Title: England’s Divergence from China’s Yangzi Delta: Property Relations, Microeconomics, and Patterns of Development
Author: Robert Brenner and Christopher Isett
Scope: 3 stars
Readability: 3 stars
My personal rating: 4 stars
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Topic of aRticle

The authors compare the historical economies of the most advanced region in Europe (England) with the most advance region in Asia (Yangzi River Delta in China) to see which had the most developed economy.

Key Take-aways

• The Yangzi Delta has a stagnant agricultural sector which support a small urban population. The bulk of the trade economy was in grain and home-spun cotton. Increased population forced peasants to work harder and harder on smaller and smaller plots of land.
• England has clear increases in agricultural productivity, rapidly growing populations in the cities and a highly diversified trade economy.
• There is no evidence that China was as well off as Europe before the Industrial Revolution.
• Only within the last 30 years has China been able to catch up.

Important Quotes from Article

In the Great Divergence Kenneth Pomeranz (2000) proposes a radical revision of our understanding of the pattern of economic evolution in the eastern and western ends of Eurasia over the course of the early modern and modern periods, roughly late Ming and Qing.

According to Maddison, “Western Europe overtook China … in per capita performance in the fourteenth century. Thereafter China [was} … more or less stagnant in per capita terms until the second half of the twentieth century”.

In contrast, Pomeranz insists that if the comparative focus is placed, as only makes sense, not on Europe or China as a whole-both of which contained the most disparate regions at vastly different levels of economic development-but on the most advanced, or core, areas within each, it can be seen that, by as late as 1800, there was little to choose between them, in terms of the character of the economy, the nature of growth, or its results.

Pomeranz’s thesis is complex. At the most general level, he sees Smithian growth taking place as a consequence of the deepening of the division of labor, by means of the growth of exchange driven by population increase. In this conception, the rise of dense population tended to make for economic development by making for the growth of markets and thereby ever greater specialization-so long as institutional or demographic barriers to growth were absent, or had been transcended.

Pomeranz follows Wrigley, himself inspired by the classical economists Smith, Malthus, and Ricardo, in seeing Smithian growth as tending to come up against an ultimately impassable ceiling resulting from the limited supply of land.

All else being equal, between 1750 and 1850, both the Yangzi delta and the English economy were careering toward what Pomeranz calls the “protoindustrial cul-de-sac”.

What ultimately opened the path for England’s great divergence from the Yangzi delta was the distinctive form of English and European mercantile expansion, which had no counterpart in the East. This made possible the establishment of the unique raw material and food-producing peripheries using coerced slave labor that proved indispensable in enabling England, and later Europe, to transcend the tendency to Malthusian-cum-ecological crisis, while the Yangzi delta was unable to do so.

England “was able to escape the protoindustrial cul-de-sac … in large part because the exploitation of the New World.

The burden of our critique is that, from the dawn of the early modern period, the institutional framework or system of social-property relations that structured the English economy was radically different from that of its medieval period (1100-1400) and, more to the point, from that of the Yangzi delta during the Qing (1644-1912). As a consequence, the main economic agents in England and the Yangzi delta faced sharply differing constraints and opportunities and therefore found that it made sense to adopt very different economic strategies, or rules for reproduction. The aggregate outcome was that England’s path of economic evolution diverged decisively from that of the Yangzi delta over the course of the early modern period (1500-1750), as it also did from that of most of the rest of Europe at the same time. It was this already existing decisive divergence, not England’s capacity to gain access to the American colonies and their land-saving staple crops, that explains why the two economies distanced themselves ever increasingly from the middle of the eighteenth century, during the period of the classical industrial revolution (1750-1850).

