Japan and the great divergence a short guide (palgrave studies in economic history)

Francks, Japan and the Great Divergence, Palgrave Studies in Economic History, DOI 10.1057/978-1-137-57673-6_1 Abstract The publication in 2000 of Kenneth Pomeranz’s The Great Divergen

JAPAN AND THE GREAT DIVERGENCE

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Japan and the Great

Divergence

A Short Guide

Palgrave Studies in Economic History

DOI 10.1057/978-1-137-57673-6

Library of Congress Control Number: 2016955184

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East Asian Studies

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Part I The Great Divergence and Japan So Far 5

2 The Great Divergence Debate 7

3 Explaining the Great Divergence 15

4 Japan in the Great Divergence Debate:

5 Introduction: Interpreting the Tokugawa Economy 41

6 Resources, Trade, and Globalisation 45

7 Institutions and the Market 57

8 The Role of the State 79

9 Knowledge, Technology, and Culture 89

10 Consumption and the Industrious Revolution 99

Glossary of Japanese Terms 117

© The Author(s) 2016

P Francks, Japan and the Great Divergence, Palgrave Studies

in Economic History, DOI 10.1057/978-1-137-57673-6_1

Abstract The publication in 2000 of Kenneth Pomeranz’s The Great Divergence presented a seminal challenge to the prevailing, largely

Eurocentric, view of the path taken by global economic development from the early-modern period onwards Its argument that the conditions for economic growth in advanced regions of China and other parts of Asia were not signifi cantly different from those of their counterparts in Europe on the eve of the Industrial Revolution stimulated a debate that has brought global history to life, while initiating a considerable reas-sessment of, in particular, Chinese economic history However, it has yet

to exert much infl uence over those who study the only country outside

‘the West’ that did achieve signifi cant industrialisation before the Second World War, that is, Japan

Keywords The Great Divergence • Economic history of China • Economic history of Japan

It was in the year 2000 that Kenneth Pomeranz , then a professor at the University of California, unleashed upon the somewhat staid world of

economic history his book The Great Divergence (Pomeranz 2000 ) As historians—not just economic ones, as it turned out—began to absorb the detailed arguments and evidence that the book contained, it became clear

Introduction

that a seminal challenge had been posed to a very longstanding sus view of the path that global economic history had taken from early- modern times This consensus maintained that the unprecedented leap into sustained economic growth brought about by the Industrial Revolution was rooted in a pattern of development that had prevailed in Europe since at least the sixteenth century It was therefore this ‘superiority’ that explained the economic, political, and military dominance that Europe, and in due course the USA, came to be able to exercise in the world from the eighteenth century onwards, and hence the inequality in living stan-dards between the ‘West and the rest’ that only began to narrow in the later twentieth century, as major Asian countries started to ‘catch up’ Against this, Pomeranz essentially argued that this long-term European

consen-‘superiority’ that was assumed to have brought about the Industrial Revolution could not be demonstrated on the ground, and that in fact signifi cant parts of Asia could be shown to have been as developed, from the point of view of the factors that determine economic output and living standards, as much of Europe up to the eighteenth century It was only thereafter, he maintained, as a result of the Industrial Revolution itself, that the divergence in fortunes across Eurasia set in Consequently, the industrialisation that had made Europe and the USA the dominant forces

in the world economy by the nineteenth century could not be explained as the outcome of particular long-term features of the economies, societies,

or cultures of the West If eighteenth-century China was as well placed as England to achieve sustained economic development, then the fact that the Industrial Revolution occurred when and where it did can only have been the result of particular contingent factors that came to operate on one place but not the other

Pomeranz’s clear challenge to the Eurocentric picture of global nomic change in the early-modern and modern eras has given rise to an explosion of debate that has brought the whole fi eld of world history

eco-to life As we shall see, by no means all of Pomeranz’s contentions have

withstood the testing to which they have been subjected, but The Great

Divergence has forced global comparison on to the agenda of historical

analysis and shaken historians out of their Eurocentric assumptions, giving rise to what Eric Vanhaute deems the ‘single most important debate in recent global history’ (Vanhaute 2015 : 7)

Although, where possible, The Great Divergence does include evidence

from various parts of Asia, including India and Japan, given Pomeranz’s interests and expertise, the focus is predominantly on the comparison

between (parts of) northern Europe and China Moreover, it has cipally been scholars of China who have risen to the challenge of test-ing and debating the book’s arguments Scholars of India have more recently begun to take the Great Divergence debate on board, and

prin-Prasannan Parthasarathi ’s book Why Europe Grew Rich and Asia Did Not

(Parthasarathi 2011 ) represents a thorough analysis of Indian economic history within a comparative economic framework Meanwhile, work on the Ottoman Empire has begun to appear within the growing number

of collected volumes inspired by the debate (e.g Broadberry and Hindle

2011 ) However, as later chapters will show, although dutifully mentioned from time to time, it is largely only within the context of global quantita-tive comparisons that Japan appears in the discussion While the efforts

to estimate macro-level indicators of Japan’s development over long ods of time have produced interesting results, these have for the most part passed by non-quantitative historians, who continue to conduct their detailed research outside any comparative framework

This is unfortunate because, as this book aims to show, global ans and scholars of Japan have much to offer each other in terms of both evidence and analytical insights Japan’s early-modern and modern history has by now been extensively and intensively researched by both Japanese- and Western-language scholars, yet little of this work fi nds its way into the global and comparative literature emerging out of the Great Divergence debate As a result, the light that the case of Japan—the only non-Western country to achieve signifi cant industrialisation before the Second World War—might throw on the issues raised by the debate has scarcely been allowed to shine In as far as work on Japan, subconsciously or not, accepts

histori-a globhistori-al frhistori-amework, it remhistori-ains, with some nothistori-able exceptions, thhistori-at of the Eurocentric ‘catch-up ’ model which the Great Divergence debate has so profoundly challenged

This short book is therefore an attempt to promote dialogue between scholars of Japan and global/comparative historians, and to suggest some

of the ways in which the Japanese case might fi t into and throw light on the Great Divergence debate Part I outlines the debate and the issues

it has raised, so as to provide a framework within which to fi t Japanese evidence Part II assembles and summarises some of this evidence, con-centrating for the most part on that published in English which might

be available to non-Asian global historians Throughout, the book makes substantial use of the important work of more-or-less quantitative eco-nomic historians of Japan, which is not always known by or accessible to

a non-specialist readership Equally, though, recent years have seen the publication of a growing number of remarkable qualitative studies of par-ticular aspects of Japan’s early-modern and modernising history by a new generation of scholars These may well not make it over the disciplinary border between Japanese studies and economic history but can, I believe,

be shown to have important, if largely unexplored, implications for the comparative understanding of industrialisation and its preconditions

