would take up too much land and require too much labor, the West turned to coal as a fuel source. In the agricultural industry advances in technology eliminated the need to pay a high number of farmers. The East, which never really reduced labor because their wage rate was already so low, never felt the optimizing pressure that the West did.^[13] By the time the East did feel the need to use technology to lessen their reliance on pricey human labor, the West had already gained an incredible competitive advantage.^[13] Both the East and the West had the technology, but from earlier on the West had more of an incentive to use and refine it.^[13]

Government policies also played a great role in the Great Divergence. For centuries, Chinese rulers followed Confucianism, an ideology which promoted laissez-faire policies^[15] and which allowed China to experience substantial growth, especially during the Song and Ming Dynasties. China was the world's largest and most advanced economy for the most of the past two millenia.^[16] However, with the conquest of China by the Manchus, the new government placed draconian restrictions on commerce and agriculture, restricting new developments such as commercial agriculture and prohibited mining in favor of an "idyllic" rural economy, a development which crippled Chinese industry.^[17]

In the west, the dominant government policy prior to the 18th century was mercantilism, which promoted government interference in the form of protectionism, state-granted monopolies, inflation, high taxes, and war.^[18] However, government policies shifted in the 18th and 19th centuries towards Classical liberalism, an ideology which called for a minimal government which would allow the economy to develop through the free market.^[19] These new policies allowed the capitalist economy to develop to its full potential and was a key cause of the Western economic boom of the 19th century which allowed it to surpass its Eastern competitors.

The Old World methods of agriculture and production could only sustain certain lifestyles. In order to make such a dramatic shift from the rest of the world, Industrialization had to take place at many levels. There were many advantages present in Europe that allowed it to industrialize at such a quick pace.^[20]

Prior to, and even within the 19th century, much of European agriculture was underdeveloped compared to the rest of the world. This left Europe with abundant idle resources ready to be taken advantage of. In the 1800s, rather than adopting more advanced farming techniques for greater crop production, French and German farmers were able to put on the market more of their product by laboring longer and curbing their own consumptions. There was also a large agricultural shift from crop rotation to farming for market demand. England, on the other hand was already at its limit in terms of agricultural productivity well before the beginning of the 19th century. Rather than taking the costly route of improving soil fertility, the English opted to increase labor productivity by embracing industrialization in the agricultural sector. From 1750 to 1850, European nations experienced population booms, however European agriculture was able to barely meet the dietary needs. A few ways in which England was able to cope with the food shortage include: imports from the Americas, less caloric intake required by the newly forming proletariat, and the consumption of appetite suppressants such as tea.^[21] By the turn of the 19th century, much European farmland had been eroded and depleted of nutrients required to grow crops. Fortunately, through improved farming techniques, the import of fertilizers, and reforestation, Europeans were able to recondition their soil and prevent setbacks to their industrialization efforts. Meanwhile, many other formerly hegemonic areas of the world were struggling to feed themselves — notably China.^[22]

The global demand for wood, a major resource required for industrial growth and development, was increasing in the first half of the 19th century. A lack of interest of silviculture in western Europe primarily attributed the wood shortages due to lack of forested land. By the mid 1800s, most western European countries had less than 15% of their areas forested. Affected countries felt tremendous inflation in fuel costs throughout the 18th century and many households and factories were forced to ration their usage, and eventually adopt forest conservation policies. It was not until the 1800s that coal began providing much needed relief to energy starving Europeans. China had not begun to use coal in large-scale industry until around the turn of the 20th century, giving Europe a huge head start on modern energy production.^[3]

Through the 19th century, Europe had vast amounts of unused arable land with adequate water sources. However, this was not the case in China; most idle lands suffered from a lack of water supply, so forests had to be cultivated. Since the mid 1800s, northern China's water supplies have been declining at an alarming rate, dampening their agricultural output. By growing cotton for textiles, rather than importing, China exacerbated the effects of their water shortage.^[23]

