Economic history : What was the Great Divergence ?

/economic-history-1

  • Economic history: What was the Great Divergence? | The Economist
    http://www.economist.com/blogs/freeexchange/2013/08/economic-history-1?fsrc=rss

    What was the Great Divergence?
    Sep 2nd 2013, 10:13 by C.W. | LONDON

    This post has been updated to include a suggested reading list.

    A better understanding of economic history might have helped the world avoid the worst of the recent crisis. Free exchange continues its discussion of milestones in economic history, showing how they contributed to the development of economic thought. You can read the first entry here.

    A FEW centuries ago it would have been difficult to tell Europe apart from the rest of the world—in economic terms, at least. Indeed, half a millenium ago Europe might justly have been considered a laggard. The three inventions which, in the words of Karl Marx, “ushered in bourgeois society” were not invented in Europe. Gunpowder, the compass and the printing press were probably all invented in China.

    But by the 19th century, things were rather different. Western Europe and parts of North America had become fabulously wealthy. Almost everywhere else was horribly poor. Economic historians refer to this as the “Great Divergence”.

    The timing of the divergence is hotly debated. Some think that it really took off around 1800. Others reckon that it was earlier. Such debates will probably never be resolved with much precision, given the unreliability of the evidence. But the question of what caused the divergence might be of more interest.

    Cultural factors are a popular explanation for European ascendancy. Max Weber, a German sociologist, thought he had the question nailed. In his book “The Protestant Ethic and the Spirit of Capitalism”, published in 1905, Weber argued that religious factors were crucial for spurring European economic growth. Weber’s view centred on Calvinism—a branch of Protestantism—and argued that it encouraged Europeans to be thrifty, rational, and concerned with material gain. Such values did not exist outside Europe where, according to Weber, material wealth was not revered and entrepreneurship was seen as subversive.

    Similar arguments have emerged since Weber. Thomas Sowell, at Stanford University, points to the British as responsible for no less than the invention of freedom. In Mr Sowell’s view, the British were a shining light of economic development, which other countries gradually learnt to imitate. (Fascinating new research explores a similar theory: that learning best practices from others is essential to growth and becomes harder the greater the cultural distance from economic leaders.)