In the end, of course, the book offers no defi nitive answers to the tions posed by the inclusion of Japan in the Great Divergence debate—in some ways, paradoxically, it reinforces the conclusion that research pre-sented in a comparative context merely serves to emphasise the variety of distinctive paths that economic development has taken over the centu-ries Nonetheless, if it stimulates others to view Japan’s history within the broader lens that Pomeranz’s seminal work makes possible, it will have done its job

REFERENCES

Broadberry, S., & Hindle, S (Eds.) (2011) Asia in the great divergence Economic

History Review, 64 (special issue), s1

Parthasarathi, P (2011) Why Europe grew rich and Asia did not: Global economic

divergence, 1600–1850 Cambridge: Cambridge University Press

Pomeranz, K (2000) The great divergence: China, Europe and the making of the

modern world economy Princeton: Princeton University Press

Vanhaute, E (2015) Escaping the great divergence? A discussion about and in response to Peer Vries’s Escaping poverty: The origins of modern economic

growth An introduction Tijdschrift voor Sociale en Economische Gescheidnis

12 (2), 3–16

The Great Divergence and Japan

So Far

© The Author(s) 2016

P Francks, Japan and the Great Divergence, Palgrave Studies

in Economic History, DOI 10.1057/978-1-137-57673-6_2

Abstract The Great Divergence presents a range of evidence for its

con-tention that, by the eighteenth century, the Yangzi Delta was in no worse

a position, in terms of living standards, economic institutions, and the spread of the market, to achieve sustained growth in output and incomes than was England It followed from this that the ‘Great Divergence’ in economic fortunes across Eurasia since the eighteenth century cannot

be explained by conditions that preceded the Industrial Revolution, the emergence of which in northern Europe rather than China must there-fore depend on contingent factors that relieved resource limitations in one place but not the other This argument challenged prevailing interpreta-tions of the causes of industrialisation in terms of a longstanding European

‘superiority’ and led to a substantial reassessment of the path of global economic change from the sixteenth century onwards However, the work

on China of the ‘California School’, following Pomeranz, has been licated for Japan only to a limited, mainly quantitative, extent and the

rep-signifi cance of the Japanese case for the issues that The Great Divergence

raised has hardly been considered

Keywords Kenneth Pomeranz • Eurocentrism • Industrial Revolution •

California School

The Great Divergence is a long and dense book designed to provide the

evidence to support Pomeranz’s clear and straightforward—though,

as it turned out, highly provocative—claim for ‘a world of surprising

The Great Divergence Debate

resemblances’ across Eurasia in the eighteenth century 1 Its central focus

is on a comparison between the two regions that represent, according

to Pomeranz , the most developed parts of Europe and Asia, respectively,

in the early-modern period, England and the Yangzi Delta in China Other regions—for example, Holland on the European side and Moghul India and Tokugawa Japan, as well as other areas of China, on the Asian side—are brought in from time to time, but one of Pomeranz’s innova-tions has been to search out and work with comparable parts of two vast continents, rather than making a simple East–West divide It is on this basis that he presents his argument for the possibility of similar levels of income, welfare, and economic development in general across pre-indus-trial Eurasia, with its implication that the Great Divergence in prosperity only emerged once Europe had discovered the secret of the sustained and rapid economic growth that industrialisation made possible

Pomeranz’s attempt to bring together comparable quantitative and qualitative data to support such an argument was largely unprecedented Nonetheless, he was able to assemble a wide range of evidence on incomes, living standards, and the institutions and infrastructure underlying the economies of both his regions in the seventeenth and eighteenth centuries This enabled him to argue that levels of consumption of food, textiles, and other basic goods were broadly equivalent (even if quite different in their composition) and that comparable standards of welfare led to comparable life expectancies At the same time, he showed that the degree of com-mercialisation did not differ signifi cantly across the two economies and that sophisticated market systems operated in China as in England Local, national, and international trade were highly developed in both regions, and the institutional bases for market activity, such as property rights, were equally well established, even if their forms were different The Yangzi Delta thus appeared to have been as capable as England of generating the form of economic expansion, based on the spread of the market and the consequent division of labour, that has come to be known as ‘Smithian ’ growth 2 Hence, in terms of the factors that determined the level of eco-nomic development in the pre-industrial world, the Yangzi Delta and England appeared to resemble each other more than they differed

If this were so, the implications for understanding of the pattern of world development over the centuries were nothing short of revolutionary Since the nineteenth century at least, those looking for answers to the question of why the Industrial Revolution began in England/Europe, or to the closely related ‘Needham question’ as to why the Scientifi c Revolution did not take place in China, had turned to any number of particular features of European

economic, social, cultural, or political history that could be contrasted with their Chinese, or more broadly Asian, counterparts As later chapters will illustrate, explanations ranged from the impact of the European voyages

of discovery and the acquisition of empires, through the invention of the institutions of capitalism, to social and cultural factors favouring techno-logical innovation and entrepreneurship However, all assumed that the origins of industrialisation could be traced to developments taking place in Europe from at least the sixteenth century and that the divergence in for-tunes between East and West was the result of European ‘superiority’ over China and the rest of Asia, as far as the conditions for technological change and economic growth were concerned

In fact, even before the publication of The Great Divergence , writers

such as Andre Gundar Frank and Giovanni Arrighi were beginning to lenge this Eurocentric interpretation of global history 3 They argued that, until the onset of the Industrial Revolution in the later eighteenth century,

chal-it was China , and to a lesser extent India , that dominated the world omy China’s early-modern technological superiority in fi elds such as tex-tiles and ceramics meant that much of the trade of the world was devoted

econ-to the acquisition of the high-quality products of Chinese industry, which European consumers demanded in ever-greater quantities In return, a sig-nifi cant share of the silver of the Americas found its way to China, where

it acted as the currency lubricating the booming Chinese market economy More recently, scholars such as Maxine Berg and Beverly Lemire have argued that it was through the efforts of European producers to compete with Chinese and Indian products that the fi rst technological steps towards the Industrial Revolution were taken, spurred by the consumer demand that these desirable imported luxuries had demonstrated 4 In this light, as China began to rise again in the later twentieth century, European domi-nation of the world economy in the post-Industrial-Revolution era could almost be seen as a relatively short-term blip in the great scheme of global economic history, rather than as the natural order of things dating back to the Middle Ages