During the era of European imperialism, periphery countries were often set up as specialized producers of specific resources. Although these specializations brought the periphery countries temporary economic benefit, the overall effect inhibited the industrial development of periphery territories. Cheaper resources for core countries through trade deals with specialized periphery countries allowed the core to advance a much greater pace and widen their gap from the rest of the world both economically and industrially.^[24] Europe's access to a much larger quantity of raw materials and a larger market to sell its manufactured goods gave it a distinct industrial advantage through the 19th century. In order to further industrialize, it was imperative that the developing core areas be able to acquire resources from less densely populated areas, since they lacked the lands required to supply themselves with necessary raw materials. Europe was able to trade manufactured goods to their colonies, including the Americas, in turn the colonies traded their raw materials. The same sort of trading could be seen throughout regions in China and Asia, however colonization brought a distinct advantage. As these sources of raw materials began to proto-industrialize, they would turn to import substitution, depriving the hegemonic nations of a market for their manufactured goods. Since Europe had control over their colonies, they were able to prevent this from happening; keeping the supply lines flowing.^[4] Britain was able to use import substitution to their benefit when dealing with textiles from India. Through industrialization, Britain was able increase cotton productivity enough to make it lucrative for domestic production, and overtaking India as the world's leading cotton supplier.^[25] Western Europeans were also able to establish profitable trade with neighboring eastern Europeans. Countries such as Prussia, Bohemia, and Poland had very little freedoms in comparison to those to the west. Forced labor left much of Eastern Europe with little time to work towards proto-industrialization and ample manpower to generate raw materials. However, these areas were not large consumers of the Western Europe's manufactured products, leaving Western Europe to pay for much of its raw materials from eastern Europe.^[26]

A deeper look into the politics and leadership of various nations reveals an assortment of insights into the Great Divergence. Political ideas and lack thereof warranted either progression into the modern world, regression, or no change at all. Strong countries like Great Britain set the model for representative governments in the West.

At the end of the 17th century, Britain's government was considerably altered due to the Glorious Revolution. This was England's last revolution, attesting to the soundness of a democratic government.^[27] A monarch no longer controlled with absolute rule; instead authority was held by parliament and state officials. Through gradual and peaceful reforms, Parliament's wishes along with the will of the people were expressed amply in England's democratic society. A pivotal achievement for the West, as the British system of government would become a model for other types of representative government, including France and the United States.^[28]

Another great advantage for Britain was that it was one of the countries that were least affected by mercantilist policy due to the fact that interventionist policies were largely unenforcable, as the British monarchy was the one of the most weakest in Europe^[29]. The wave of Classical liberal thought was also one of the first to affect England, whose government had began to adopt liberal policies as early the mid-1700's^[30], ahead of other European powers still heavily affected by mercantilism. This allowed Britain to become the premiere power of Europe.

Throughout the seventeenth and into the eighteenth century, France's system of authority was overlapping and confusing.^[31] Cardinals Richelieu and Mazarin's attempt to centralize France's government was unsuccessful. Towns and provinces had their own parliaments, laws and local estates. The aristocracy also commanded authority from those beneath them. Louis XIV used France's traditional values and manipulated them for his own means. He did not achieve absolute monarchy but his success lay in both his cleverness and his manipulation. When Louis XIV died in 1715, he left behind a country in financial disarray. However, Louis XIV's reign was one worth remembering. He set the standard for monarchies all over Europe with his lavish lifestyle at his Palace of Versailles.^[31]

Until the French Revolution, French society revolved around the system of ancien régime. A society under which the first and second estates are entailed certain rights and have absolutely no accountability. The first estate consists of clergy, the second state of nobility, and the third estate all other citizens.

France was one of the countries worst affected by mercantilist regulations. The French monarchy followed mercantilist policies with zeal. During the Valois dynasty, the monarchy had already cartellized several important industries into guilds and instituted strict "quality standards", which prohibited competition and greatly raised prices^[32]. Mercantilist policies reached a height during the reign of Louis XIV, whose chief minister, Jean-Baptiste Colberte, was an ardent mercantilist. The French state stablished monopoly prileveges for all major industries, to the extent that monopoly grant accounted for over half of state revenues; innovations such as the loom, calicoes, and even buttons were completely prohibited, largely destroying the textile industry. Wage and price controls led to heavy distortions in the economy. Taxes rose greatly as well, along with revenues from the hated state salt monopoly. These destructive policies greatly hobbled French growth, and put it out of the running as a leading industrial nation.^[33]

The Revolution's leaders used Enlightenment ideals to justify their attack on the ancien régime. The French Revolution was viewed as the promise of a new era for both participants and observers. A time when the ideals of the Enlightenment would come into view including, justice, reason, liberty, and equality. France's use of these Enlightenment principles set the country apart from countries in the East. The French people were rebelling as a whole, as a means for mutual happiness and fulfillment in life. ^[34]

At the turn of the century, France's government was seized by Napoleon Bonaparte, who pushed the Revolution in a new direction, to extreme nationalism, which had lasting repercussions in the twentieth century.^[35]

The French Revolution reshaped the modern West. First, innovative ideas of Enlightenment thinkers were put into action. Second, career opportunities for the bourgeois opened up vastly. Jobs were awarded based on talent not birth. Also, the middle class was no longer kept from high ranking jobs. Third, the French upper class perceived a decline of the aristocracy as a result of their lost special privileges and rights. French bourgeois served as a model for other bourgeois around the world. Their commitment to change and challenging of the old authority transformed the modern state.^[36]

