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Why Europe Grew Rich and Asia Did Not: Global Economic Divergence, 1600-1850

Author(s):Parthasarathi, Prasannan
Reviewer(s):Mokyr, Joel

Published by EH.Net (January 2012)

Prasannan Parthasarathi, Why Europe Grew Rich and Asia Did Not: Global Economic Divergence, 1600-1850. Cambridge: Cambridge University Press, 2011. 365 pp. $30 (paperback), ISBN: 978-0-521-16824-3.

Reviewed for EH.Net by Joel Mokyr, Departments of Economics and History, Northwestern University.

The year 2011 was? a banner year for ambitious books that explain what is becoming known as the ?Great Divergence? of the West and the Rest. In addition to the book under review here, two other books by major scholars have appeared: Jean-Laurent Rosenthal and Bin Wong?s Before and Beyond Divergence and Ian Morris?s Why the West Rules for Now. One would have hoped that the proliferation of this literature would perhaps start to converge toward a consensus, but alas, so far discord and confusion reign in this debate. One could call it perhaps ?the small divergence.?

Parthasarathi?s book, its title notwithstanding, is not about ?Asia? and ?Europe? but really about India and Britain. While there are some pages that deal with China and the European Continent, the author clearly is most at ease when writing about the former two countries. Japan makes only an occasional appearance, and the rest of Asia does not figure much. Above all, this book is an argument that the ?California hypothesis? applies to India as well. The California School, most notably embodied in Kenneth Pomeranz?s Great Divergence and Andre Gunder Frank?s Re-Orient, argue that the Chinese economy rather than falling behind from Ming times actually performed admirably until the end of the eighteenth century, and that it was only the Industrial Revolution in Western Europe that (temporarily) gave Europe a big advantage. Parthasarathi?s book makes a similar argument for India. Moghul India, he argues, was not backward, primitive, ignorant, poorly organized, or anything of the kind. As late as 1800 it was technologically sophisticated, scientifically progressive, commercialized with well-working institutions and efficient markets that allowed the Indian economy to work well. Its cottons were in high demand world-wide, and its abilities in a host of other industries were more than respectable.

If everything in India was so good, why was everything so bad? Parthasarathi?s argument depends heavily on his interpretation of the British Industrial Revolution. For him the Industrial Revolution was above all policy-driven. In his interpretation, the Industrial Revolution was the result of deliberate industrial policies by its governments, protecting domestic industry and encouraging import-substitution. What was true for Britain, Parthasarathi continues, was even more true for the Continental countries. Industrial policies shaped the speed and form of economic development. The one country that had as much potential as Belgium or Germany was India. But the British Raj mercilessly pressed their advantage against the hapless Indians, denied them access to the British market, and forced them to buy the cheap cotton products with which Lancashire after 1820 increasingly flooded the Indian market. India was ruled by the British, and they not only did nothing to encourage the development of manufacturing there; they did all they could to obstruct it. The power of states could determine successful economic development and prevent it elsewhere.

The argument is, of course, not new, and much of the evidence that Parthasarathi relies on has been used by other scholars. A notable example of an important essay published more than three decades ago (not cited by Parthasarathi) is Subramanian Swamy?s ?The Response to Economic Challenge: A Comparative Economic History of China and India, 1870-1952? (Quarterly Journal of Economics, 1979). Swamy fully anticipates Parthasarathi?s argument: ?The slow industrialization, or at least the lack of rapid industrial growth in India … can, be ascribed to the unwillingness of foreign capital to enter into the basic industries, and to the British Indian Government for placing obstacles in the path of indigenous investment … It was the combination of ?British interests? and the underlying social ethos of the Government of India that they were there ?to govern, to stabilize, and to administer,? but not to transform that proved to be the main cause of India?s slow development? (pp. 37?38).

Yet it is far from clear whether we have fully disposed of ?deep? cultural differences between Asia and Europe. Eight years after Swamy?s paper, Gregory Clark published a famous paper with a disturbing finding, comparing the Indian cotton mills in Bombay to those in Lancashire. He found that although Indian wages were only a sixth of British wages and they were using essentially the same equipment, the Indians had no major cost advantage over their British competitors, because Indian labor?s efficiency was only a fraction of their counterparts in Manchester. Clark left the reasons for this open, but subsequently in A Farewell to Alms he returns to the issue and argues that labor quality was remarkably low in poor countries, because of high absenteeism, poor discipline and similar matters. Whether Clark is right or not, Parthasarathi pays no heed to his work. Perhaps he can show us that low labor productivity can somehow be chalked up to the Raj as well, but until he does, his case is simply unpersuasive.