Against such a background, the contribution of The Great Divergence

was to present a new way of analysing and comparing the domestic mies on which the pattern of world economic development prior to the Industrial Revolution was based Moreover, if its comparative case could be sustained, it implied that the Industrial Revolution could not be explained

econo-as the culmination of long-term developments specifi c to Europe and had

to be seen as a contingent and, as it turned out, lucky way of ing universally experienced limitations to pre-modern Smithian growth

overcom-It thus threw down the gauntlet to those who would claim that Europe was already on the path to industrialisation by the early- modern period and that the European dominance of the world economy in the nine-teenth century was based on a ‘superiority’ that had long-term historical roots Many of these scholars have risen to the challenge, as later chapters will suggest, and the resulting research results have certainly led to some modifi cations in the position of Pomeranz and those whose work sup-ports him within what has come to be known as the ‘California School ’ Nonetheless, the fact remains that there is no going back for those who seek to explain the pattern of economic development across the world, and claims as to the causes of European economic growth and the diver-gence which it produced cannot now be convincingly made without a comparative global framework that takes pre-modern economic growth

to generate per capita income growth 6 While by no means everyone has accepted that Chinese living standards were indeed comparable with north-ern European ones, it could not be denied that by the eighteenth century China was home to a thriving commercial economy, with well-function-ing market institutions, that was capable of producing consumer goods in quantities and qualities exceeding those of Europe Hence, while historians

of the early-modern period must now view their topics through a pletely different—and to some extent comparative—lens, those seeking to explain what subsequently happened to China’s economy can no longer attribute it to a long-term, historically rooted ‘failure’ to be like the West This transformation in approaches to the economic history of the east-ern side of Eurasia has now spread to scholars of India 7 However, it would

com-be hard to say that it has reached those studying what must surely com-be one

of the most interesting and important examples for the Great Divergence approach, that of Japan 8 Pomeranz does in fact make quite frequent ref-erence to Japan, and it certainly features, as we shall see, in the efforts to make quantitative comparisons across Eurasia, but the accumulation of scholarship that now exists on the political economy of the early-modern Tokugawa period (1600–1867) barely references or fi nds its way into the

Great Divergence debate The persistent tradition of viewing Japan as

‘unique’ may be partly to blame for this, but it also refl ects the long nance of a model of Japanese economic development as a process of ‘catch-ing up ’ with the West Although, as we shall see, research is beginning to demonstrate the continuities between the early-modern economy and its later ‘modernising’ successor, and to downplay the Meiji Restoration of

domi-1868 as the starting point of modern economic growth, the global and comparative implications that follow from this have hardly been examined Japan’s position within the Great Divergence debate therefore remains uncertain and to a signifi cant extent unanalysed In practice, the onset of her modern industrialisation lagged that of much of Europe by no more than a few decades, and the question of how big a lag constitutes a ‘failure’ (such that subsequent industrialisation becomes no more than ‘borrowing ’) is just one of those which the Japanese case raises (Pomeranz 2013 : 119) If pre-industrial Japan was on a similar trajectory of Smithian growth to China, as Pomeranz suggests, how and why, by the late nineteenth century, had this evolved into modern economic growth in one case but not the other? If Pomeranz is right and the European Industrial Revolution was indeed a particular contingent response to the conditions thrown up by early-modern growth in England, might not Japan’s industrialisation equally represent a particular, though dif-ferent, response to similar conditions? On the other hand, if the roots of sus-tained economic growth in Europe do lie in specifi c earlier preconditions, as Pomeranz’s opponents would argue, why should this not also have been the case in Japan and how does this relate to the pattern taken by Japan’s subse-quent industrialisation? In either event, the Japanese case demonstrates that the path to industrialisation was not blocked everywhere in Asia and might indeed take a variety of different forms

As Part II will illustrate, historians of Japan have in recent years been busy building up a much more detailed picture of economic, social, politi-cal, and cultural life through the Tokugawa period and into the era of modern economic growth Part II is designed to present some suggestions

as to how this knowledge might fi t into the comparative framework of the Great Divergence debate, so as to contribute to a better understanding

of both Japan’s development path and the wider processes of global tory within which it has been framed However, before that, it is useful to consider how work pursuing the new directions in global history opened

his-up by the publication of The Great Divergence has taken the discussion

forward, so as to provide the context within which to view what we know

of the Japanese case

NOTES

1 For more detailed summaries and critiques of The Great Divergence , see for

2 The term ‘Smithian’ (after Adam Smith) is now widely applied to the ket-based growth observable in, for example, seventeenth- and eighteenth- century England It contrasts with the growth based on technological advances, capital investment, and economies of scale that is held to have been initiated by the Industrial Revolution

2007

5 In the words of a recent extensive survey of the long-term historical roots of

China’s late-twentieth century ‘miracle’, The Great Divergence ‘catapulted

Chinese economic history from a narrow specialty to a central concern of

6 The most notable California-School contributions on China have come

key evidence for The Great Divergence

generalisa-tion In fact, Peer Vries, in reviewing The Great Divergence , has suggested

that Pomeranz should have gone on to conduct a similar study of Japan (Vries 2001 : 445)

REFERENCES

Arrighi, G (2007) Adam Smith in Beijing: Lineages of the twenty-fi rst century

London/New York: Verso

Oxford University Press

Brandt, L., Ma, D., & Rawski, T (2014) From divergence to convergence:

Reevaluating the history behind China’s economic boom Journal of Economic

Literature, 52 (1), 45–123

Frank, A.  G (1998) ReOrient: The silver age in Asia and the world economy

Berkeley: University of California Press

Lemire, B (2009) Revising the historical narrative: India, Europe and the cotton

trade, c 1300–1800 In G.  Riello & P.  Parthasarathi (Eds.), The spinning

world: A global history of cotton textiles, 1200–1850 (pp.  205–226) Oxford:

Oxford University Press

O’Brien, P (2010) Ten years of debate on the origins of the great divergence

Parthasarathi, P (2011) Why Europe grew rich and Asia did not: Global economic

divergence, 1600–1850 Cambridge: Cambridge University Press

Pomeranz, K (2013) Writing about divergences in global history: Some

implica-tions for scale, methods, aims, and categories In M. Berg (Ed.), Writing the

history of the global: Challenges for the 21st century Oxford: Oxford University

Press

Roy, T (2012) Beyond divergence: Rethinking the economic history of India

Economic History of Developing Regions, 27 (S1), S57–S85

Vries, P (2001) Are coal and colonies really necessary? Kenneth Pomeranz and

the great divergence Journal of World History, 12 (2), 407–446

Vries, P (2010) The California School and beyond: How to study the great

diver-gence History Compass, 8 (7), 730–751

European experience Ithaca: Cornell University Press

© The Author(s) 2016

P Francks, Japan and the Great Divergence, Palgrave Studies

in Economic History, DOI 10.1057/978-1-137-57673-6_3

Abstract The boom in global history that The Great Divergence helped to

stimulate has produced much new analysis of the path of economic change that preceded the Industrial Revolution This can be used to provide the frame-work within which work on Japan is presented in Part II of the book Thus, explanations of the timing and nature of the Great Divergence can be catego-rised as: (i) those that relate to divergences in access to the natural resources,

in particular coal, on which accelerated economic growth and industrialisation depended, via engagement in trade, colonisation, and globalisation in general; (ii) those that see divergence as the result of differences in the institutional structures that condition the spread of the market and determine household behaviour, for example in relation to demography; (iii) those relating to the role of state institutions in promoting the conditions for industrialisation; (iv) those that see the Divergence as resulting from differences in cultural and institutional approaches to science, technology, and wealth-creation; (v) those that see industrialisation as dependent on growth in the market for consumer goods, the extent and nature of which may have diverged across Eurasia

