The Great Divergence: China, Europe, and the Making of the Modern World Economy (2000) by Kenneth Pomeranz

Serious people have been trying to explain the genesis of the Industrial Revolution since the days of Max Weber and Karl Marx or later by Arnold Toynbee, who coined the term in 1884. However, it is only relatively recently that it has emerged as something of a cottage industry in academia. “The Great Divergence: China, Europe, and the Making of the Modern World Economy” (2000) by Kenneth Pomeranz is one of the most important books in the field. Important as it may be, “The Great Divergence” lacks any kind of cohesive narrative and is a tough, tedious read.

In many ways, “The Great Divergence” is an energetic retort to “The European Miracle: Environments, Economies and Geopolitics in the History of Europe and Asia” (1981) by Eric Jones. Pomeranz contends that Jones’s core thesis of European exceptionalism is incorrect on multiple levels. First, Pomeranz argues that it makes no sense to think about the events of the eighteenth century in the terms of the modern day nation state. Rather than comparing Europe to China and Japan, Pomeranz suggests that it’s more appropriate to think in terms of southern England and perhaps the Netherlands versus the Yangtze Delta and the Kanto Plain of Japan. When you look at things from that more focused geographic perspective, suddenly “a world of surprising resemblances” emerges. According to Pomeranz, “core regions in China and Japan circa 1750 seem to resemble the most advanced parts of western Europe, combining sophisticated agriculture, commerce, and nonmechanized industry in similar, arguably even more fully realized, ways.” On top of that, those economically advanced zones confronted the same “ecological bottlenecks” resulting from the exhaustion of critical productive resources, specifically agricultural land and forests, which supplied the wood necessary for both building construction and fuel.

Pomeranz argues that European exceptionalism, such as it was, came much later than Jones contends (i.e. after 1800) and for very different reasons. Pomeranz’s thesis boils down to just two elements: coal and colonies. The importance of the transition from wood to coal for heat and then power cannot be overemphasized, Pomeranz says. By the eighteenth century most of northwest Europe had been denuded of forests. For instance, by 1800 less than 10% of Britain was forested. Many countries faced an energy crisis more acute than any twentieth century oil shock. For example, the price of wood to build a seagoing ship rose 700% between 1550 and 1820. Fuel wood prices in France jumped almost 100% in the mid-eighteenth century alone.

Just as things reached their ecological breaking point, England began exploiting its massive and conveniently located coal reserves. England became the nineteenth century equivalent of Saudi Arabia. Coal output from 1,000 mines grew by over 500% from 1750 to 1830 and then grew by a factor of fourteen to 1900. Moreover, there was an usually symbiotic relationship between coal and the development of the steam engine. One of the primary impediments to coal mining in England had been that the mines tended to flood. An early use case for rudimentary steam engines was to pump water out of the coal mines. Thus, steam engines were used (and steadily improved) to pump water out of the coal mines, which opened up new sources of coal, which in turn fed the burgeoning steam engines.

Meanwhile, the New World colonies largely solved England’s agricultural shortfall and alleviated pressure on rapidly dwindling domestic land resources. Pomeranz says that the benefits from England’s enormous coal deposits combined with the virtually unlimited farmland of North America solved the ecological bottlenecks that had bedeviled the advanced economies of the eighteenth century and triggered the mass industrialization of the nineteenth.

Even more important than colonial profits, Pomeranz says, were the “ghost acres” freed up in England by the ability to leverage these vast American lands. For instance, timber or tobacco, if grown in Europe, would have used 10 to 15 million acres, or two-thirds of England’s total arable land, according to Pomeranz’s calculations. The Industrial Revolution allowed Europeans to escape a long standing pattern in which all growth placed significant incremental demands on the land. Thanks to the combination of a demographic catastrophe amongst the indigenous people of the New World and the massive importation of African slaves, European powers were able to “create a periphery that was an ever-expanding source of raw materials in an era before most production required expensive capital goods and when most people still had some connection to subsistence production.” The export of New World crops, such as sugar, boomed. Sugar made up just 2% of British caloric intake in 1800 but exploded to 14% by 1900. By the late eighteenth century, tea, sugar, Indian cloth, Caribbean rum, silk and tobacco made up two-thirds of British customs revenue and 22% of the yield from all major taxes. Between 1500 and 1800, 85% of the world’s silver was mined in Latin America, and as much as half of it ended up in China.

Steam-driven manufacturing devices powered by unlimited, inexpensive, and easily accessible coal were available for operation by young men and women no longer needed to work the fields. It was this combination of things, Pomeranz says, that served as the motive force behind industrialization or, to be more accurate, industrial capitalism, which required the large-scale use of inanimate energy sources. Moreover, long distance trade and colonialism, which were the most capital-hungry activities of the period, generated new forms of distributive partnership and, eventually, joint-stock companies that propelled industrial capitalism forward in the mid-nineteenth century. However, Pomeranz stresses that “New World exports were a crucial, though not sufficient, condition for continued and accelerated growth.”

“Coal and Colonies” encapsulates Pomeranz’s primary thesis. “The Great Divergence” is almost exactly three hundred pages long and I would estimate that Pomeranz dedicates no more than thirty or forty pages to his central coal and colonies argument. The rest of the book (i.e. the other 270 pages) is dedicated to energetically refuting the arguments of other leading scholars, Eric Jones in particular. The end result is a plodding and often captious piece of scholarship. One reviewer of this book in Foreign Affairs wrote, “Pomeranz relies heavily on plausible guesstimates, based on extensive but fragmentary evidence, to make quantitative arguments and venture occasionally into counterfactual analysis.” That sounds about right.

Serious scholars have suggested a myriad of reasons for European advantages en route to the Industrial Revolution, such as better capital accumulation, more advanced transportation capabilities, military fiscalism, more efficient labor markets, technological sophistication, the objectification of luxury, superior European animal husbandry, and favorable demographic patterns owing to late and restrictive marriages. All balderdash according to Pomeranz. In light of the evidence, he says, even as late as 1750 there is no reason to believe that Europeans were uniquely well-off in any meaningful way. “European science, technology, and philosophical inclinations alone do not seem an adequate explanation,” Pomeranz writes, “and alleged differences in economic institutions and factor prices seem largely irrelevant.”

Naturally, many scholars dispute Pomeranz’s timeline and his coal and colonies thesis. Specifically, they contend that the latest one can reasonably push out the Great Divergence is 1700 not 1800, which means that Pomeranz’s story of colonial windfalls and British coal use is seriously misguided.