Non-institution Hypotheses

Culture

Cultural factors are a popular explanation used to explain the divergence between China and Europe. The best known is Max Weber’s association of Christianity with European economic prosperity in his famous work The Protestant Ethic and the

Spirit of Capitalism. It argued that religious factors were crucial for spurring

European economic growth. Weber’s view centered on the subtle link between the teaching of Calvin and the Puritans, which encouraged savings, investments, and the relentless pursuit of profit with the unintentional consequences of capitalist behavior (Bai and Kung, 2013). Elvin (1973) mentions that an intellectual paradigm shift from Taoism to Confucianism in China moved the focus from natural science and mathematics fostered under Taoism to studies of morality and social philosophy under Confucianism, which changed the intellectual climate for scientific research. The role of the Protestant Christian churches in Europe was custodian of knowledge and school for technicians (Landes, 2006). On the other hand, the Confucianist orthodoxy upheld in China impelled the officials and gentry leaders to exercise paternalist, benevolent leadership and attention to their subjects’ well-being (Hung, 2008).

Different religions predetermine different evolution of social cooperation, in Weber’s and other culturalist’s schema, which leads to different institutional evolution. China’s predominated Confucianism considers moral obligations among kin as the basis of social order but Europe’s Christianity discouraged practices that sustain kinship groups, such as adoption, polygamy, concubinage, marriage among

distant kin, and marriage without the woman’s consent (Greif and Tabellini, 2010). Cultural distinctions eventually determined modes of economic growth through shaping institutions.

Geography, Natural Resource and Colonialism

Advocates of “geography hypothesis” argue that time-invariant geographic factors such as ecology, climate, natural endowments, and the disease environment, are the primary drivers of long-run economic development. This view has been emphasized by a number of empirical studies that highlight the correlations between geographic characteristics and economic development, such as the climate (Kamarck, 1976), the disease environment (Sachs et al., 2001; Sachs and Malaney, 2002), natural openness (Rappaport and Sachs, 2003), factor and resource endowments (Engerman and Sokoloff, 2000; Sachs and Warner, 2001). This literature mostly focuses on the countries in the America, Africa and the tropical zones.

Some historians looked to geographical explanations for the Great Divergence. Diamond (1997) suggests that environmental factors of particular geographies played a crucial role in the European take-off. Diamond argues that Europe was uniquely endowed with domesticable plants and animals such that the population was also more immune to diseases. These factors led to higher productivity and, crucially, higher population density, which eventually led to the development of institutions (e.g. cities, bureaucracies), and contributed to economic growth. Europeans’ higher resistance to bacteria and virus also accelerated its colonialism since the germs they carried killed large number of native populations,

particularly in the Americas and Australia. However, Clark’s (2008) explanation is the opposite: the better-off segment of the population became steadily more competent and productive over successive generations because disease picked off Britain's poorer residents. Despite their unconformity, both of their hypotheses agree that geography pre-determined the long-run economic consequence through institutions.

Diamond (1997) also used the geographical characteristics to explain why China evolved into a centralized social organization but Europe was fragmented. First, China’s geographical connectedness made it too easily unified under stultifying dictatorships, whereas Europe had just the right amount of geographical fragmentation to keep power divided.2Second, Chinese civilization over the past 2000 years was built increasingly on the irrigated agriculture. The establishment of a central social organization and hierarchy, founded upon the construction and maintenance of irrigation. European civilization, on the other hand, was founded upon the domestication of rainfall-dependent crops – wheat and barley, which will grow anywhere, as long as it rains for part of the year. This allowed farming communities, villages, towns and eventually cities to emerge autonomously in Europe. There was never any need for a central authority to control irrigation across the continent. Distinct political system shaped by geography determines dissimilar institutional evolution thereby lead to different economic mode.

2

China is enclosed by a ring of insurmountable geographic obstacles – the ocean to the east, desert to the north, mountains to the south and sparsely populated desert and steppe regions beyond an enormous, man-made wall to the west. On the other hand, Europe was geographically segmented, ,with four mountain ranges, five peninsulas, dozens of rivers, islands, and proximity to the coast of north Africa (Diamond, 1997).

In Pomeranz (2000), access to natural resources pre-determined the Great Divergence. China was locked into a development path of ecologically efficient but highly labor-intensive agriculture and proto-industry, which offered limited room to shift labour into manufacturing for per capita growth. Pomeranz argues that Britain was able to break this limitation and evolve along an energy-intensive ecological trajectory because of the lucky geographical accident of its ready access to coal. However, Brenner and Isett (2002) and Huang (2002) argue that Pomeranz is too optimistic about China’s resource constraints and over-estimates China’s economic prosperity. Pomeranz (2000) considers the Middle Yangtze households’ allocating female labour to domestic proto-industry in the 19th century was a sign of growing prosperity, while for Brenner and Isett (2002) and Huang (2002) it was an unavoidable response to downward pressures on living standards resulting from the decreasing returns to labour in agriculture. Huang (2002) criticized Pomeranz for failing to grasp the distinction between land productivity and labour productivity and between labour intensification per unit of land and capitalization per unit of labour, which he says lead Pomeranz to glide over China’s agricultural stagnation after the 18thcentury.

Pomeranz also argues Britain obtained huge natural resource windfall from the discovery of the New World. Centuries of European colonialism following the 1492 landing of Christopher Columbus in America enabled Europe to pull in raw materials, bullion and labour resources, which had the effect of holding back the rest of the world. Blaut (1993) argues the rise of Europe for the 15th century stemmed directly from the wealth. Europeans acquired from colonizing on America, first in acquiring vast quantities of gold and silver, and later from the slave plantations and

other colonial enterprises. This immense wealth inflow gave the Western European merchant community the power to seize political control over sizeable territories through buying off the landlord class, which in England eventually lead to the “Glorious Revolution” of 1688 that ushered in a raft of institutions innovations central to Britain’s rise. However, although colonialism may explain the rise of Europe, it cannot explain why China’s merchants have no interest on maritime trade even though China’s maritime navigation technology was much advanced.3