Keywords Resources and development • East Asian institutions • Technology in East Asia • Consumption in East Asia

Explaining the Great Divergence

If nothing else, the publication of The Great Divergence has stimulated an

upsurge of research and analysis relating to the nature and understanding

of global patterns of economic change The following presents a gorisation and summary of the major threads that have emerged, as the expanding ranks of global/comparative historians have worked out their responses to the issues Pomeranz raised This section concentrates on theories and analytical approaches, so as to develop a framework within which Japanese evidence can be considered Work on the quantitative measurement of the key Great Divergence comparators, within which Japan does feature more strongly, will be considered in Chap 4

cate-3.1 RESOURCES, TRADE, AND GLOBALISATION

Alongside the comparative analysis discussed so far, The Great Divergence

also presents Pomeranz’s own hypothesis as to how and why, from broadly similar starting points in the early-modern period, England and China diverged so dramatically in the era of industrialisation 1 He argues that,

at both extremes of Eurasia, by the eighteenth century, Smithian growth was beginning to run up against limitations posed by both natural and human resources The scope for area expansion and/or intensifi cation in agricultural production was reaching its limits, given available technol-ogy, making it increasingly diffi cult to meet the food demands of growing populations; the ability to increase supplies of energy and raw materials, including wood and textile crops, was declining, as diminishing returns set in However, fortuitously in Pomeranz’s view, northern Europe was presented with a way out of this bind In part, this was the result of the European discovery of the Americas, which opened up access to new sources of food and raw materials, but for England it also involved exploi-tation of the abundant supplies of coa l with which the country turned out

to be blessed It was in the efforts to devise the technology that enabled coal to become a cheap and effective energy resource that, on this argu-ment, the seeds of the Industrial Revolution lay

By contrast, China’s main resource lay in its abundant supplies of labour, improved exploitation of which, on the basis of relatively limited land and energy resources, was becoming, by the eighteenth century, increasingly diffi cult In England , on the other hand, economic growth and urbanisa-tion had been putting pressure on the labour supply since the sixteenth century and wages were already high relative both to those in other parts

of Europe (not to mention Asia) and to the cost of borrowing capital For

Robert Allen , it was these high wages, especially when compared to the cost of capital, that drove the search for the means to save labour through the utilisation of new energy sources and the mechanisation that they made possible 2 The resulting steam-powered technology proved a widely applicable means of raising labour productivity, eventually generating the sustained growth in European output and incomes that caused the Great Divergence

This view that it was Europe’s ability to access and utilise new resources that lay behind the leap into sustained economic growth has in fact been widely held, even by those who see the origins of European ‘superiority’ as lying much further back in time than Pomeranz allows for The European voyages of discovery from the later fi fteenth century opened up the possi-bilities of all kinds of new goods, from basic foods like the potato, through

‘luxuries’ like tea and coffee that stimulated consumer demand, to inputs such as the raw cotton produced by slave labour in the Americas American silver was the lure that drew investment into the technology of shipping and the infrastructure of trade and transport, creating the framework for

an ‘early globalisation ’ linking Europe and America with the ing centres of China and India 3 In due course, the establishment of colo-nies created not only new sources of supply of new goods, but also new markets for European manufactures For Acemoglu et al ( 2005 ), it is the establishment of the Atlantic economy that lies behind the emergence of England and Holland as the leading European powers, while Joseph Inikori ( 2002 ) stresses what he sees as the key role of international trade, much of

manufactur-it revolving around African slaves and their labour, in creating the tions for the Industrial Revolution in Britain Coming from a quite different angle, Marxist and world-system theorists similarly see the ability to exploit trade and empire as the key to Western domination of the world economy 4

condi-Meanwhile, China —large, self-suffi cient, and ‘inward- looking’—is assumed

to have missed out on the benefi ts to be derived from the globalisation of trade, going no further than the exchange of its superior consumer goods for silver that disappeared into the ‘sink’ of its domestic economy

Various issues have been raised in relation to these ‘trade and resources’ explanations of Europe–Asia divergence China did have coal resources which, while not very convenient, might have been exploited, had appro-priate incentives existed (Vries 2001 : 438–9) The key inventions that trig-gered the Industrial Revolution in England in the later eighteenth century did not involve the use of coal and the great age of steam power did not emerge until decades later (Griffi n 2010 : 123) The relatively high wages

of northern European workers, compared with their Asian counterparts, certainly indicate underlying differences in the availability of factors of production (land, labour, and capital) and in the ways in which they were utilised, and may help to explain why the path of technological innovation

in England turned in a mechanising, labour-saving direction However,

as we shall see, wage-rate comparisons may not be very meaningful in situations where labour markets and work organisation differ, while later experience suggests that, in any case, technological change does not nec-essarily have to follow the capital- and resource-using pattern that condi-tions in England dictated, in order to raise output and incomes

Equally, doubts have been expressed as to whether the share of trade in the economies of Europe was ever suffi cient for it to have had the impact ascribed to it by globalisation theorists (O’Brien 2010 : Sect 4) Moreover,

it is becoming increasingly clear that early-modern China was itself at the centre of an extensive Asian trade network, involving long- distance ship-ping and merchant activity, largely outside the orbit of Western traders Chinese merchants and the Chinese state may not have regarded inter-national economic relations as the means to acquire resources that China did not possess, but they certainly appreciated the benefi ts that involve-ment in world markets could bring The most important of these was the infl ow of silver —traded as a commodity in exchange for the Chinese goods Europeans sought—the high demand for which merely refl ected the high level of activity within China’s market economy (Flynn and Giráldez 2002 )

Altogether, therefore, while differing resource structures and the European ability to develop and exploit global trade and, in due course, imperialism certainly provide a backdrop to the Great Divergence, it seems unlikely that, on their own, they represent the key They thus have to be viewed in conjunction with the range of other factors to which we can now turn

3.2 INSTITUTIONS AND THE MARKET

It is now generally accepted in economic history that institutional tures—the household and family, producers’ organisations such as com-panies or guilds, the fi nancial system, property rights and land tenure arrangements, and much more—are signifi cantly related to economic out-comes and need to be analysed in terms of their economic effects In the longstanding ‘Eurocentric ’ explanation of Europe’s rise, the superiority of

struc-European economic institutions, in areas such as the security of property rights or the determination of family size, over their Asian counterparts was generally assumed The Chinese family system led to excessive population growth and sub-division of landholdings; landownership and tenancy sys-tems failed to provide the security of tenure that would have encouraged saving and investment, and the institutions of the market did not ensure the degree of communication, probity, and trust necessary to sustain trade and the division of labour

