Political Competition, Innovation and Growth in the History of Asian Civilizations

Published by EH.NET (April 2005)

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Peter Bernholz and Roland Vaubel, editors, Political Competition, Innovation and Growth in the History of Asian Civilizations. Cheltenham, UK: Edward Elgar. 2004. xii + 225 pp. $100 (cloth), ISBN: 1-84376-919-0.

Reviewed for EH.NET by Stanley L. Engerman, Department of Economics, University of Rochester.

One of the more interesting ideas to come out in the re-emergence of long-term comparisons of the economic growth of Europe in contrast with Asia is the role of political fragmentation in explaining the success of Europe. Expressed most clearly in Jean Baechler’s The Origins of Capitalism and then in Eric Jones’s The European Miracle, the argument resembles a political interpretation that follows the lines of economists’ belief in the advantages of perfect competition in industrial markets. The advantages of having several competitors and having constraints imposed by other firms, which influence behavior in a desirable direction, suggest that having several nations rather than one empire would be advantageous for economic growth.

These ideas are, as claimed by this volume’s editors, an independent recapturing of arguments made by David Hume (1742) and Immanuel Kant (1784) on why Europe developed more rapidly than Asia. Since Europe, particularly a Western Europe composed of several different nations, had emerged as the world leader, the idea, then as now, has some degree of plausibility, particularly since Asia was considered to be composed primarily of a small number of large empires. The idea of the editors, and the basis of a conference held in Heidelberg in September 2002, including as contributors historians, sociologists, economists and a socio-psychologist, is to provide a more direct test of the hypothesis by examining the four major Asian empires — China, Japan, India, and the Middle East — to determine the broader role of political fragmentation. While that is the primary intent of the volume described by the editors, a key set of arguments are broader, asking more generally why none of the Asian nations achieved modern European growth rates for a prolonged period.

The volume includes three general essays on creativity and fragmentation, with four Asian case studies. Dean Keith Simpson, a social psychologist, uses earlier estimates of Asian creativity, to argue for the importance of political fragmentation and also of cultural homogeneity. Jean Baechler reviews the debate on the hypothesis claiming that it “is not a yardstick to be applied rigidly and mechanically … but a hypothesis and a method of inquiry.” The essay by the editors provides some background to the general arguments and the case studies presented, arguing for the importance of geographic mobility, religious diversity, political stability, peace, and “institutional pluralism within the political units.” The studies of India by Deepak Lal and of the Islamic Middle East by Timur Kuran, contend that these two societies were too monolithic to have achieved sustained growth. The other two case studies, of China by Pak Hung Mo and Japan by G?nther Distelrath, point to the drawbacks of centralized control in China and the difficulties confronted by Japan at times of “total decentralization.”

The conclusions drawn from these studies are generally based upon comparing periods of creativity or economic growth of the Asian nations over a long period, with the extent of changes in degree of political fragmentation. As might be expected the specific conclusions are rather mixed, political fragmentation helping to explain bursts of creativity in some cases, but not in others. Each of the studies does provide much interesting information and insights for the non-Asian specialist. The usefulness of the volume is helped by the inclusion of comments made on each of the articles by other scholars who attended the conference.

As Eric Jones suggests in the introduction, a point reiterated by most contributors, the evidence presented “suggests amending rather than abandoning the hypothesis,” as “the new notion in more qualified than before.” To advance this discussion, it will be interesting to examine several more case studies to broaden our knowledge. Was, for example, Africa over-fragmented, with the population of small states leading to an inability to exercise power against Europeans and also leading to conditions favorable to wars and the sale of war captives elsewhere to be slaves? Did the transition in South America in the early nineteenth century do more to facilitate growth than the previous unified empire of the Spanish? This expansion of case studies will be useful, since if political fragmentation can spur cultural and economic growth, but only under certain conditions, it will be helpful to learn more about what such conditions were.

It would also be interesting to follow the logic of the underlying economic argument to determine what the optimum degree of fragmentation would be. Too much centralization can be limiting, as would too much fragmentation, which can be at the cost of political stability. The cost of fragmentation in Europe is given less attention than the frequency of warfare among those nations might suggest, as are the costs of the mercantilist policies that all European nations followed. The deaths of millions in warfare may have been the outcome of policies related to the benefits of fragmentation, which is to say that fragmentation into different nation-states was not costless.

Stanley L. Engerman is John Munro Professor of Economics and Professor of History at the University of Rochester.

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