Why Europe Grew Rich and Asia Did Not: Global Economic Divergence, 1600-1850 (review)

For many years, one of the biggest questions mulled over by economic historians has been why Europe rather than Asia first came to dominate the global economy. The bulk of the ruminations on this issue have focused on the superiority of early modern European, and especially British, institutions, whether they be legal arrangements that protected individual property rights, a more enlightened and rationalistic belief system that emerged from the Protestant Reformation, a marriage and kinship structure that delayed fertility, or some other structural arrangements that, theoretically, furthered economic development in the West but had no equivalent in other societies around the globe.

During the past decade or so, the "California school" of East Asian historians, particularly Pomeranz, has changed the terms of the debate. Rejecting the notion of a stagnant, traditionalist Asia, they have pointed out the vibrancy of the pre-nineteenth-century Chinese economy and the relatively similar levels of consumption between its most developed regions and their counterparts in Western Europe. The "great divergence," as Pomeranz has termed it, occurred later, during industrialization. It is best studied by looking not only at what blocked Asia from following in Europe's footsteps but also at why Europe deviated from successful methods of production pioneered in Asia.¹ Parthasarathi's intelligent new book continues in the same vein but focuses primarily on the divergence between Britain and India from the 1600s, when India enjoyed considerable prosperity, to the early nineteenth century, when the subcontinent's economy failed to grow.

Parthasarathi argues that, as happened in China, the silver that entered India as payment for its manufactures, principally cotton textiles, placed it in an enviable position throughout most of the seventeenth and eighteenth centuries. Indian property rights, the caste system, and birthrates have been erroneously cast as major barriers to economic growth during this period. Rather than obsessing about the cultural differences between India and Europe, Parthasarathi directs attention to the economic problems in Britain—namely, competition from Indian cottons and deforestation—that led ultimately to the adoption of new processes. Britain's first response to the threat that calico posed to its light-weight woolens was to ban it for domestic consumption, hardly a forward-thinking or proto-Smithean reaction. Only much later in the century did mechanical innovation in spinning result in the production of a rival cotton cloth. Parthasarathi notes that textile manufacturers in the Ottoman Empire also faced the problem of Indian calicos flooding their markets, but its government did not act against the commodity's invasion as Britain's and France's did. The substitution of coal for wood also benefited from government intervention, eventually playing a role in industrial development that few foresaw initially. Because India had no energy crisis and was in the cat's seat so far as textile sales were concerned, it had no incentives to follow the path of the British. The change in India's circumstances came after 1780 when the East India Company and then the imperial authorities began to tighten their grip on the Indian economy, and the British cotton mills began taking market share from their weaving establishments.

Using the research of other economists and historians as well as his own, Parthasarathi contends that Indian technology did not stand still during the early modern period; nor did Indians ignore scientific information from Europe. Indian princes sponsored research and established libraries at their courts, and artisans adopted new industries, including the building of ships for the East India Company. British imperial policy, however, worked against these efforts. In his last chapter, Parthasarathi documents this thwarting of Indian manufacturing.

This book contributes significantly to the project of de-traditionalizing the Asian economy of the early modern period by demonstrating the strength of Indian manufacturing in the global economy and the inadequacies of theories about institutional barriers to development. It also raises questions about the direct role...