This approach built on a longstanding, broadly Marxist , framework which argued that the breakdown of European feudalism , especially in England, resulted in the separation of landownership from the management

of cultivation and the establishment of commercial farm units employing wage labour This system proved conducive not just to increases in labour productivity in agriculture, for instance through greater use of draft ani-mals, but also to the spread of the market and the generation of savings and investment in all kinds of economic activity—essentially to the estab-

lishment of capitalism In the most fully worked-out response to The Great

Divergence along these lines, Brenner and Isset ( 2002 ) argue that the ferent path of institutional change followed in China precluded the emer-gence of the capitalist structures on which industrialisation depended The landowning elite had no incentive to invest in agricultural improvement and removed themselves to towns, where they lived on rentier incomes that were largely unrelated to the productivity of their land and its cul-tivators Meanwhile, the peasant households who controlled cultivation needed to ensure the continuation of their household labour forces in conditions of uncertain life expectancy and ended up, given inheritance practice, subdividing their holdings amongst necessarily large numbers of children Cultivation became ever more small-scale and labour-intensive, and households were increasingly driven to combine farming with low- productivity by-employments, especially in textiles, in order to survive on their small holdings 5

Pomeranz and others in the California School have devoted able effort to overturning this picture and to showing that, while some-times very different in form, Chinese economic institutions were in many ways functionally equivalent to their European counterparts and did not lead, at least in the Yangzi Delta , to the kind of ‘involution ’ described above Chinese birth rates do not appear to have been any higher than European ones and Malthusian pressures were no more intense, given the much higher yields possible within irrigated rice-cultivation systems

consider-The population growth checks attributed to the ‘European marriage tern ’—in particular the relatively late marriage that resulted from the fact that the children of landless households had to establish themselves in an occupation before setting up a family—appear to have operated, if through different mechanisms, in China too (Pomeranz 2000 : 40–1)

Moreover, an institutional structure based on small-scale peasant ing does not seem to have stood in the way of output growth, in both agricultural and manufactured goods, and engagement with the commer-cial market (Pomeranz 2000 : Chap 2) Although tenancy was probably quite widespread and tenants competed for land in the market, cultivators possessed relatively strong cultivation rights and insecurity of tenure does not appear to have restricted agricultural growth Crop yields rose as the result of sustained improvements to technology and irrigation systems, and although rural households continued to grow a signifi cant proportion

farm-of their own subsistence, they also marketed increasing amounts farm-of food and industrial crops The expanding market for textiles presented rural women with an opportunity to use their spare labour time to supplement household income and a labour market certainly existed, even if very few workers relied on wage-work alone for their livelihoods

Meanwhile, the production activities of rural households throughout China and many other parts of Asia operated within what are now seen

to have been sophisticated commercial institutions (Pomeranz 2000 : 166–86) Trade took place throughout the region, under the auspices of a range of business organisations, and the communications system was well developed, even though obviously distances were long Banking and sav-ings institutions were widely established and capital markets functioned; interest rates and risks do not seem to have been greatly higher than in Europe; types of commercial law, or at least custom, existed and could

be enforced The forms that commercial organisations took were not necessarily the same as their counterparts in Europe—Greif and Tabellini ( 2010 ), for example, develop a model based on the differences between

‘clans’ (in China) and ‘cities’ (in Europe) as the basis for economic and social interaction and security—but they clearly functioned to sustain mar-ket activity and even economic growth

Hence, while California School evidence on these points has been lenged in places, it does now seem diffi cult to argue that impediments within the institutional structures of the market were what prevented China from achieving the subsequent economic growth and industriali-

chal-sation that produced England’s post-eighteenth century divergence The

Great Divergence has accelerated a trend amongst historians of China

to rewrite the early-modern period as one in which market institutions provided a framework for Smithian growth, just as they did in Europe Consequently, the Malthusian pressures and economic decline that began

to beset China in the nineteenth century have to be attributed to other causes, including of course the impact of the by-then industrial Western powers To the extent that Japan’s early-modern market institutions func-tioned in similar ways to China’s, this of course leaves open the question

of what explains the very different Japanese experience from the second half of the nineteenth century onwards

3.3 THE ROLE OF THE STATE

If private-sector institutions have thus dropped out of favour as tions of the Great Divergence, this has not necessarily been the case with those of the state, and a number of well-known works explore the ways

explana-in which governments promoted and supported economic activity as a major factor behind the rise of at least parts of Europe Acemoglu and Robinson ( 2012 ), for example, argue that the key to understanding ‘why nations fail’ lies in the historical processes that determine whether or not

a national-level framework of law-and-order and property rights emerges, within which businesses can invest and grow In Europe, this hinges, for them, on the growth of Atlantic trade , which, in England and some of the other nations with links to the Americas, brought about the rise of com-mercial interests outside the control of the monarchy These interests were able to press for the establishment of legal and political institutions that ensured their ability to pursue their activities free of monarchical depre-dations and gave them the guarantee of security and the rule of law that they needed, if they were to undertake larger and riskier investments In such a view, the contribution of the state to the historical achievement of industrialisation lay in setting up and guaranteeing a free-trade environ-ment and it is no coincidence that it was in England, where such an envi-ronment was earliest to emerge, that the Industrial Revolution was born

It is however equally possible to see a much more interventionist and mercantilist state as the crucial factor explaining, if not the origins of the Industrial Revolution, then at least its subsequent diffusion Even in eighteenth- century England, described by Vries ( 2012 : 654) as ‘a fi scal- military, mercantilist superpower’, the protection given to textile produc-ers against imports of Indian cottons proved crucial to their ability to

develop competitive products for a growing market (Parthasarathi 2011 : 125–31) More widely, throughout Europe, as Chang ( 2002 ) shows, governments commonly instituted the tariff protection, subsidy systems, and promotion of science and technology that they viewed as essential

to industrial catch-up Some have gone farther and argued that, far from peace and free trade, it was the competition of war and military expendi-ture that stimulated economic growth and technological change 6 At any rate, there is no doubt that early-modern European governments pro-tected the interests of traders and producers who contributed to state cof-fers, and in general intervened in a mercantilist way to promote national economic gain

