Pomeranz, Kenneth, The Great Divergence: China, Europe and the Making of the
Modern World Economy (2000), 382p.
This study provided the title of “Great Divergence” for the contemporary debate
about why Europe rather than highly developed areas of Asia experienced the first
industrial revolution and why the West as a whole became so rich. It rejects the
Eurocentric argument that Europe’s economic precociousness was a consequence of
exceptional factors such as its scientific and technological superiority, a particular
demographic pattern of nuclear families with later marriages, superior economic and
political institutions, or an especially aggressive and imperialist disposition to exploit the
rest of the world. Pomeranz acknowledges the vital role of “internally driven European
growth but emphasizes how similar these processes were to processes at work elsewhere,
especially in East Asia until almost 1800.” However, internal growth factors could only
have achieved Europe’s success in the context of “Europe’s privileged access to overseas
resources.” He notes that much of the existing literature on the subject has been either
about why European growth was largely internal, what economists call endogenous
growth, or especially from outside force, called exogenous growth. Pomeranz offers a
comparative general economic history of both internal and external developments that
emphasizes ecological and geographical factors. His comparisons are not just between
Europe and Asia, or between countries, since such comparisons are merely averages that
obscure developments in unusual areas. Instead, he compares regions in Asia with
comparable regions in Europe.
In recent decades the origin of Europe’s modern economic growth, especially for
northwestern Europe has been pushed further and further back into the seventeenth and
even the medieval period. Pomeranz points out, however, that it was it was large-scale
industrial capitalism that created the great divergence and this was not fully developed
until the mid-nineteenth century. He doubts that the Europe’s earlier essentially protoindustrial economy and its commercial and economic institutions were more likely by
themselves to produce an industrial revolution than comparable regions in Asia.
Moreover, he holds that European industrialization in the early 19th century was still
almost entirely limited to Britain and should not be seen as dependent upon general
European conditions. According to Pomeranz, Europe did not have an advantage in
physical capital over many other large Asian economies. It was not freer from Malthusian
population pressures and important areas in Asia were at least as successful in in limiting
fertility. He also rejects the notion that Europe was technologically more innovative and
sophisticated than leading Asian economic regions. He argues that before about 1800
European markets, including its labor markets, were probably less competitive than those
of China. He also discusses the role of women and children in the labor market and
suggests that Chinese families appear to have used similar strategies that Europeans to
maximize their labor and income, The latter has been described by Jan de Vries for
Europe as an “industrious revolution” (see the bibliographical entry below). He concludes
that “core regions in China and Japan circa 1750 seem to resemble the most advanced
parts of Western Europe, combining sophisticated agriculture, commerce and mechanized
industry in similar, arguably even more fully realized, ways.”
In Part II, he discusses the role of consumer demand in promoting economic
growth. He argues that Europe, China and Japan may have been quite different in the
level of consumption from the rest of the world but that they were not very different from
each other. In all three areas increased consumer demand was able to increase the supply
and production of consumer goods. However, Europeans did have the advantage of extraEuropean supplies, such as New World plantations that produced sugar and tobacco and
New World silver, for which there was great demand in Asia. These products allowed
Europeans to consume many Asian luxury goods. Although he concedes that parts of
Europe, especially northwest Europe, had an advantage in the security of property and
capital, and that it may have enjoyed lower interest rates, he does not see a significant
advantage in either available capital or the forms of business organizations between
Europe and Asia. Pomeranz argues that during the early modern period neither capital nor
labor were particularly scarce. The real restraint was land and natural resources. To some
extent capital and labor could produce more land, through reclamation and fertilization
for example, and resources, but before the extensive use of fossil fuels the ability of
capital and labor to substitute for land and resources could not by itself solve the
ecological bottlenecks faced by the most developed pre-industrialized regions. According
to Pomeranz, “only in overseas colonization and armed trading did Europe’s financial
institutions” and business organizations enjoy an advantage over Asia.” Europe’s long
distance trading companies, backed by government sanctioned monopolies, could afford
large-scale investment overseas backed by armed force.
In Part III, Pomeranz examines the ecological restraints on further economic
development in each of the most developed proto-industrial economies. These constraints
were not serious enough to produce food famines, but were especially felt in wood for
fuel, building supplies, fiber and threats to soil fertility. For the more advanced
economies long distance trade only supplied a partial solution to these problems because
the political economies of less developed regions were too poor to provide enough
effective demand for the exchange of manufactured goods for raw materials. Moreover,
the cost of transport before steam power was too high to move enough bulky primary
products to solve the problem. The solution for Europe, according to Pomeranz, was to
solve its resource constraints by switching from wood to coal as its primary source of
energy and by its capture of the resources of the Western Hemisphere. Moreover, another
critical aspect of early modern European economic growth was its use of African slaves
in the early economic development of the New World. Slavery in other developed regions
of the world was more limited and had fewer economic benefits. Since the European
plantation economies bought slaves in Africa with manufactured goods, and the
plantations in the Caribbean bought grain and timber from North America, which in turn
bought manufactured goods from Europe, the Europeans were able to expand their
markets for manufactured goods. He argues that the flow of resources to Europe from
both free and slave labor during the colonial provided a framework “that accelerated
throughout the nineteenth century despite independence and emancipation.” By contrast,
other highly developed regions in Asia, especially in China, which had at least eight of
these regions that were each as large as European states, became stuck in a protoindustrial trap during the nineteenth century.
One of Pomeranz’ crucial assumptions is that proto-industrialization can lead to a
Malthusian trap. Proto-industrialization is the non-mechanized production of goods by
rural labor organized by merchant-manufacturers for distant markets. Pomeranz explains
that rapid population growth was associated with Asian proto-industrialization. It
produced a vicious circle of very low piece-rate wages, which forced workers to increase
production in order to survive, and which in turn lowered wages. An increase in food
prices because of population growth, a decline of product prices due to lower product
demand, or a shortage of land and industrial resources increased misery and inhibited
further economic growth. In short, according to Pomeranz, for Europe, the New World,
combined with Europe’s switch to coal, made possible the rise of the West to economic
pre-eminence in the nineteenth century.