Great Divergence

The Great Divergence is a term used to denote the extreme differences in material prosperity and living standards between countries. The term is frequently used when discussing the economic advantage that the "West" gained over the rest of world during the modern period.

Technological Factors Leading to Divergence

Beginning in the early 1800’s, economic prosperity skyrocketed due to improvements in technological efficiency. This communication was facilitated largely by the advent of new technologies including the railroad, steamboat/steam engine, and coal as a fuel source. These innovations accelerated the Great Divergence, elevating Europe and the United States to high economic standing relative to the other world regions. Though these inventions were founded in the West, the Eastern countries still employed their uses in trade and transportation. So, a disparity arises. Both the Western and Eastern countries had access to the same technology, yet the West benefited more from its presence. In other words, technology was readily available to all countries, but its use differed between the East and the West. The concept of comparative use-efficiency levels can be used to help corroborate the West’s progression ahead of the East.

Total Factor Productivity Analysis

When analyzing comparative use-efficiency, the economic concept of Total Factor Productivity (TFP) is applied to quantify differences between countries. TFP analysis assumes similar raw material inputs across countries and is then used to calculate productivity. The difference in productivity levels, therefore, reflects efficiency of input use rather than the inputs themselves. TFP analysis has shown that the Western countries had higher TFP levels on average in the 1800's than Eastern countries such as India or China. From this one can conclude that the West was making better use of their resources than the East, accelerating the socioeconomic Great Divergence.

Importance of Technological Advances to Divergence

Some of the most striking evidence for the Great Divergence comes from data on per capita income. The West rising to power directly coincides with per capita income in the West rising relative to the East. This change in per capita income can be attributed largely to the mass transit technology such as railroads and steamboats that the West embraced in the 1800’s. First of all, construction of enormous boats, trains, and railroads required large numbers of steelworkers and engineers, all of which had to be paid. Secondly, the railroads and boats made moving huge amounts of coal, corn, grain, livestock and other goods across countries more efficient. This is one of the chief differences between the East and West in the 1800’s. The West had more efficient boats and railroads which had a trickle-down effect on the efficiency of other industries. Medical technology was also surging ahead in the West as was the understanding of nutrition. Healthy workers were more efficient, causing the West’s TFP to rise.

Possible Efficiency Influencing Factors

A number of factors contribute to why the West was able to optimize its usage of new technology while the East fell behind. These factors are outlined below.

Geography – Europe and the United States have a large number of inland ports due to extensive, deep rivers. Steamboats were therefore not limited solely to coastal ports. Pittsburgh, PA for example, became an epicenter for steel distribution towards the end of the 1800’s due to its rivers. This argument is difficult to make, however, because China had a very extensive system of internal canals at the time linking the inland land masses to the coast. Also, due to regional climate, European coal mines were wetter than the arid Chinese mines. Water could easily be pumped out of European mines using steam engines, but ventilating Chinese mines to prevent explosions was much more difficult.

Managerial – The railroad efforts in the United States were spearheaded by experienced business tycoons such as Cornelius Vanderbilt and Johns Hopkins. These millionaires were able to focus their finances on distinct, organized projects which increased the efficiency of track building. The East did not have investment on the same level.

Agriculture – Advances in agriculture meant the West was well fed to the point of huge surpluses. This meant less time spent feeding nations and more time spent on per capita income increasing business ventures for the West.

Labor – Perhaps the most important difference between the East and the West which drove the West to such success was the difference in wages. Wages in the West were much greater than those in the East. This put economic pressure on the West. In order to compete the United States and European countries would have to find ways to reduce the amount of labor needed to run their businesses. This meant investing in and searching for new technology to reduce the need for people. This focused engineers on adapting to new machinery and to efficient land use practices. Instead of using wood for fuel which would take up too much land and require too much labor, the West turned to coal as a fuel source. In the agricultural industry advances in technology greatly lessened the need to pay tons of farmers. The East, which never really reduced labor because their wage rate was already so low, never felt the optimizing pressure that the West did. By the time the East did feel the need to use technology to lessen their reliance on pricey human labor, the West had already gained an incredible competitive advantage. Both the East and the West had the technology, but from earlier on the West had more of an incentive to use and refine it.