By blaming the Raj squarely for everything that went wrong with India?s nineteenth century development, Parthasarathi offers us a warmed-up old nationalist chestnut, and his waving at the post-colonial literature does not add much credibility to his case. While he is surely right that one can easily overstate the weaknesses of the Indian economy on the eve of the Industrial Revolution, his cherry-picking of examples (there are only a few tables in the book and only one of them pertains to India) simply does not persuade. Had Britain and India been at the same level of economic and institutional development in 1750, why was there no ?Western Europe Company? set up in Delhi that would have exploited the political divisions within Europe, established an Indian ?Raj? based in London and forced Europe to accept Indian calicoes without tariffs? Moreover, there were Asian nations, from Persia to Siam, which were never controlled by European Imperialists, yet they never seem to have developed much modern industry either. Neither, for that matter, did Imperial China, which poses a logical problem for anyone trying to blame imperialism for economic backwardness in Asia. The case of China is brushed off by Parthasarathi as the result of an ecological disaster due to deforestation and the feckless policies of the Q?ing government which did nothing to encourage the exploitation of Chinese coal deposits. But why would we believe that a counterfactual Indian independent government would have performed like Belgians or Prussians and not more like the Q?ing? To make his case stick, Parthasarathi ought perhaps have argued that India?s society was much like Japan?s, and that in the absence of colonial domination it would have made its own rules work for it. But such arguments are never made, and I suspect for good reason.

Parthasarathi is a learned and well-read historian, and he is no-doubt correct in pointing out that scholars have underrated the vitality and strength of the Indian economy in the eighteenth century. There were enclaves of highly skilled craftsmen and craftswomen in India, and it is easy to overrate the advantage that Britain and Europe enjoyed over Asian countries such as India and China. But in his justifiable indignation over the disrespect shown by ?Eurocentric? scholars to Indian civilization, he lets his rhetoric get the better of him and so hopelessly overstates his case as to undermine the credibility of those corrective elements he provides to the standard story that are most valuable.

First, he exaggerates the role of the British government in the first Industrial Revolution. There was no real industrial policy except for letting the new industrialists do their thing. With a few exceptions such as the Longitude Board, the demand for military hardware and royal dockyards, and running a patent office, the government played a remarkably modest role in fostering the Industrial Revolution. On the Continent this role was clearly larger, but even in Belgium and Prussia, the fact that the government supported and abetted the process does not prove that the government was a ?critical factor? as Parthasarathi repeatedly asserts. What these governments did (far more than Westminster) was to invest in infrastructure or encourage and subsidize others to do so. But this is precisely what the British did in India: they invested in its infrastructure. Lord Dalhousie, governor general of India 1848?56 (never mentioned by Parthasarathi) famously said that he introduced three ?great engines of social improvements?: railways, electric telegraph, and uniform postage (Suresh Chandra Gosh, ?The Utilitarianism of Dalhousie and the Material Improvement of India? in Modern Asian Studies, 1978, p. 97). One might add the Ganges irrigation canal, the brainchild of a single-minded Briton, Colonel Proby Cautley, was a huge success.

The exact dimensions of the impact of the Raj on the Indian economy will remain in dispute. Did the British extinguish an intellectual community comparable in quality and achievements to the one in eighteenth century Europe? We are told (p. 266) that the British colonial order led to a lossof patronage for institutions that produced and diffused knowledge, and that this, presumably, contributed to the decline of science and technology in the entire subcontinent. It is true that some of the libraries collected by Maharajas were dispersed and looted, but it seems implausible that a handful of British officials and soldiers could have wiped out the human capital of a population of close to 200 million people and reduced them from a vibrant intellectual community to a largely illiterate mass. The Indian society that emerged in the nineteenth century, Parthasarathi maintains, was radically different from what was there before. There is no question that there is truth to this argument, and that for much of the nineteenth century the British discouraged the formation of human capital and local centers of technology.

