Title: Why Europe Grew Rich and Asia Did Not: Global Economic Divergence, 1600-1800
Author: Prasannan Parthasarathi
Scope: 3 stars
Readability: 3 stars
My personal rating: 4 stars
See more on my book rating system.

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Topic of Book

Parthasarathi attempts to explain why Britain industrialized early, but India did not.

If you would like to learn more about why Europe became rich and why Asia did not (until recently), read my book From Poverty to Progress: How Humans Invented Progress, and How We Can Keep It Going.

My Comments

I do not find the author’s argument particularly persuasive, but it is worth being aware of.

Key Take-aways

Parthasarathi argues that:

• In 1750 Britain and the most economically-advanced regions in India were quite similar to each other.
• Therefore, the Industrial Revolution was not caused by anything that was unique or advanced about Britain. The causes were external.
• Britain faced two main pressures:
  • Economic competition from Indian textile imports
  • Declining availability of wood
• No other nation on Eurasia faced these twin pressures.
• Britain reacted by placing tariffs on Indian imports, under-developing the Indian economy and using coal to substitute for wood.
• These factors created a tremendous boom in British textile manufacturers that led to the Industrial Revolution.

Important Quotes from Book

Beginning in the late eighteenth century economic life in Western Europe was transformed. Revolutionary methods of manufacturing were developed and diffused. Inventors dreamed up new machines that increased by several hundred-fold the productivity of the human hand. New industries took root and expanded in Britain, Belgium, France and Germany. By the mid-nineteenth century, the scale of production in Europe was staggering. The decline in prices for cotton yarn and cloth, iron and other manufactures had no precedent in human history and the export of these goods led to deindustrialization in India, China and elsewhere. By 1850, Western Europe was the undisputed center of a new global manufacturing order.

Since the nineteenth century a number of explanations have been offered for why Europe industrialized and Asia did not. Advantages in markets, population, property rights, rationality, state systems and scientific life have all been invoked to account for Europe’s exceptional path of development. While the differences between these explanations have been much discussed and debated, less examined is a striking similarity in method. For despite their disagreements, they explain divergence in the same way. They all identify something that made Europe different, to which Europe’s divergent path is then attributed.

This book takes a different approach. Drawing on scholarship that points to profound similarities in political and economic institutions between the advanced regions of Europe and Asia, it rejects claims for European difference.  

Britain diverged from Asia, as well as other parts of Europe, not because it possessed rationality, science, markets, capitalism or anything else in greater abundance, but because the pressures and needs it faced – in combination with its state policies – produced a revolutionary response.

Two pressures were critical in generating British divergence. The first was the competitive challenge of Indian cotton textiles, which in the eighteenth century were the most important manufactured good in world trade and were consumed from the Americas to Japan. British efforts to imitate Indian cloth propelled a search for new techniques of production, which culminated in the great breakthroughs in spinning of the late eighteenth century. These new technologies transformed the world economy and shifted the center of global manufacturing from Asia to Europe. The second was shortages of wood, a consequence of deforestation. The British response was the substitution of coal for wood, which sparked the development of the steam engine, new techniques for the smelting of iron and eventually new means of transport, including the railway and steamship.

Neither of these pressures – shortages of wood and competition from global trade – was found in eighteenth-century India. From this perspective, British advances in cotton and coal were solutions to problems that did not exist in the Indian subcontinent.

In China, as in India, British technological breakthroughs in cotton and coal, while revolutionary, did not address major needs. Therefore, the British path of change was either unnecessary or inadequate for the pressing social, political and economic needs of the advanced parts of Asia in the eighteenth century.

The Western European path of change was without a doubt extraordinary, but this was not because economic or technological dynamism was unique to that part of the world. Europe followed an exceptional path because it faced a set of pressures which were absent in India and only partly found in China. Therefore, India and China had no need to forge the economic and technological responses that emerged in Europe. India and China were not failures but took different routes which were shaped by their different contexts.

