The Great Divergence: China, Europe, and the Making of the Modern World Economy
Historians have always puzzled over Britain's ascent in the Industrial Revolution, often offering conflicting theories to explain its rise. Pomeranz takes a neo-Malthusian, ecological approach that focuses on access to food and raw materials. He observes that the core areas of China, Japan, and India shared similar levels of technological and institutional development with Europe by 1750. Like Europe, they had already cleared much land to feed their growing populations and faced increasing difficulty in importing food, fuel, and fibers; over time, they shifted to more labor-intensive agriculture. In contrast, Europe had more institutional slack, easier access to coal (which was crucial, in the author's view), and cheap imports of sugar and cotton harvested by slaves in its New World colonies. Europe's technological boom actually came later. Pomeranz relies heavily on plausible guesstimates, based on extensive but fragmentary evidence, to make quantitative arguments and venture occasionally into counterfactual analysis. It is a pity that he does not even mention the quite different explanations offered in David Landes' recent Wealth and Poverty of Nations.
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All have heard about the virtual corporation. What the world is witnessing now is the rise of the virtual state. After World War II, led by Japan and Germany, the most advanced nations gave up territorial conquest to compete instead for world trade. As more corporations farm out production and land becomes less valuable than technology, knowledge, and portfolio investment, the state will further shift its efforts from amassing productive capacity to choosing industries and investing in people. War over territory is becoming quaint, but so is the welfare state.
U.S. and international development agencies, believing that poor countries should develop economically before they become democratic, have not taken politics into account when disbursing aid. This is a mistake: poor democracies are almost always stronger, calmer, and more caring than poor autocracies, because they allow power to be shared and encourage openness and accountability. They deserve all the help they can get.