But it is frustrating that so little is known about Indian progress in the pre-Raj era and that the experts differ so much. Indian science and technology was surely not as primitive as contemporary Western observers described, but was it really at a par with Europe as we are told in this book? The complexity of the matter is wholly reflected in the writings of the Indian scholar Dharampal (not cited by Parthasarathi) who conceded that ?It is possible that the various sciences and technologies were on a decline in India around 1750 and, perhaps, had been on a similar course for several centuries previously? but that it was hard to know because of the ?general incommunicativeness of eighteenth century Indian scholars and specialists in the various fields? which may have been due to ?the usual secretiveness of such persons? (http://www.scribd.com/doc/29011033/Dharampal-s-Collected-Writings-Vol-1-5, p. 5, accessed on Dec. 31, 2011). The difference between that kind of insider science and the growth of public science in eighteenth-century Western Europe, which was at the very core of the Industrial Enlightenment, is symptomatic of the weakness of the argument made in this book. At the very least, Parthasarathi seems to fall into the trap of what Deepak Kumar has called ?a naive (perhaps revivalist) appreciation of pre-colonial science and technology.?

Part of the book?s weakness is the author?s very limited and minimalist concept of the Industrial Revolution, which he sees as purely a revolution in cotton and coal. He closely examines one key industry, cotton, and points out that British consumers were exposed to the high-quality, brilliantly colored calicoes coming from India. The Act of 1721 prohibited the importation and wearing of these textiles and thus stimulated British manufacturers to make their own, thus creating powerful incentives for the invention of machinery in the cotton industry. In this way, the British Industrial Revolution was indebted to India. Perhaps, but the Calico Act had quite a few exemptions, and its enforcement was far from water tight. But more to the point, the Industrial Revolution consisted of improvement on a much broader front than India?s example can account for. Thus in the woolen textiles ? never mentioned by Parthasarathi ? the introduction of shearing frames in the finishing stages was completely novel. In many other industries there were critical innovations, some of them the result of unscientific serendipity, but at least in some cases they were related to scientific advances. In cotton, the most famous example is of course chlorine bleaching, but Parthasarathi may also find a new book on the British gaslighting industry instructive (Leslie Tomory, Progressive Enlightenment: The Origins of the Gaslight Industry, 1780-1820, MIT Press, 2012). Such examples can be multiplied at will.

In Parthasarathi?s opinion, British coal developed in large part because of the wise policies of the Hanoverian government which regulated prices and protected coastal shipping. They also taxed coal quite heavily, which may not have been such an advantage. But more to the point, British coalmining, from the surveying and viewing stage all the way to the market, was in private hands. So were education, turnpikes, canals, healthcare, railroads, and most law enforcement. There was a fair amount of state regulation, but it is not clear how much of it was actually enforced and what effect it had. The same is true a fortiori for protectionism. The argument that Britain succeeded because of and not despite of the mercantilist policies of the eighteenth century is repeated over and over but never supported with much evidence. The one area in which British government may get some credit (but oddly never mentioned by Parthasarathi) is the Old Poor Law, a unique English institution which may have helped bring about social stability and raised the material quality of life for the bottom third of the income distribution.

This is a polemical book. Parthasarathi criticizes much of the literature on the British Industrial Revolution and its effect on the rest of the world, and often his critiques are well-aimed and deserved. There is no question that the initial differences between Asia and Europe on the eve of the Industrial Revolution have been overdrawn, and that Europe?s success was not quite as predetermined and inexorable as it was made out to be by scholars from Max Weber to David Landes. Yet there is an equal risk to exaggerate in the other direction and to argue that there was no difference whatsoever. More often, Parthasarathi succumbs to the unfortunate habit to take nuanced and subtle arguments of his opponents, oversimplify them into a cartoon, and then energetically proceed to take these strawmen apart; this is a time-honored custom in all rhetoric, but if applied too thickly it can be counterproductive. All in all, this is a provocative and eloquent book that will modify our views of the Great Divergence, if not nearly as much as its author would hope for.

Joel Mokyr is the author of The Enlightened Economy: An Economic History of Britain, 1700-1850, Yale University Press, (2009).

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Subject(s):Economic Development, Growth, and Aggregate Productivity
Economic Planning and Policy
Economywide Country Studies and Comparative History
Industry: Manufacturing and Construction
Markets and Institutions
Geographic Area(s):Asia
Europe
Time Period(s):17th Century
18th Century
19th Century