Economic global history lecture 2 (The great divergence)

Who introduced the great divergence as a concept?

Kenneth Pomeranz

What is the resemblance thesis argued by Kenneth pomeranz?

He argued that the scale of comparison had been wrong. Rather than comparing England with china, or Europe with china, similar units of comparison had to be taken. He focused on two areas similar in population and size: the Yangtze Delta vs England. He argued that both areas faced similar constraints and similar resemblances, in terms of wages, income and markets.

He argued that England was just fortunate to have access to coal nearby its industries, and access to colonial resources.

Why does the resembelance thesis not uphold? ?

There were already significant differences before the great divergence. Parts of northwestern Europe already became a leading economic area before 1820 and are richer than most parts of China.

What were the issues faced by preindustrial societies?

Most of the energy was derived from biomass (land and forests), whereas after the IR fossil fuels released enormous amounts of energy.

Who is Thomas Malthus and what did he believe?

Thomas Malthus was a British economist and demographer in the 18th-19th known for his theory on population growth in his Malthusian growth model. He believed that population growth would always outstrip food supply, leading to inevitable famine and societal struggle. Because the earth can’t keep up with population growth.

What does Neo-malthusianism mean?

A term applied to thinkers that are pessimistic about the future of human societies, those that warn that economic and population growth is on the long run nor sustainable.

What finally ended Malthus theory?

Industrial Revolution allowed population growth to be matched by productivity

Draw the Malthusian model.

What’s the most clear and widely used example of the Malthusian model? And what was the outcome

The Black Death in 14th century. Despite political attempts it lead to labor shortages and ultimately higher real wages. This meant the end of serfdom (farmers tied to the land by their landlord) in Europe.

Explain what the great leveler refers to

Often a pandemics or wars, but namely the idea is that a big crisis sometimes in history are linked to larger equality (levelers/stabilizers). These often lead to redistribution of wealth and resources.

Give examples against the Malthusian pattern in preindustrial societies other than the Black Death.

Incomes were not flat so historically you can find other places with economic growth coupled to population increase.

Ex. Italy in 14-15th century, England and Holland 17-18th century. These were short lived but reached a high equilibrium for a sustained period.

How did the cities of Europe change between 1500 to 1800?

In 1500 : mostly in the south, especially in northern italy. There is also a cluster of cities in areas like Belgium/netherlands. Here urbanisation is our main proxy, indicator of economic growth. Large cities reflect the presence of markets, and agricultural hinterland that is able to produce and sell surplus to the city.

1800: More large cities in Northern Europe. Particularly in englanf, the rise of large cities is very pronounced. Cities are also much larger. Million cities included London and Paris,

When does the Malthusian pattern hold true?

In the late Middle Ages (1300-1500)

What is meant by a little divergence?

Exceptions to the Malthusian pattern caused within Europe. There were differences between northwest Europe and southern Europe. The latter stagnated and the economic activites mowed towards the north.

Who was Douglas north and what did he believe?

Who was Douglas North and what did he believe?

Douglas North was an American economist and a key figure in the development of institutional economics. He won the Nobel Prize in Economic Sciences in 1993 for his work. North argued that economic performance is heavily influenced by historical and institutional contexts, emphasizing that the evolution of institutions—rules, norms, and structures—shapes the economic development of nations. He believed that understanding institutions is critical to explaining the disparities in economic growth across different countries, particularly how they affect transaction costs and economic incentives.

What is the rule of law index?

Where there is a good degree of the rule of law, meaning arbitrariness is limited, this is strongly linked to GDP per capita.

What is the main distinction between (proto) representative governments in late medieval Europe and modern liberal democracies?

Proto-representative governments allowed for more openness and economic elite participation but lacked the universal representation and rights characteristics of modern liberal democracies.

What characterized the self govern,ent of merchant elites in Italian city states during the late medieval period?

These city states were oligarchic, with governance dominated by merchant elites rather than traditional nobility or patricians.

What caused the Dutch revolt in the 16th century?

Merchant elites protested against Spanish rule, heavy taxes and religous oppression.

What was the staten-general and what role did it play in the Dutch republic?

The staten general was the duch parliament, where merchants and commercial interests held political power. It was involved with warfare and large-scale investments in infrastructure, such as canals and agricultural productivity.

What were the main economic achievements of the duch golden age. In the 17th century?

It saw economic prosperity, growing income per capita, and significant investments in infrastructure and agriculture.

How was the duch political system in the 16th and 17th century different from absolutist rule?

Unlike absolutism, the duch system involved some sharing of power, particularly among merchant elites, offering an alternative to the unchecked power held m monarchs and dictators.

How did the stats generaux influence the French Revolution in 1789?

An assembly representing various estates of French society, played a pivotal role in initiating discussion that led to the revolution.