As regards China , on the other hand, the ‘traditional’ Eurocentric view

of the state tended to rely on a caricature of the mandarin class, devoted to learning the Confucian classics and despising anything to do with business

or technology However, the Qing state of the seventeenth and eighteenth centuries was capable of mobilising large numbers of troops when neces-sary to defend China’s borders, and of maintaining a system of bureau-cratic administration which appears to have ensured just the kind of peace, security, and law-and-order that some see as the key to the state’s role in northern Europe Chinese offi cials did not interfere in trade or impose excessive taxation and their interventions appear to have been limited to measures such as the ‘ever-normal granaries’ system that sought to even out the effects of harvest fl uctuations They may not have been particularly interested in promoting science or industry, but few states, if any, at the time saw economic growth, rather than possibly mercantilist protection

of domestic producers, as a goal 7 As rulers of a great and diverse empire, Chinese offi cials at least do not appear to have acted as any more of a hindrance to development than most of their European counterparts, and from the point of view of stability and welfare, they perhaps did rather well Nonetheless, it cannot be denied that the non-interventionist Chinese state, concerned above all to maintain peace, stability, and the welfare

of the empire’s people, does not appear to have provided a framework conducive to the dramatic economic change involved in industrialisation, although precisely what role European states played in bringing about, for example, the invention of the steam engine remains unclear 8 Meanwhile, Parthasarathi ( 2011 : e.g 265–6) clearly sees the British state as the main culprit explaining India’s failure to industrialise in the nineteenth century Equally, though, as Vries ( 2002 : 124–5) points out, Japan’s history sug-gests that there was nothing inherently inimical to industrial growth in

Asian systems of governance, at least when contingent economic and geo- political conditions were favourable The jury is undoubtedly still out on exactly what part states did or did not play in the Great Divergence, but it

is clear that, as the exception that could prove whatever the rule might be, the Japanese case is potentially crucial to the discussion

3.4 KNOWLEDGE, TECHNOLOGY, AND CULTURE

There has long been an argument that the origins of industrialisation are

to be found in the seventeenth-century Scientifi c Revolution in Europe In this view, it was the consequent new, rational, and experimental approaches

to science that generated the practical inventive activity behind the tions of the Industrial Revolution It was widely recognised that, prior to this, China had come to possess technological knowledge in many fi elds—the invention of gunpowder is always cited—which was superior to that of Europe, and the question raised by the eminent historian of science and technology in China, Joseph Needham , as to why the Scientifi c Revolution did not occur there continued to be debated Although Chinese scientifi c knowledge in fi elds such as agronomy and even navigation was known to have been advanced in the mediaeval period, the new impetus towards the understanding of nature that emerged in seventeenth-century Europe was seemingly alien to Chinese thought, which provided no basis for the application of knowledge to the overcoming of natural limitations This argument paralleled other cultural approaches to the explanation

innova-of the birth innova-of industrialisation in northern Europe Protestantism was seen as offering the moral justifi cation of worldly success that enabled the British and Dutch to seek out new ways of making money, while the related rationalisation and bureaucratisation of society, as described

by Max Weber , provided the basis for the institutions of capitalism The roots of European economic superiority could thus be seen to lie in the unique conjunction of capitalism with the culture and morality that sus-tained it, without which large-scale modern industrialisation could not have occurred More recently, Deidre McCloskey ’s ( 2010 ) magnum opus

argues that Britain and Holland led the world in economic terms because they were the fi rst to afford respectability and dignity to the bourgeois who pursued business, made money, and invented capitalism Meanwhile,

it seemed, the Chinese remained ‘other worldly’, with the route to a cessful career becoming ever more tied to passing the entrance exam into the bureaucracy by means of classical knowledge

Even those who accept that the development of science and technology

in Europe did represent an important element in explaining the Industrial Revolution would nowadays modify this traditional cultural position The inventions that powered industrialisation had little directly to do with the philosophic and theoretical advances of the Scientifi c Revolution, and Joel Mokyr argues that it was the network of practical engineers and inventers, nurtured by apprenticeship systems and a ‘Baconian’ approach

to science, especially in England, that was the key 9 Capitalist business organisation and a respect for bourgeois virtues was by no means confi ned

to Protestant Europe and it is extremely diffi cult to separate the effects of

‘cultural’ factors from those of wider economic forces, such as rising wages

or pressure on natural resources

More to the point, however, it is also now clear that a different culture and different forms of economic organisation did not in fact stand in the way of technological advance and economic growth in Asia, at least until after the Industrial Revolution On China , Pomeranz’s evidence (e.g 2000 : 43–8) demonstrates that Confucianism and the mandarin system by no means ruled out the accumulation of practical knowledge and a search for improvements in technology that continued into the eighteenth century 10

Local elites engaged in scientifi c correspondence and debate; numerous advances were made in fi elds such as agronomy, textile technology, and med-icine; practical innovations continued to appear and to diffuse rapidly across regions Parthasarathi devotes a whole chapter to refuting, on the basis of evidence from seventeenth- and eighteenth-century India, Mokyr ’s case for the uniqueness of England’s rational and practical scientifi c culture, conclud-ing that ‘the secret to Europe’s scientifi c and technological verve must be found in the specifi c challenges that Europeans faced, not in any purported cultural, economic or social exceptionalism’ (Parthasarathi 2011 : 222) None of this of course denies that capitalism , as we have come to know

it, was invented in Europe, whereas the bulk of technological advance in early-modern Asia occurred within a structure of small-scale, household- based production such that the separation of wage labour from ownership

of the means of production—the central feature of the organisation and culture of European industrial capitalism—remained limited However, there is now evidence that much of the productive and innovative activity that European industrialisation involved in fact took place within networks

of small-scale businesses, located in regional ‘industrial districts ’, while the factory enterprise employing wage labour and large-scale mechanised tech-nology remained relatively rare until well into the Industrial Revolution Hence, the impact of the great British inventions, whatever kind of science

and education brought them about, on the rate of economic growth was

by no means dramatic and it was not until well into the nineteenth century that large-scale mechanisation and the use of steam power began to have

an impact on Britain’s growth rate 11

Hence, although it could well be argued that China’s business systems

in the eighteenth century were not ‘capitalist’, there does not seem to

be a prima facie case that this necessarily precluded economic growth or

technical innovation of the kind that preceded and even accompanied the eventual spurt of factory-based industrialisation in nineteenth-century Europe Nonetheless, in China and India, early-modern advances clearly did not, for whatever reason, evolve into the sustained process of scientifi c and technological progress that appears to have underlain the Industrial Revolution In Japan, on the other hand, where the technology and organ-isation of modern industry was already becoming embedded by the late nineteenth century, this was not the case, suggesting a divergence within Asia that might have signifi cant implications for understanding of the fac-tors behind the global diffusion of industrialisation