Our thesis, stated in the most schematic manner possible, is thus two-fold. In the Yangzi delta, the main economic agents possessed direct non-market access to the means of their reproduction. They were therefore shielded from the requirement to allocate their resources in the most productive manner in response to competition. As a result, they were enabled to allocate their resources in ways that, while individually sensible, ran counter to the aggregate requirements of economic development, with the consequence that the region experienced a Malthusian pattern of economic evolution that ultimately issued, in the eighteenth and nineteenth centuries, in demographic-cum-ecological crisis. In England, in contrast to the Yangzi delta, the main economic agents had lost the capacity to secure their economic reproduction either through extra-economic coercion of the direct producers or their possession of the full means of subsistence. They were therefore both free and compelled by competition to allocate their resources so as to maximize their rate of return (the gains from trade). The region experienced, as a result, a Smithian pattern of economic evolution, or self-sustaining growth, that brought it, in the eighteenth and nineteenth centuries, to the edge neither of demographic nor ecological crisis, but to the industrial revolution.

Beginning in the late Ming and accelerating over the course of the seventeenth century, peasants in the Yangzi delta secured, most often through purchases, various customary forms of possession and effective permanent tenancy, particularly in the paddy zone. They also gained fixed rents, exemptions from rent procurements against second crops, and a variety of favorable terms that reduced the weight of rents. Many of these gains were secured as a consequence of the mid-seventeenth-century population collapse… They were subsequently consolidated through political struggles in the form of rent resistance movements.

As the reverse side of the process by which peasants consolidated their hold on the land, landlords found themselves not only fully divorced from production, were also deprived of the ability to vary rents in accord with the supply and demand for land and thus of the capacity to remove tenants who could not pay what the market would bear.) By the eighteenth century, they had largely removed themselves from the countryside and taken up residence in the towns.

At the same time, however, these landlords had consolidated their legal ownership of the land and thereby their ability to take what was an essentially politically set level of rent, which, in the Yangzi delta, amounted to 40 to 50 percent of the summer harvest-rice in the paddy zone and cotton in the cotton belt.

Since the amount of landlords’ rent was politically fixed and thus entirely independent of peasants’ output, landlords had no reason to concern themselves with, let alone to invest in, agricultural production.

[The peasants] subdivided their holdings, in land, tools, and liquid wealth, in order to provide those sons with the wherewithal for their own maintenance, early marriage, and family formation. The outcome was large numbers of children per woman, rapid population growth (up to a point) and, consequently, a trend to ever smaller peasant plots and the de-concentration of peasant wealth more generally.

England before the Black Death was similar to China.

During the late fifteenth and sixteenth centuries, in the wake of the late medieval agrarian crisis that was set off by the Black Death (1348-49), the system of social-property relations in the countryside was radically transformed… Following the severe population decline of the late fourteenth century, peasants succeeded, by way of resistance and flight, in destroying the prevailing system of lordly exaction by extra-economic compulsion. Nevertheless, from the fifteenth century onwards, having failed to reinstate serfdom, lords did succeed in asserting their absolute property rights to the greater part of the land. They consolidated their hold on what were, in terms of western European norms of the time, unusually large demesnes. They expanded, moreover, those already large demesnes by appropriating peasant customary land which had been left vacant in the demographic downturn. They acceded, finally, to land held by customary tenants who lacked both the right to pass on their holdings on inheritance and the right to invariable fines on the transfer of their holdings. The emergent class of commercial landlords, unable, as the feudal lords had been, to take their rents by extra-economic coercion, were obliged to depend on rents determined by supply and demand-i.e., what the market would bear.

The demographic-agrarian regime that emerged in early modern England, dominated as it was by tenant farmers as well as similarly commercial and competitive economic agents in (most of) industry and trade, thus contrasted sharply with and was decisively more favorable to economic development than that which prevailed in the Yangzi delta, shaped as it was by peasants along with fixed-rent-extracting landlords.

[China] As peasants saw their plots and liquid wealth grow smaller under the pressure of subdivision, they obviously had to increase yields (output per unit of land) in order to maintain the same standard of consumption as before. But in order to do so, given both the diminishing quantities of not only land but also and especially of the capital that they could dispose of per worker, they could not avoid having to increase labor inputs for any given output. A long-term trend to declining labor productivity was therefore unavoidable.

