China's Failure to Experience an "industrial Revolution"

A number of economic historians have argued that the tendency toward late marriage and other fertility-reducing practices in Europe (especially in the northwest) conferred a distinct advantage on the region, at least in terms of economic growth rates. Pomeranz argues that although some aspects of European marriage patterns were distinctive, the slightly different cultural tendencies in China were approximately as effective in achieving reduction in fertility. The Chinese simply were not breeding out to the Malthusian margin. Peculiar to Europe were some of the ways in which fertility rates were kept under control, not the fact of control itself. Hence, the key to understanding China's failure to experience an "industrial revolution" like Europe's in the eighteenth and nineteenth centuries is not to be found in differential fertility rates.

Another seemingly plausible hypothesis involves property rights and incentive effects, but Pomeranz minimizes the importance of the definition and enforcement of property rights in explaining the different development experiences of the two regions. He argues that China, too, had competitive markets and an elaborate legal system of property rights; in contrast, he also notes the plethora of institutions and laws antithetical to capitalist enterprise, ranging from apprenticeship laws to actual serfdom, that hampered economic development in Europe. Indeed, he suggests that China provided a freer marketplace than did mercantilist Europe. In connection with this particular factor, I think Pomeranz is wrong in suggesting that these institutional matters were irrelevant in the "European miracle" (hence, my qualified "yes" at the beginning of this review); surely the compatibility of the structure of property rights and incentives to capitalism was a necessary, albeit not a sufficient condition for achieving sustained economic growth. Nevertheless, Pomeranz does an excellent job of debunking the excessive emphasis on deregulation as the principal (or even the only) engine of economic growth.

What, then, does account for the "great divergence" of the book's title? Pomeranz argues for the importance of two factors, essentially exogenous "shocks" outside the price system that had important effects on the economy: the distribution of energy-generating resources and the accident that Europe discovered the New World, whereas China did not.

The first argument might be termed "geology is destiny." Coal was the chief energy-generating resource significant for the Industrial Revolution. The location of major coal deposits was a critical factor in determining the viability of industrialization. England's coal deposits were located almost exactly where manufacturers would have placed them if they had had a say in the matter; transportation costs therefore were low and were made still lower by the ready