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Sunday Morning Book Review #2: Why Europe Grew Rich and Asia Did Not
By lotp

Prasannan Parthasarathi is an economic historian with a rich record of publications that focus on India's relationships with the West and other countries. In Why Europe Grew Rich and Asia Did Not: Global Economic Divergence, 1600-1850 Parthasarathi marshalls the whole body of his detailed research to enter a major ongoing debate: how and why did the economic prosperity of Europe diverge so greatly from that of China and other regions after 1600 AD?

Theories about the Great Divergence generally fall into one of two camps: those that cite cultural differences and those that focus on natural resource advantages. The former school says, in effect, that European rationality as demonstrated in science, the stability provided by entrenched rule of law as demonstrated in the English common law tradition that underlies the US Constitution and related cultural characteristics (see: Weber on Protestant work ethic) came to the fore in the Enlightenment, led to the Industrial Revolution (tellingly, in Britain first) and hence to economic prosperity.

The opposing view focuses on natural resource availability as a key determinant, citing e.g. the massive flow of silver from the New World to Spain and the exploitation of the new continent by Europeans which fueled the success and expansion of industry in the 18th century until recent times when, it is said, that advantage is now disappearing and China is rising once more.

Parthasarathi enters the lists on the second side, with a difference: he extends the scope of natural resources to include certain governmental mechanisms and to technologies themselves. For example, after Indian calico cloth began to be exported to Britain under the Raj, it became all the rage with British, American and continental consumers. British weavers were able, says Parthasarathi, to exploit Indian inventions and know-how to launch the industrial textile industry at home - the first real step in the Industrial Revolution - while simuultaneously using control of India to prevent competition. The growing use of coal and team to !power factories gave a considerable cost advantage to Britain over India and consequently major textile-exporting centers began migrating there from the subcontinent. The result was that Europe grew richer and richer while India fell behind.

It is not possible to cover the detailed discussion of this book in a short review, but a few comments are in order. First, this is not (despite the title) a book about Europe and Asia - it is primarily a book about Britain and India during the period in question. Moreover, several of the author's claims are very controversial, among them the claim that Indians had developed science and technology to a level equivalent of that in Britain in the 17th-18th centuries only to have them appropriated or suppressed economically by the British under colonial rule. Here Parthasarathi cites Chinese texts which informed Indian techniques of dying and textile management, techniques which the Indians developed beyond those in the Chinese sources. Simiilarly, he details coal mining and early steam technologies developed in India prior to British rule.

While there is no doubt that the Indians had a much greater familiarity with cotton textile production of a traditional sort than did Britain, the author ignores the deep expertise of British and continental textile industries with similar techniques for fibers common to those regions, specifically wool and linen, plus imported silk, all of which played key roles in major textile production throughout the Medieval and Renaissance periods. Moreover, he ignores broad and deep Western developments in earlier periods that underlay industrial techniques - monastic development of reliable clockworks, for instance, during the Middle Ages, along with exploitation of water for powering mechanical devices which informed later steam-driven machinery.

Rantburg readers might be most interested in the later chapters of this book which detail tax and import/export duty polices of the Raj which, the author argues, significantly distorted competitiveness of the two competing textile industries in Britain's favor. A dissenting opinion is presented in a scholarly review on the website of the Economic History Association. For instance, that review notes that due to low labor productivity, Indian textile production was at a disadvantage to that of Britain quite without tax or duty issues.

The EH site review, which I discovered after reading this book, illustrates how scholarly peer review process can and does often work well. Only after citing detailed differences of evidence and interpretation by other scholars does the reviewer sum up his assessment:

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....

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.

I recommend Parthasarathi's book and the EH review, both, to Rantburg readers willing to go through detailed discussions of particular cases in order to consider just what factors are at work in generating national wealth. Parthasarathi is right to say that import duties, tax levies etc. can stimulate or crush an economy over time. But that is not, by far, the only factor involved in national competitiveness. Natural resources also matter but today, in particular, a whole raft of cultural and legal structures matter just as much: reliable intellectual property protection, a well-grounded educational system, access to capital for investment, whether and in what way a country encourages immigration - these will play a critical role in our own future wealth or loss thereof. In addition to presenting a good deal of information that is not well known in the West, this book provides an illustration of just how complex international economic relationships and the growth or loss of national advantage has always been.
Posted by: 2012-06-10
http://www.rantburg.com/poparticle.php?ID=346340