Industry

The Old World methods of agriculture and production could only sustain certain lifestyles. In order to make such a dramatic shift from the rest of the world, Industrialization had to take place at many levels. Europe had many advantages present to Europeans that allowed them to industrialize at such a quick pace.

Agriculture

Prior to, and even within the 19th century, much of European agriculture was underdeveloped compared to the rest of the world. This left Europe with abundant idle resources ready to be taken advantage of. In the 1800s, rather than adopting more advanced farming techniques for greater crop production, French and German farmers were able to put on the market more of their product by laboring longer and curbing their own consumptions. There was also a large agricultural shift from crop rotation to farming for market demand. England, on the other hand was already at its limit in terms of agricultural productivity well before the beginning of the 19th century. Rather than taking the costly route of improving soil fertility, the English opted to increase labor productivity by embracing industrialization in the agricultural sector. From 1750 to 1850, European nations experienced population booms, however European agriculture was able to barely meet the dietary needs. A few ways in which England was able to cope with the food shortage include: imports from the Americas, less caloric intake required by the newly forming proletariat, and the consumption of appetite suppressants such as tea. By the turn of the 19th century, much European farmland had been eroded and depleted of nutrients required to grow crops. Fortunately, through improved farming techniques, the import of fertilizers, and reforestation, Europeans were able to recondition their soil and prevent setbacks to their industrialization efforts. Meanwhile, many other formerly hegemonic areas of the world were struggling to feed themselves - notably China.

Fuel/Resources

The global demand for wood, a major resource required for industrial growth and development, was increasing in the first half of the 19th century. A lack of interest of silviculture in both western Europe primarily attributed the wood shortages due to lack of forested land. By the mid 1800s, most western European and European low countries had below 15% forested land area. Affected countries felt tremendous inflation in fuel costs throughout the 18th century and many households and factories were forced to ration their usage, and eventually adopt forest conservations policies. It was not until the mid 1800s, much earlier in England, that coal began providing much needed relief to energy starving Europeans. China had not begun to use coal until around the turn of the 20th century, giving Europe a huge head state on modern energy production.

Through the 19th century, Europe had vast amounts of unused arable land with adequate water sources. However, this was not the cast in China; most idle lands suffered from a lack of water supply, so forests had to be cultivated. Since the mid 1800s northern China's water supplies have been declining at an alarming rate, dampening their agricultural output. By growing cotton for textiles, rather than importing, China exacerbated the effects of their water shortage.

Trade

Europe's access to a much larger quantity of raw materials and a larger market to sell its manufactured goods gave it a distinct industrial advantage through the 19th century. In order to further industrialize, is was imperative that developing areas be able to acquire resources from less densely populated areas, since they lacked the lands required to supply themselves with necessary raw materials. Europe was able to trade manufactured goods to their colonies, including the Americas, in turn the colonies traded their raw materials. The same sort of trading could be seen throughout regions in China and Asia, however colonization brought a distinct advantage. As these sources of raw materials began to proto-industrialize, they would turn to import substitution, depriving the hegemonic nations of a market for their manufactured goods. Since Europe had control over their colonies, they were able to prevent this from happening; keeping the supply lines flowing. Western Europeans were also able to establish profitable trade with neighboring eastern Europeans. Counties such as Prussia, Bohemia, and Poland had very little freedoms in comparison to those to the west. Forced labor left much of eastern Europe with little time to work towards proto-industrialization and ample manpower to generate raw materials. However, these areas were not large consumers of the western Europe's manufactured products, leaving western Europe to pay for much of its raw materials from eastern Europe.