What major event in English political history marked the shift away from royal absolutism?

The glorious revolution of 1688

What was the political outcome of the glorious revolution?

England became a constitutional monarchy, with the monarchs power limited by the bill of rights and more decision power resting with the parliament

What were the two sides in the English Civil War of the mid 17th century and what did they support?

The royalist supported royal absolutism while the opposing side favoured a stronger parliament and limits on the crowns power

Who became the new monarch of England after the glorious revolution and what conditions did he accept?

William the third became the new monarch green to accept the Bill of Rights which he restricted the power of the crown

What role did Parliament play in England’s economic development?

Parliament facilitated investments in commercial transportation infrastructure and support the prioritisation of agricultural land benefiting economic elites

What is Max Weber’s hypothesis?

Max Weber's hypothesis emphasizes the concept of the 'Protestant Ethic', suggesting that religious values, particularly those of Protestantism, played a significant role in fostering the spirit of capitalism and influencing economic behaviors.

Why is Max webers theory problematic? 3

1. one could say there is a problem with work ethic is seen by a lot of scholars as response to economic incentives not the other way around,

2. it is ethically and morally flawed because it invites ethnocentric and superiority arguments (think of Eurocentrism)

3. the capitalist spirit existed in other places and different areas of time. The Islam world in the middle ages of the Republic and Timbuktu was especially very dynamic and what about economic growth in catholic areas.

What were the main economic development that occurred in this period related to the growth of market?

1. Growth of cities meant farming increasingly responded to markets, making it more worthwhile to invest in productivity to increase the output of farming to sell surplus food. The end of serfdom and enabled commercial agriculture.

2. A system of household production emerged on the countryside (for instance textile production) . Thus families sold products to the marketing exchange for cash more cash for households enable them to produce consumer goods on markets for instance lead in production on the countryside.

Privatisation of land —> economic elite established systems of privet property rigthd of land, this meant that a lot of farmers lost access to land which pushed them on the labour market. The process of privatisation was supported in England by Parliament. This is different from feudalism

What is feudalism?

Feudalism is a social and economic system that dominated medieval Europe, characterized by the exchange of land for military service and labor. Lords owned large estates and granted parcels of land, called fiefs, to vassals in return for loyalty and service.

Explain enclosure

Process of land privatization that left lots of farmers landless between 1350-1800. (Remember picture of fields and fences)

Why were banks important?

They enabled the financing of long distance trade. They extended credits to merchants who engaged in long-distance trade. But also institutions for credit consumption emerged. Public banks also provided loans to states.

What happened to China during the QING rule?

China reached its greatest geographic extent and experience the remarkable boom in population. There was a boom until the 18th century, that rested on population growth, and growth on agricultural output. And there was also a degree of maturation of the market economy. Yet levels of GDP per capita did not increase that significantly as in for instance NL or ENG.

What were the differences in terms of politics and institutions between China and Europe?

• large degree of political centralisation as opposed to fragmented system in Europe in Europe fragmentation was considered to be an advantage although centralisation in the case of China could be considered an advantage

• In the 18th century there was a long period of peace.

• Peace allowed to facilitate market integration which sets it apart from Europe. North and south china connected by river

• Taxes were compared to Europe also much lower

• the system of meritocratic bureaucracy was viewed in the western world and the rule of law generally applied this invited for practices of good governance

What are the three disadvantages of the centralised system in China?

1. .Centralisation seemed to impede growth. While bureaucracy or chosen on their merits. There was little incentive to do well. successful local agent/structures were trusted by central authorities and local initiatives were discouraged. Furthermore the imperial regime was aristocratic, which meant that economic elites had little or no say in political system (opposed to Holland or England)

2. The clan based structure of Chinese society. risks were shared and burdened within very large family structure. For instance clans would provide credits as opposed to banks.

3. Unlike Europe the centralised Chinese state did NOT allow colonial expansion and trade which would have provided an impetus to the Chinese economy in similar ways as it did in Europe.

What caused urbanization in the North Sea?

Long distance travel. Cities like Amsterdam and London are examples.

Explain the consumer revolution that happened when people in cities started earning more because of trade

People (even low level workers) had extra money so they started buying a larger variety of products. This resulted in new things like tea and coffee becoming more popular. People wanted to buy these goods to feel more socially promoted. People wanted money to spend so they also worked longer and harder. Europeans also started to try and copy the luxury goods like silk and porcelain.

What is an important example of import substitution

Large amounts of textiles were imported from Asia, especially India which became fashionable in Europe. This lead to the cotton industry (which often used yarn from India) in Europe emerging. In 1721 English parliament staretd an experiment with import tariffs on cotton textiles to raise tax income and protect domestic textile production. This lead to it being more interesting to produce textiles in England.