3.5 CONSUMPTION AND THE INDUSTRIOUS REVOLUTION

All the explanations for Eurasian divergence considered so far—and indeed almost all discussions of the causes of the Industrial Revolution until rela-tively recently—have involved what economists would call the supply side, that is, the determinants of the quantities of goods produced in terms

of inputs, technology, and production organisation However, it is also necessarily the case that any increase in output that was not reinvested must have been consumed somehow, and in recent decades the determi-nants of the demand side of the economic equation have begun to receive much more attention, as factors related to industrialisation Fuelling this has been evidence from northern Europe pointing towards a signifi cantly rising trend in the acquisition of consumer goods, from at least the sev-enteenth century Families in Golden-Age Holland adorned their houses with comfortable furniture, decorative pottery, and paintings glorifying their possessions Meanwhile, in England , imported luxuries, such as tea, coffee, sugar, and chocolate, began to spread amongst the ‘middling sort’, along with the utensils and furnishings that surrounded their consump-tion, as part of a civilised and respectable social life Textiles imported from India spurred the spread of fashion in clothing to a wider market and accelerated the fashion cycle Shopping began to be regarded as an enjoy-able leisure activity, as Wedgwood opened his showroom in London and

haberdashers everywhere displayed desirable chintzes and muslins to the daughters of the emerging middle classes 12

In the light of this evidence, it began to be argued that, by the teenth century, signifi cant parts of Europe were experiencing a ‘consumer revolution ’, which began well before its industrial counterpart and seemed

eigh-to pave the way for it However, the exact mechanism whereby the growth

in the market for everyday luxuries such as sugar and tea was related to subsequent industrialisation remained unclear One solution to this puzzle was proposed by Jan de Vries , who developed a model according to which the increasing availability of previously expensive luxury items incentivised rural households to increase the time they devoted to market-based work

in order to earn the cash to buy more of such goods 13 While male hold heads may have continued to work in agriculture, their wives took on more textile work in the home, via putting-out systems, or in local work-shops, and their sons and daughters went out to fi nd wage-work near or far The resulting ‘industrious revolution ’ had a signifi cant impact, it is argued, not just on the consumption of commercial goods, but also on household structures, population growth, and labour-force skills and attitudes, help-ing to create the conditions under which industrial employers were eventu-ally enabled to recruit the labour they needed Equally, it is diffi cult not to see a link between the growth in demand for textiles, metal items, house-hold ceramics, and so on, and the incentives for producers to devise new techniques and products, so as to profi t from expanding markets

In his efforts to demonstrate the ‘surprising resemblances’ between England and the Yangzi Delta in the eighteenth century, Pomeranz pro-duced signifi cant evidence that per capita levels of consumption of goods such as sugar and tea were broadly similar He also saw growing Chinese demand for textiles and household goods, which suggests that something along consumer-revolution lines may have been taking place there too (Pomeranz 2000 : Chap 3) It was already clear that rural households were increasing the time they devoted to activities such as textile work, by means of production networks not unlike those utilised by their European contemporaries, and that what had once been viewed as involution might

be reinterpreted as a form of industrious revolution However, there was only scattered evidence of full-scale engagement in consumer-goods mar-kets and it has been diffi cult to argue that the predominantly rural and household-based workers of China constituted quite the same sort of con-sumers as their wage-worker counterparts in England

As discussed in the next chapter, quantitative attempts to compare real wages and living standards across Eurasia do not suggest that the scope for growth in consumption existed to the same extent in Asia as in northern Europe, while there seems little doubt that Chinese households continued to derive a smaller proportion of their consumption from the market than did English ones On the other hand, it is diffi cult to ignore the evidence of demand for commercial

‘luxuries’ such as sugar or to deny that, in their own way, Chinese consumers were creating market conditions in some respects similar to those that sur-rounded economic growth and eventual industrialisation in Europe It can also

be argued that the impact of ‘industriousness’ on family structures and tion growth might not have been very different, even if the Chinese version of the industrious revolution did not result in the expansion of a footloose wage-labour force Hence, if developments on the demand side do matter, as regards creating the conditions for eventual industrialisation, it is not clear that the situation in China was so different from that in Europe as to offer a convincing explanation of Chinese ‘failure’ As we shall see (Chap 10 ), the term ‘industri-ous revolution’ was originally invented, prior to de Vries, to describe change within the rural household economy of early-modern Japan, but its implica-tions for consumption and the long-term conditions for Japanese industrial growth have not been examined and the signifi cance for the Great Divergence

popula-of the distinctive patterns popula-of consumer demand in Asia remains unclear

The debate that the publication of The Great Divergence initiated has, not

surprisingly, failed to come up with any defi nitive answer to the questions Pomeranz raised, as regards the timing of the Eurasian divergence in eco-nomic conditions and its links to industrialisation But it has generated a vari-ety of new hypotheses and research and has dramatically changed the angle of vision, in relation to understanding of early-modern Asian economies These now have to be treated, not as static, ‘traditional’, poverty- stricken examples

of ‘oriental despotism’ or the feudal subsistence economy, but rather as tioning, and in some cases at least growing, systems which, even if not on the same path towards industrialisation, nonetheless shared many features with their European counterparts The second part of this book considers in more detail how the Japanese case might be viewed from this changed angle, using the framework of causal approaches described above However, while scholars

func-of Japan may not yet have taken to seeing their work in a Great Divergence light, the quantitative historians who have sought to test Pomeranz’s hypoth-eses against available data have not neglected Japan in their comparisons and the fi nal chapter of this Part considers their conclusions

NOTES

8

3 For discussion of the signifi cance of early globalisation, see, for example,

integration of markets across the world, then it did not begin until the

defi nition, according to which globalisation began in 1571 The signifi

4 For an early application of this approach to the issue of China’s ‘failure’ to

5 For the argument, heavily criticised by Pomeranz, that China’s

6 This is a longstanding argument but brought up to date by Hoffman

8 For a detailed survey of the literature that concludes to this effect, see Vries

11 Recent research has tended to stress the signifi cance of ‘micro- inventions ’, which built on existing technology in a wide range of British industries through the eighteenth century For a very useful survey of the literature

on the disputed role of technology in Britain’s Industrial Revolution, see

12 For a vivid account of the expanding world of consumption in eighteenth-

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© The Author(s) 2016

P Francks, Japan and the Great Divergence, Palgrave Studies

in Economic History, DOI 10.1057/978-1-137-57673-6_4

Abstract In response to The Great Divergence , a number of economic

historians set about attempting to test Pomeranz’s hypothesis against such quantitative data as could be found The availability of such data for Japan meant that the Japanese case could be considered within quantitative comparisons related to the Great Divergence, even if access to qualita-tive evidence was limited The starting point for these comparisons was Maddison’s global estimates of GDP, but these were based on very limited sources, and considerable efforts have been made to fi nd better compara-tive indicators of economic conditions, such as real wage rates or improved GDP per capita series These have generally failed to confi rm Pomeranz’s case and have suggested that levels of output and income had already begun to diverge across Eurasia well before the Industrial Revolution Early-modern Japan, like China, appears to have lagged behind northern Europe, but to have moved ahead of China as leader of a ‘little divergence’ within Asia by the eighteenth century However, while the many inad-equacies of such quantitative evidence are still being addressed, it remains

to be seen how far it accords with the available qualitative picture of nomic change in pre-industrial Japan

