What Time Is the "Great Divergence"?: And Why Economic Historians Think It Matters

In a 1965 article titled "The State of Economic History," Douglass North suggested that improvements in economic organization might have been "as important as technological change in the development of the Western world between 1500 and 1830." Although students of American economic history had drawn "broad inferences from scraps of evidence [about] the relationship between the money supply, price levels, and specie flows," most economic historians working at the time were oblivious to incidence theory, and in some cases spurned systematic quantitative analysis altogether. On the whole, North castigated much of the research in the field—then still heavily weighted toward the West—as much less rigorous than the work done by economists.¹

Over the next four decades, a "new economic history" emerged, whereby one segment of the field has championed "cliometrics" in order to keep abreast with advances in quantitative techniques that are used to research contemporary economies. But in some instances, such measuring techniques were lapped up at the expense of a broader social contexture and in the face of lingering doubts about the representativeness or reliability of pre-twentieth-century quantitative data. Cliometricians have come under fire also for their espousal of neoclassical reductionism, which—contrary to North's own research agenda—eventually lapsed into understating the complex role played by institutions in welfare enhancement and the interplay between technological innovation, property rights, and path dependency.²

Through much of the 1980s and early 1990s, the divisions between hard and soft economic-history research were widening as a result of growing specialization over time. The contours and rationale of articles appearing in Explorations in Economic History thus began looking increasingly different from the ones published, for example, in Business History. In the former journal, regressions have patently become a touchstone for academic rigor, whereas a few other journals still occasionally allowed for narrative detail and historic context to take center stage. At the same time, economists and historians seemed to have engaged one another's findings less frequently, with those working on the intersection of history and economics often finding refuge in area-studies departments. The growing divisions between economists' work and that of great many economic historians, as well as the latter's loss of prestige, meant that a number of universities shut down their once fiercely independent departments of economic history, relegating staff either to retirement or to a tangential role in management schools.

It was not until the mid-1990s that economic historians had come into vogue again on the back of globalization. Suddenly, there was great urgency to understand the historic trajectories defining East and West, and speculations based on the lessons of history concerning a possible decline in Western hegemony found many new listeners. Certainly, the recent global financial crisis has amplified the spectre of a twenty-first century dominated by Asia or China and led by interventionist governments, namely, governments that, by and large, reject neoclassical prescripts. This turnaround called on academics to go beyond the now somewhat eclipsed neoclassical consensus about the healing, timeless powers of the market in order to provide lessons from simular regulatory crises in the past.

Against this backdrop, the late 1990s also saw the rise of another important vein of literature, mostly (though not exclusively) among economic historians of a narrative bent: the California school. Pomeranz's Great Divergence is arguably the most influential study in this vein; it has stimulated scholars to reconsider East-West historic binaries and question the foundations as well as the duration of Western economic and technological supremacy.³ Contrary to what the title of his path breaking book might suggest, however, Pomeranz cast, in fact, very serious doubts on the notion...