Two pressures loom large in this book. The first emanated from the global trading system, in which the position of Europeans was very different from that of both Indians and Chinese… And from the seventeenth century Europeans faced sustained competition from Asian imports, including cotton textiles, porcelains, ships, silks and even fans and furniture… Of these, the European encounter with the cotton textiles of India would prove to be the most momentous for the divergence between Europe and Asia. Indian and Chinese manufacturers did not face such global competitive pressures, and, as a consequence, the powerful incentives for innovation that the global economy transmitted to Europe were absent.

The second pressure that differed across Europe and Asia lay in the realm of ecology, specifically in the supply of wood. While Britain and parts of France and central Europe faced shortages of wood… Much of the Indian subcontinent was heavily forested well into the nineteenth century and possessed abundant timber and wood. East Asia, on the other hand, faced greater pressures on its woodlands.

The three pieces of the argument that follows are global competition, deforestation and state policy. Britain faced both an Indian competitive challenge and shortages of wood and possessed a powerful and activist state that helped to forge a response. China faced one of these challenges, the ecological, but not that of competition in the global economy. In the economically advanced regions of China, above all the Yangzi delta, deforestation created growing ecological difficulties for which China’s political system was unable to formulate an answer, which hampered economic development into the nineteenth century. Finally, in the Indian subcontinent the prosperous regions of Gujarat, Bengal and North and South India faced neither global competition nor shortages of wood till the nineteenth century. Before 1800 there was no need for radical innovations to compete in the world trade in manufactures or to add to energy supplies.

At the core of this book are a number of comparisons between Britain and the advanced regions of the Indian subcontinent.

This work has given a new answer to this very old question. In a nutshell, it has argued that historians must move away from the search for what made Europe economically, socially or culturally different and instead focus on the social needs, economic pressures and political responses that produced different paths of change in the eighteenth century. The British path was a coming together of global competitive pressures, ecological shortfalls and a mercantile state. No other advanced region faced these pressures and combined them with a state that had such capacities to forge a revolutionary response.

For many, the backward and abysmal economic conditions of the nineteenth century may make it difficult to imagine a different kind of India in the not so distant past. As shown in this work, however, the period between 1600 and 1800 was a time of great economic and political dynamism in the advanced regions of the Indian subcontinent. Vibrant production of cotton textiles for export led to sizable inflows of silver, gold, copper and cowries which fueled a commercial revolution. Political competition led to state centralization and advances in science and technology, especially in areas that could be of benefit to the state such as armaments production.

From the second decade of the nineteenth century there was a sustained economic regression in Bengal, South India, Gujarat and other regions of seventeenth- and eighteenth-century dynamism. An early sign of decline was the falling demand for Indian cotton cloth.

Trade was not all that declined, however. The dismantling of the Indian state system led to a loss of demand for a variety of goods, particularly armaments, which had been a source of technical and manufacturing dynamism in the eighteenth century. The rise of the British colonial order also translated into a loss of patronage for institutions that produced and diffused knowledge. Education suffered. Libraries were looted, burned in battle or dismantled. Scientific and technical inquiries were not supported. As a consequence, there was a profound loss of knowledge and skills in the first several decades of the nineteenth century and an enormous technical gap opened between the subcontinent and Western Europe. The Indian society and economy that emerged in the nineteenth century was, therefore, radically different from what had preceded it and should not be projected into the seventeenth and eighteenth centuries.

The ascendance of Smithian political economy in early nineteenth-century Britain led to a profound reinterpretation of economic change in the eighteenth century. The understanding of innovation in the British cotton industry shifted from competition with India and state protection to the forces of the market and supply and demand. From the late seventeenth century the British state restricted imports of Indian cotton cloth, which gave an impetus to local cloth printing and then to local cotton cloth manufacturing, which were given a monopoly over the British market. Over the course of the eighteenth century the British state steadily increased tariffs on iron imports from Sweden and Russia, which gave local ironmasters a guarantee of high prices for their goods as they experimented with coal and new techniques of smelting. And British state protection for trade, whether through the Navigation Acts which helped to create British dominance in the Atlantic or through the protection of coastal convoys of coal, aided British economic growth and expansion.

If you would like to learn more about why Europe became rich and why Asia did not (until recently), read my book From Poverty to Progress: How Humans Invented Progress, and How We Can Keep It Going.