By the Qing, peasants had been obliged largely to give up the use of animals in agricultural production, sustaining as a result a significant decline in their labor productivity. During the late Ming and Qing, peasants did succeed in raising yields from their ever more diminutive plots-by weeding more thoroughly, by spreading more fertilizer, and by adding a winter wheat crop that matured before rice planting. But in each case they were required to add labor inputs that failed to yield returns in grain as high as those yielded by already existing labor inputs. Thus higher output per unit of land was secured through the sacrifice of output per unit of labor.

By the end of the Ming, peasants had been obliged to give up animal husbandry almost entirely.

Over time, gains in yields from the application of fertilizer ran up against diminishing returns of huge proportions-in part because the land itself was stressed by the addition of a second wheat crop (see below).

In sum, the introduction of new techniques, especially new fertilizers and new crops, which had as their aim to raise yields so as to compensate for the declining size of plots, did go a long way toward maintaining consumption standards. Certainly the enormous increase in the productivity of the land was a signal achievement of Chinese rice agriculture, making possible a huge expansion of the land’s ability to support population. But the cost entailed by the introduction of these techniques was even greater–ever increasing labor inputs for any given output. A secular decline in labor productivity in Yangzi delta agriculture was thus unavoidable.

As a result of the inability of agricultural output to keep up with rising population in the delta, between 1600 and 1800 grain output per capita fell by our calculations by 30 percent.

England:

The agricultural revolution thereby entailed meant the abolition of the age-old conflict between arable (for immediate subsistence) and animals (for soil fertility).

Part and parcel of the foregoing development, English agriculture radically increased its capacity to support horses and other animals needed for plowing, pulling, carting, and the like.

The outcome represented a breakthrough: a secular tendency to rising labor productivity in agriculture. Between 1500 and 1750, agricultural labor productivity grew by between 52 and 67 percent. Its trajectory thus diverged sharply and decisively from that of virtually all of the rest of Europe in this period, reaching, for example, a level that was double that of France by 1750.

China:

The character of trade in the Yangzi delta, and in China as a whole, reflected the limited capacity of the country to support towns and, by the same token, the limited growth of the division of labor. Because peasant households turned to domestic manufacture essentially to secure subsistence grains, the exchange that resulted simply entailed the exchange of peasant-produced cottons for peasant-produced grain.

To a very large extent, trade in China was between peasants with grain deficits, usually located in densely populated core regions like the Yangzi delta, and peasants with grain surpluses, who tended to be found in the more sparsely populated peripheries.

A whopping 66 percent of all long-distance trade involved just two goods: peasant-produced grain (42 percent) and peasant-manufactured cotton cloth (24 percent).

Large delta towns (with populations of over eight thousand) confined themselves to a small number of functions, in contrast to English towns of the same period. They were centers of political administration; but they were also commercial nexuses from which merchants orchestrated interregional trade in grain and cloth as well as a few other commodities.

England:

In marked contrast with developments in the Yangzi delta, the secular trend in England toward rising agricultural labor productivity constituted the basis for a transformed relationship between agriculture and industry and between country and town, what was indeed a classically Smithian pattern of growth via the gains from trade.

Initially, industrial production was heavily located in the west of England and East Anglia, as well as Yorkshire in the north, where it grew up in close connection to the sheep and dairy farming of those regions. It was, correspondingly, largely (though not entirely) missing from the Midlands granary.

China:

From the mid-Ming on, Chinese peasants had opened up the middle and upper Yangzi regions, the southwest (Yunnan and Guizhou), the northwest, the northeast (Manchuria), the island of Taiwan, and vacant hillsides and highlands everywhere including the delta itself… Nevertheless, over time, as in the delta, they experienced the same inexorable decline in size of holdings and of grain output per labor input and, eventually, the same need to turn to protoindustrial production as had the delta.