Impacts of Trade

1870–1939

During the era of European imperialism, periphery countries were often set up as specialized producers of specific resources. Although these specialization brought the periphery countries temporary economic benefit, the overall effect inhibited the industrial development of periphery nations. Cheaper resources for core countries through trade deals with specialized periphery countries allowed the core to advance a much greater pace and widen their gap from the rest of the world both economically and industrially.

Eighteenth Century Politics and Leadership

A deeper look into the politics and leadership of the East and the West reveals an assortment of insights into the Great Divergence.

Great Britain

At the end of the 17th century, Britain's government was considerably altered due to the English Revolution. The English Revolution was England's last revolution, attesting to the soundness of a democratic government. A monarch no longer controlled with absolute rule, instead authority was held by parliament and state officials. Through gradual and peaceful reforms, Parliament's wishes along with the will of the people were expressed amply in England's democratic society. A pivotal achievement for the West, as the British system of government would become a model for other types of representative government, including France and the United States. .

From the period 1707 to 1801, Great Britain was known as The Kingdom of Great Britain. Britain's ability to dominate war allowed them to retain their colonies and prevent France from seizing them. This enabled Britain to establish an imperial supremacy. However, the colonies under British rule were subject to several acts of Parliament thus jarring the imperial-colonial relations. These acts include the Sugar Act and the Currency Act.

France

Throughout the seventeenth and into the eighteenth century, France’s system of authority was overlapping and confusing. Cardinals Richelieu and Cardinal Mazarin attempt to centralize France’s government was unsuccessful. Towns and provinces had their own parliaments, laws and local estates. The aristocracy also commanded authority from those beneath them. Louis XIV used France’s traditional values and manipulated them for his own means. He did not achieve absolute monarchy but his success lay in both his cleverness and his manipulation. When Louis XIV died in 1715, he left behind a country in financial disarray. However, Louis XIV’s reign was one worth remembering. First, he set the standard for monarchies all over Europe with his lavish lifestyle at his castle in Versailles.

Until the French Revolution, French society revolved around the system of ancien régime. A society under which the first and second estates are entailed certain rights and have absolutely no accountability. The first estate consists of clergy, the second state of nobility, and the third estate is everyone else. The Revolution’s leaders used Enlightenment ideals to justify their attack on the ancien régime. The French Revolution was viewed as the promise of a new era for both participants and observers. A time when the ideals of the Enlightenment would come into view including, justice, reason, liberty, and equality. France’s use of these Enlightenment principles set the country apart from countries in the East. The French people were rebelling as a whole, as a means for mutual happiness and fulfillment in life. It is said that a rebellion kills men but a revolution kills ideas.

At the turn of the century, France’s government was seized by Napoleon Bonaparte, who pushed the Revolution in a new direction, to extreme nationalism and its lasting repercussions in the twentieth century.

Spain

The death of King Charles II, the Spanish Hapsburg, resulted in Louis XIV's second grandson, Philip Duc d'Anjou, named as successor. This was designated by the King’s will on November 1, 1700. The subsequent War of the Spanish Succession ended with the Treaty of Utrecht sanctioning Philip V’s right to the Spanish throne. As a result French advisors, sent by Louis XIV, flood the Spanish court and government. French involvement enhances Spain because of France’s superior government. Spain has a prominent link to France now due to its Bourbon alliance. On one hand where France learns to excel, Spain excels as well. Their link to each other was strong, with Spain profiting from France’s accomplishments. Spain attempts very few independent foreign policies during the eighteenth century. Spain ends up losing its control of the sea to the French, English, and Dutch due to strain on the Spanish government and the peoples lack of confidence in Spain economic policies. This suggests that in order to maintain oversea interests a country must both possess and occupy them effectually. This idea greatly affects European imperialism in the nineteenth century. Imperialism set the West apart from the East. European nations believed that in order to make their country better than others they must acquire more territories.

Country Specific Ideologies

Great Britain

British society is ruled by an "aristocratic ideology".

See also

• The Enlightenment
• Colonial empire
• Western empires
• Economic history of China (pre-1911)
• The Civilizing Process