Why Europe Grew Rich And Asia Did Not – Global Economic Divergence 1600-1850 --------- Prasannan Parthasarathi

 

The focus of the book under consideration is categorically elaborated in the title. The attempt is to understand why Asia got left behind in the economic race and Europe got ahead -- and hugely so. The debate on this ‘divergence’ is not new, but the arguments advanced by Prof. Parthasarathi in this fascinating book are both intriguing and stimulating.

The history that the debate attempts to understand is well known. In summary, from the late 18^th century onwards a series of technological innovations occurred in Britain that transformed certain sectors of the British economy. Productivity increased hugely, and the British economy became the global center of manufacturing by the mid-19^th century. Western Europe followed the British lead and Europe grew rich, while Asia in general and India in particular, did not.

Explanations for this ’divergence’ are manifold. The focus of all explanations is a stark difference between Europe and Asia. Some find the cultural/religious difference significant -- the Protestant ethic and related social orientation towards mastering nature by scientific exploration, hard work and frugal living. Others argue that European institutions were conducive to technical innovation and economic growth -- free(ish)markets, individual property rights and such economically dynamic structures were the major differentiators between a dynamic Europe and a static Asia. Other explanations are also on offer.

The author however, offers an entirely different perspective.

He argues that the economic, political, social and ecological context in any given period of time determines the possibilities open for a society to choose from. Choices are not determined, but certainly constrained by circumstance. In the 18^th century, the context, so defined, differed across geographies and led to different paths being chosen -- and rationally so -- by different ‘agents’.

This general argument needs elaboration and validation.

Trade between Europe and Asia via the Red Sea and The Persian Gulf had existed for centuries, before an all sea route via the Cape of Good Hope was discovered by the Portuguese and Vasco Da Gama reached Kerela in 1498. About a century later the Dutch and the English (the French took a little longer) also came by sea in search of profit. From an initial fixation on pepper and other spices the ‘Company of Merchants of London trading into the East Indies' (the East India Company, in short) found another hugely profitable commodity for trade -- Indian cotton cloth -- coloured, checked and even coarse white. Cotton was more comfortable to wear than the commonly used wool and linen, was available in a wide variety of colours and patterns, and held colour much better too! Soon a huge and growing demand for Indian cottons was created in Britain and elsewhere. The fancy, coloured stuff was for the English consumer and the coarse for buying slaves with on the West African coast; and also to clothe the slaves so bought, in the Americas—and that includes the Caribbean sugar plantations. The quality of Indian cottons and the volumes that sea transport made possible, created and helped meet a huge and growing demand for Indian cloth. Cotton was king. And kings have enemies!

The boom in Indian cotton called forth two distinct responses. The powerful wool and linen industry pushed very hard for protection, which was given to them; and when duties proved inadequate to stem the tide, they asked for a complete ban on imports for domestic consumption and that too was given to them!   Alongside this, a cotton textile industry took birth! The huge market for cotton coupled with the protection granted by a mercantilist state made the cotton sector very attractive indeed and tech innovation followed the possibility of profit. Innovations in spinning made it possible to produce more cotton yarn much cheaper than the Indian hand spinner could and the British Industrial Revolution, led by cotton textiles, was on its way. Tech breakthroughs in weaving followed in time, but the importer of finished cotton cloth became, in the 19^th century, an importer of raw cotton instead and an exporter to the world of cotton textiles!

Two other sectors were part of the revolution -- coal and iron and steel. The principal driver in this context was ecological change -- extensive deforestation resulting in declining availability and rising prices of wood and charcoal. When wood became unavailable at reasonable prices, coal, available in plenty, boomed. For coal mines to function at depth, water had to be pumped out and for that a source of power was needed. Animal, human and water power were inadequate for the purpose and the steam engine came into being. Once a coal fired source of power was available various possibilities for its application in areas other than coal mines were quickly realized and implemented. Add to this the innovation in smelting iron using coal instead of wood charcoal and we have cheaper iron and steel too. Things are ready for takeoff. The steam powered Iron Horse, iron rails for it to gallop on with wagons and coaches in tow, and of course, steam power for manufacturing on much larger scales than was possible earlier.

The context -- competition from Indian cotton textiles, deforestation and its impact on fuel use and the actions of a proactive state willing and able to look after domestic economic interests -- created the possibilities for the English economy. The responses of the society to this context created a path that led to what was a revolution in manufacturing and transport: the Industrial Revolution of the 19^th century.

The Indian context in the 18^th and 19^th centuries was very different. Fuel use patterns did not begin to change away from wood to coal till the late 19^th century; the colonial state subordinated Indian economic interests to British interests and despite rather sophisticated financial and trade structures in place, there was no movement in directions that could have taken India towards a coal-steel-mechanized cotton textile industry based development paradigm.

It was not culture or institutions or any other huge difference between the India and the England of the times that stood in the way, it was context and the compulsions thereof.

One may find some of Prof Parthasarthi’s arguments, (especially those relating to the potential for technological change in India) a trifle hard to accept, but his core argument -- the significance of context in determining the path of change adopted by a society -- is powerful and thought provoking.

Happy reading.