Spain was one of Europe's most prosperous economies in the sixteenth century, due to the influx of bullion from the new world. In the long run, however, Spain's prosperity ended after the influx of silver and gold from the new world dried up. In addition, the Spanish economy was also destroyed by a series of devastating mercantilist policies. The Spanish crown destroyed the textile industry through passing over 100 laws which regulated and cartellized it, and also ruined the silk industry through heavy taxation and regulation. Royal policies devastated agriculture by forcing grain-growing land to be used for grazing. In addition, heavy royal expenditures and repeated defaults in 1557, 1575, 1596 and 1607 destroyed the wealth of the middle classes.^[37]

As a result of a strain on the Spanish government as well as a general lack of confidence in Spain’s economic policies, Spain lost its control of the sea to several counties, including, France, Britain, and the Netherlands.^[38]

The Dutch invention of the flyboat allowed them to capture the Baltic trade propelling the Netherlands into a great commercial expansion lasting a hundred years.^[39] They were even able to takeover Portugal’s spot in the East Indies spice trade. The United East India Company began trading posts that would stay a part of the Dutch empire until World War II. Dutch government promoted business interests. However, the government lay in the hands of merchants and manufacturers who proceeded to make policies that served their personal interests. It was the beginning of capitalism, the modern economic system, a huge change towards a global economy.^[39] The Dutch were also one of the first European nations to adopt free market policies, which allowed it to become Europe's leading nation in the seventeenth century.^[40]

During the 18th century, China was ruled by the Qing Dynasty, a regime established by invading Manchu tribes several decades ago. The Chinese economy had been devastated by the fall of the prosperous Ming Dynasty in the mid-1600's and the resulting invasion of the Manchus, which killed an estimated 25 million people. The Manchus imposed draconian restrictions on industry, commerce, and agriculture^[17], even going as far as to prohibit new mines and foreign trade altogether; although economic policies were liberalized in the 18th century, the Manchus' interventionist policies, especially the prohibition on new mines, heavily hampered the Chinese economy.^[41]

File:FrameBreaking-1812.jpg

Throughout the early modern period, a number of ideologies burgeoned and shaped the state of the Great Divergence. Specifically, the “industrialization” of Europe was fostered by the social and economic ideologies mentioned: the social ideologies illustrate a shift towards the secular, the desire to dismantle status quo sentiments, and the emergence of a personal and collective identity; the economic ideologies highlight the widening economic gap between Europe and the rest of the world, enabling the continent to expand empires and justify the methods by which they acquired them.^[42]

Confucianism was the ruling ideology of China for nearly two millenia. Confucianism's primary focus was to create a moral society in which every class would behave in accordance to moral standards and rules, and would perform their own duties. Because of this focus, Confucian scholars largely opposed state interference in the economy, as they believed that the state was usurping the roles of merchants, and oppressing the citizenry.^[15] However, Confucian principles were also invoked by Manchu rulers to justify state interference in the economy, as they alleged that rich Chinese merchants and landowners were not behaving in accordance with moral standards.^[17]

Europe in the period preceding the Great Divergence followed the ideology of mercantilism, which promoted widespread government interference in the economy, often for the benefit of politically connected merchants. Mercantilist policies such as high taxes, monopolies, protectionism, cartels, and war restricted economic development.^[18] During the period of the Great divergence, mercantilism fell from favor and was replaced by classical liberalism, which stressed laissez-faire.^[19]

Laissez-faire, the economic portion of classical liberalism, arose as a reaction to mercantilism.^[43] was advocated by Great Britain, appealed to intellectuals across many countries and overall had wide European support.^[7] The theory was that a positive outcome would result if the market economy was left to operate independently from state interference, as the market could allocate resources effectively to meet consumer needs rather than be diverted off to sectors where they were not needed.^[6] Laissez-faire accommodated the newfound trend of restructuring society around the liberties and welfare of individuals; however, the main beneficiaries of this trend were the wealthy.^[6]

Though the nineteenth century marked an advance of materialism in the typical sense (the taste for material gratification), a new and deeper level of materialism emerged and illustrated cultural change. Beliefs in the supernatural declined and church going dwindled throughout several European countries in the first half of century.^[8] Large numbers of people from various social classes looked to natural science rather than traditional religion to explain the human world. To some, materialism meant that an individual's life is dictated by certain material facts that naturally and thoughtlessly create one's fate; regardless of individual efforts, rational choices, and informed will, neither people nor God can determine their future.^[8]

• Colonial empire
• Western empires
• Modern history
• Second European colonization wave (19th century–20th century)
• Rise of the New Imperialism
• Economic history of China (pre-1911)

Books

• Guns, Germs, and Steel
• The Civilizing Process
• The European Miracle
• The Rise of the West: A History of the Human Community
• The Clash of Civilizations