New Perspectives on the Paths and Patterns of Economic Growth in Chinese and European History



Explaining the Great Divergence means explaining the emergence of modern economic growth i.e. a substantial and above all sustained increase of GDP per capita in real terms. In my view such growth can only be ‘Schumpeterian’, i.e. driven by permanent innovation in products and production and by increased productivity. Unless they are combined with innovation, which is not an automatic result of ‘the rise of the market’, of ‘capital-accumulation’ or ‘industriousness’, all other sorts of growth tend to peter out via decreasing returns. Modern economic growth presupposes the emergence and continued existence of an innovative economy in an innovative society and was up until now realized via a permanent increase in productivity based on breakthrough innovations in the field of energy use, technology and institutions. In the eighteenth and nineteenth centuries such an economy and society first emerged in Great Britain, primarily via industrialization, which was based on an energy-intensive, capital-intensive and labour-extensive mode of production.
In my presentation I will try and show that the emergence of this mode of production in Britain and to a lesser extent the rest of the West was a fairly ‘logical’ continuation of a developmental path that had existed there already for quite some time and that was absent in China. The economies and societies of Britain and China had been on very different trajectories for several centuries. I clearly reject the ‘surprising resemblances thesis’ of Pomeranz and other members of the California School and will indicate why I not convinced that China’s economy will catch up with the West. I doing so I will pay ample attention to the importance of the ‘institution of institutions’ i.e. the state for innovation and for growth more in general in both of the regions discussed.