Keywords Comparison of living standards • GDP per capita estimates •

Living standards in Japan • Little Divergence

Japan in the Great Divergence Debate:

The Quantitative Story

The Great Divergence includes quite frequent references to Japan and

Pomeranz clearly considers that, by the eighteenth century, levels of economic development in at least the most advanced Japanese regions might well have been comparable to those of the Yangzi Delta and, by inference, England and Holland He suggests that Japan too might have possessed the institutional framework for Smithian growth, and he cites evidence of consumption levels, living standards, and life expectancies at least as high as those of the Yangzi Delta, in areas such as the Kantō Plain (Pomeranz 2000 : e.g 37, 127–52 passim ) The debate surrounding the

book has inspired various efforts to test its hypotheses against such titative indicators of long-term economic conditions as can be found, and the availability of data for Japan has meant that it could also be included in

quan-a number of the compquan-arquan-ative estimquan-ates thquan-at hquan-ave so fquan-ar been mquan-ade, even if the use of qualitative evidence has remained limited

The largest project designed to produce historical macroeconomic

esti-mates at a global level, that of Angus Maddison, in fact predates The Great

Divergence and has been widely used as a source of data on comparative

levels of real GDP per capita over long periods of time 1 These estimates depend on the creative use of surviving pieces of data collected for other purposes long before concepts such as GDP had been devised, but they

do represent the longest and most wide-ranging series available at this very broad macro level The Maddison data do not support Pomeranz’s argument for ‘surprising resemblances’ in quantitative terms and suggest that comparative levels of output per capita had begun to diverge across Eurasia well before the Industrial Revolution The Maddison series for real GDP per capita (measured in 1990 US dollars) show Japan ’s level a little below China’s in 1600 but already not much more than half of the fi gure for Western Europe as a whole, let alone the UK (Maddison 2001 : Tables 8b and 8c) Thereafter, Japan did achieve some growth (China appar-ently did not), but at rates not nearly as fast as European ones, so that,

by the early nineteenth century, the divergence in real income levels had become even wider By the late nineteenth century, with Japan starting to industrialise, the gap was narrowing, but it was not really until the period

of the post-war ‘economic miracle’ that income levels began to converge The Maddison data thus paint, in broad quantitative terms, the ‘tradi-tional’ picture, contrasting the early-modern origins of economic growth and industrialisation in Europe with a largely stagnant Asia, within which pre-war Japan was the fi rst to begin to ‘catch up’

Maddison ’s work was necessarily broad-brush and involved a great many assumptions on the basis of very limited surviving sources 2 Since the

publication of The Great Divergence , substantial efforts have been made to

search out other sources that might be used to make more direct sons of income levels and living standards across Eurasia These initially focused on wage rates , for which some historical records often do survive, particularly for groups of wage-workers in larger cities However, for an era before foreign exchange markets existed to generate exchange rates which might (or might not) refl ect the buying power of different curren-cies, it is diffi cult to know what wage rates expressed in local currencies actually mean in real terms Robert Allen has devised an ingenious way

compari-of getting round this problem using the estimation compari-of what are termed

‘subsistence baskets ’ made up of the minimum amount of food (+ a small allowance for fuel, clothing, and housing) that would ensure enough calo-ries for basic survival, in terms of particular local dietary patterns (bread in England, rice in China, and so on) On this basis, it is possible to express the wage rate as a multiple of the cost of the subsistence basket—the ‘wel-fare ratio ’—and hence to make comparisons of real living standards across societies with quite different consumption patterns 3

The most comprehensive study applying this methodology in a Great Divergence context—Allen et  al ( 2011 )—took various pieces of data

on the wage rates of unskilled workers over scattered periods in various major European and Asian cities and compared them in subsistence-basket terms It found that known wage rates and the living standard that they could buy were already signifi cantly higher in London and Amsterdam than in Beijing, Tokyo, and Kyoto by the early eighteenth century, and the gap continued to widen, as industrialisation kicked in (Allen et al 2011 : Figs. 2 and 6) In cities in southern Europe, real wages remained lower than in England and Holland, giving rise to the idea of a ‘Little Divergence ’ within Europe, running parallel with the Eurasian Great Divergence, and

in fact the data for Japan suggest that the wages of, for example, Kyoto carpenters were not that much different from those of southern European urban workers or even English ones outside London However, it can-not be denied that, if historically recorded wage rates really do refl ect the overall living standards of populations, this very thorough study does not support the contention that levels of development were broadly similar across Eurasia prior to the Industrial Revolution

However, even assuming that the estimation of subsistence baskets is correct, it is not necessarily the case that real wages represent adequate measures of living standards and levels of development in Europe–Asia comparisons Wages are assumed to be determined in markets for full-time labour and to represent the incomes of workers dependent on wage-income

for their livelihoods While there is plenty of evidence that labour markets operated in early-modern China and, as we shall see, Japan, those who offered themselves for work typically remained members of family-based households and pooled their wages together with the other income that household members might earn, for instance through subsistence or com-mercial agriculture Unlike the case in, say, eighteenth-century England, few workers relied solely on wages to support a family, making it diffi cult

to equate wage rates with the income available to the members of the age household Allowing for this, Osamu Saitō has used various alternative pieces of evidence to recalculate the incomes of members of Tokugawa- period rural households in welfare-ratio terms (Saitō 2015 : 401–2) The results suggest a signifi cantly smaller gap in real incomes between Japan and northern Europe, with the Japanese level coming out more-or-less equivalent to the estimates for provincial England Hence, Saitō can con-clude that ‘the peasantry’s standard of living in late Tokugawa Japan was more or less on a par with that of labouring families in early modern rural England’ (Saitō 2015 : 405)

Meanwhile, other scholars have approached the problem from the alternative angle of the output side by trying to improve on Maddison’s estimates of GDP per capita This involves utilising whatever histori-cal data are available on the output of the various sectors of the economy,

as well as the population, for as far back as possible For Japan, there are some historical sources, typically those used for tax collection, suggest-ing the agricultural area cultivated and its yield, so that it is possible to make estimates of agricultural output, while considerable work has gone into producing population statistics (although, as we shall see in Chap 7 , results still vary quite widely) It is much harder to fi nd material on which to base estimates of non-agricultural output—offi cials tended not to record it, as

it was typically outside the taxation system—and it has become standard tice to use the urban share of the total population as a proxy for the non-agri-cultural share in total output, on the grounds that most manufacturing and service output has always been produced and consumed in towns and cities

On this basis, Bassino et al ( 2011 ) produced very long-term series for output and population in Japan These suggested slow but steady growth

in GDP per capita from at least the fourteenth century and certainly undermined the picture of early-modern Japan as a stagnant world of no more than subsistence production However, they still placed Japanese GDP per capita well below the English level by 1600 and suggested that the conditions of the early-modern economy were signifi cantly differ-