PARK HAY YEUNG | 1305811

Park Hay Yeung

Dr. Eric Golson
EC104 World Economy: History and Theory
21 December, 2013


The Great Divergence
What is the Great Divergence? How valuable are Broadberry and
Guptas real wage calculations in this debate?

The Great Divergence of productivity and living standards between Western Europe
namely Britainand the rest of the world, is crucial to the study of modern economic history
because it has dened the contours of todays global economy. While signicant variation
exists between the factors of causation cited by prevalent literature regarding the event, the
crux of the debate lies in its timing. Two main schools of thought have emerged surrounding
this issue. On one hand the California school posits divergence as a post-1800 phenomenon.
On the other, classic and revisionists assert a much earlier timing, beginning in the 1500s.
This essay aims to mediate the debate through a comparison of Broadberry and Gupta
(henceforth Broadberry)s real wage calculations (2006) to other relevant literature on the
Great Divergence. It will be argued that this wage data is very valuable in objectively
upholding the revisionist school of thought, and that overall there exists overwhelming
evidence in favour of the revisionist position.
Evaluation of the value attached to the literature prompts construction of a broad
criteria for analysis. The following discussion will observe three main aspects in ascertaining
how valuable Broadberrys real wage calculations are to the debate. These include its
comprehensiveness in showing both productivity and standard of living divergence, its
empiricism in terms of the use of quantitative, reliable, and exhaustive evidence, and its
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ability to address and counteract the arguments of contending literature. A positive approach
is preferred to a normative approach due to greater overall reliability, but qualitative
explanations are also considered indispensable.
The real wage calculations in question are comprehensive in indicating both
productivity and standard of living divergence, but there exist marginally better measures,
especially of the latter. Productivity divergence within Europe and between Europe and Asia
is demonstrated through the diverging silver wages of unskilled and skilled workers
(Broadberry, 2006, p. 5,17,19). The correlation between productivity and silver wages justied
by a Balassa-Samuelson approach to price level differences (2006, p. 24). Allen (2001) is the
only other scholar who takes a comparably systematic approach in assessing productivity
divergence, but even he is less comprehensive than Broadberry, as he lacks the relevant data
for China and India. Broadberry's calculations are hence very valuable in enabling
international comparison. In terms of living standards, Broadberry uses silver wages and
urbanisation ratios to assert divergence from 1500 (2006, p. 17,19,20). This is arguably
inferior to the comprehensive consumer price index and welfare ratio calculations done by
Allen to show real consumption wage disparity (2001, p. 428). Allen additionally makes use of
data on body heights (2001, p. 431) to bolster evidence on divergence. Other publications
have also exploited more reliable indices to evaluate divergence. Maddison (2001, p. 28) and
Broadberry (2013, p. 21) both make use of GDP per capita gures in major regions around
the world to ascertain the timing of divergence, the former showing that divergence was
already very pronounced by the 1800s, and the latter concluding that the Great Divergence is
rooted in the early modern period but regional variations and exceptions exist due to separate
Little Divergences within both Europe and Asia. Overall, Broadberrys real wage
calculations are valuable in showing both productivity and living standard divergence.
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The empiricism of the wage data is difcult to determine, because most of it is taken
from external sources, but it will nonetheless be shown that the real wage calculations present
a much more quantitative, exhaustive, and reliable evaluation of the Great Divergence than
other works, and is hence extremely valuable to the debate. As mentioned, very few authors
employ a systematic, data-driven approach to analysis, and the ones that do such as Allen
(2001) and de Vries (1984) lack the comprehensiveness of Broadberry, due to their
Eurocentric approach to analysis. By failing to establish comparisons and identify trends
against economies outside Europe, namely China and India, these other publications present
a departure from the focus on global divergence. Broadberrys wage data, which conversely
does account for Asian countries, can hence be considered unique and valuable. Despite this,
the quality of his data for Asian countries is highly inferior to that for Europe. The issue here
is one of comprehensiveness rather than reliability. Although Broadberry uses a large cross
section of both primary and secondary sources, there is a lot of missing data, which leads to
an incomplete depiction of the divergence. For example, Chinas silver wage data only has
two entriesaverages of the periods 1550-1649 and 1750-1849, whereas Europe has data
entries for every half-century from 1500 to 1849. Nevertheless, Broadberrys work is still
valuable for two reasons. Firstly, it is a pioneering attempt at incorporating the Asian
countries in a comparative study. Secondly, despite aws, the existing data is still good enough
to place the Great Divergence in the revisionists favour. Overall, the real wage calculations
empiricism warrants high valuation in deepening our understanding of the debate.
Lastly, it is important to consider the wage data in context of contending literature. The
main proponent of a post-1800 Great Divergence is Pomeranz (2000), but Hobson (2004) also
provides many arguments in favour of this position. Pomeranz argues that Europes
Industrious Revolution from 1500 to 1800, during which much larger quantities of labour
were applied to production, leading to intensive growth with minimal productivity gains,
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mirrors the situation of Chinas involuted economy in the same period (2000, p. 91). He also
cites Chinese superiority in market freedom and institutional incentives to argue that Western
Europe did not have more favourable conditions for growth, and that it was not superior to
China prior to 1800 (2000, p. 70,82). Broadberrys wage data certainly challenges the idea
that Europe was akin to China in experiencing no productivity gains by showing huge
disparities in silver wages. There is however little discussion of relative market and
institutional freedoms. There is also limited consideration of Hobsons claims of Chinas
superior infrastructural networks, such as innovative transportation links and tax systems,
which were far in advance of European equivalents and in some cases only mirrored by 1797
(2004, p. 54,57,58). These represent shortcomings in the usefulness of the real wage data;
other revisionist works such as Huangs 2002 publication are much more useful in countering
the claims of Pomeranz and Hobson. Overall, Broadberrys data is unspecic in addressing
counterarguments in the debate, but still valuable to some extent in providing a general
revocation.
The debate of the Great Divergences timings remains an area of great interest and
relevance because it is pivotal to our understanding of the modern economys origin. Despite
a plethora of assertions made by economic historians under two schools of thought, a
systematic analysis of data has largely been missing from the discussion. Broadberrys real
wage calculations are hence a leap forward in enabling an objective understanding of the
event. Its particular, focus on intercontinental comparison distinguishes it from authors such
as Allen and deVries, despite limitations in data quality. It is hence safe to say that the work is
very valuable in reinforcing the overwhelming evidence in favour of the revisionist position,
and that it has provided a platform to explore new frontiers in the debate surrounding the
Great Divergence.
Word Count: 1200
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