Lecture 2: The Great Divergence

Closed worlds definitions, examples, time

Economic spaces with important internal trade exchanges, but not economically integrated with one another: Europe/Mediterranean, East Asia, Central America. End of 13th century

Time, reasons for “opening” of closed worlds

1450-1550: geographical discoveries, new commercial and communication routes

Mediterranean status quo at the end of 15th century

Trade dominanted by Italians (Venice and Genoa). Received luxury products from far East, sent mental, paper/glass, wool/linen to the Levant

First opening, time

By Genoa/Venice to Flanders/England, end of 13th century: exchanged spices for metals/wool

First opening flaws

Galleys, cocche not suited for ocean travel
Genoa tried to circumnavigate Africa to get to Asia in 1291, failed
Italians did not go further than Morocco

Context: innovations after first opening, time

15th century: developments in shipbuilding (caravels); military technology (cannons); navigation science (astrolabe, quadrant, nocturnal, nautical charts)

Incentives for Europeans to find new routes to Asia

1. Search of new trade routes to Asia - land routes controlled by Ottomans

2. Desire to accumulate wealth through gold, silver or other resources in new territories

3. Spread the influence of European culture/Christianity

4. Competition amongst each other to expand their empires (particularly between Spain and Portugal)

Portuguese opening - contributions of Henry the Navigator

1. Assembled skilled groups to design ships, maps and navigation instruments

2. Funded expeditions to the west african coast

3. Built massive know-how for the Portuguese

Portugese voyages - timeline

Integrated to Mediterranean-North Sea trade
1427: discover the Azores
1434: Gil Eanes rounds Cape Bojador
1487-88: Bartolome Diaz rounds Cape Good Hope
1497-98: Vasco da Gama circumnavigates Africa and reaches Calicut
1510: arrival in Malaysia
1513: arrival in China
1543: arrival in Japan

Portoguese method of trade establishment

1. Establishment of outposts to control trade (gold/iron/spices, eventually slaves)

2. Marginal territorial occupation

3. High rate of resource extraction

Result of Portoguese voyages

Rose Portugal’s share of the spice trade, weakening Venice in the Mediterranean; supplanted the Arabs in the Indian Ocean

Spanish Opening, strategy & voyages

Goal was to reach the Asia from the West
1492: Cristopher Columbus arrives in America, refuses to accept he discovered new land, dissapointed in having found only gold and silver instead of spices
1520s: Hernán Cortés starts exploring and conquering the Americas, easy due to the fragility of local empires

Spain/Portugal world division

Treaty of Tordesillas: 1494
Treaty of Zaragoza: 1529

Proto-globalization definition, time

Integration of previously distant markets, 1435-1550

Characteristics of proto-globalization

East Asia participated but bought almost nothing: Europeans imported spices/tea/silk/porcelain in exchange for silver from the New World

Europe became the center of the global economic system; first, Spain and Portugal thanks to their colonies, then France/Netherlands/Englands started colonizing North America/Oceania

Imbalanced and unequal distribution of social and political power

Mercantilism definition

Economic theory claiming that a nation’s wealth depends on how much gold and silver it posesses

Goal of the state under mercantilism

To accumulate as much gold and silver as possible by creating a trade surplus from maximizing exports and minimizing imports

Tools used by state to achieve goal of mercantilism

1. Protectionism: tariffs on imported goods

2. Trade monopolies, such as state-chartered companies

3. Export incentives: subsidies or tax breaks to export-oriented industries

4. Colonialism: colonies were a source of cheap raw material, an exclusive market for the motherland’s products

Great Divergence definition(s)

The process through which Europe became the most developed area in the world + the process through which the limits of pre-industrial economies were finally overcome

Characteristics of preconditions to the Great Divergence

Europe had similar preconditions to Asia; in certain fields, Asia was even more advanced than Europe

Evidence of the Great Divergence

1. Higher urbanization rates in Europe than in Asia

2. Dominance over seas and trade

3. More technological and scientific innovation

4. Higher living standards

Great Divergence: Demographic Explanation

Higher population density in Europe led to faster circulation of ideas and to more pressure on resources, leading to innovation

Great Divergence: Alternative Demographic Explanation

According to G.Clark: Black Death reduced pressure on resources, which led to a temporary escape of the Malthusian trap → wages increased, living conditions rose, inequality lowered

Great Divergence: Institutional Explanation

European institutions stimulate economic, scientific and technological innovation

Great Divergence: Examples of Institutions for institutional explanation, author

Universities: encouraged the dissemination of knowledge and use of the scientific method

Mercantile cities: encouraged the emergence of the bourgeois mentality/managerial techniques and entrepreneurial solutions

Needham

Institutional Explanation: what institutions led to, authors

According to North, Thomas, Landes, mercantile cities led to private initiative: free/efficient markets, recognition of property rights

Great Divergence: Geopolitical Explanation

Diamond: natural barries → small European states encouraged competition vs large empires in Asia, which favored stability over innovation

Pomeranz: access to the Americas → resources that helped overcome natural constraints in Europe → shift from a labor-intensive to a capital-intensive economy + development of energy-heavy sectors (coal)

Wallerstein: colonialism → Europe exploited the territories it conquered, created a system with center, semi-peripheries and peripheries

Wallerstein’s world system

Core: driver of the economy, concentrates highest value-added production

Semi-periphery: limited political weight but significant economic weight

Periphery: limit economic and political weight; produces only raw materials and simple goods