ABSTRACT
The paper which opened the session at Madrid was Jeffrey G.Williamson’s ‘Real wages and relative factor prices in the Third World, 1820-1940: Asia’. Even two decades ago this paper could not have been written. It depends on recent breakthroughs in the historical statistics of the Asian economy. These advances came in the early 1980s and created a revolution in the understanding of Asian development. Williamson’s pathbreaking study carries the work forward and notes that as early as 1914 there were big economic differences between the wealthy industrialized countries of Europe, and the poorer countries of Asia from the Indian subcontinent to Japan. But when did these differences appear? Williamson argues that conventional GDP per capita data is too incomplete and unfocused to provide an answer to this fundamental question. Real wages are a better indicator of the economic well-being of ordinary people than the averages obtained in GDP per capita estimates, as these lump together the rich and the poor and ignore the effect of income distribution. A crucial feature in these real-wage estimates is the price of rice, the key commodity in the market baskets of the Asian urban poor, and the main foodstuff throughout most of the region. Fortunately rice prices are now relatively well recorded as a result of the pioneering work of the 1980s. He therefore suggests a new research agenda for the region, using real wages and wage/rental ratios for thirteen major Asian regions: Burma, China, India (North, South, East and West), Indonesia (Java and Outer Settlements), Japan, Korea, the Philippines, Taiwan and Thailand. Some of these regions have good statistics going back to 1820. When Japanese real wages are examined over time, it appears that although living standards there kept pace with those in Britain from the 1870s to 1914, they did not catch up with them. Elsewhere in Asia living standards were actually falling. Most Asian countries did not make much advantage of the great globalization boom from 1870, and some hardly at all. Williamson closes by setting an agenda for further research. By 1940 there was an enormous gap in living standards between Asia and Europe. This was not due to events in the inter-war years. It was mainly due to Asia’s failure to exploit the economic opportunities of the expanding world market in the preceding two hundred years, particularly from 1870 to 1914. Why did Asia fail in this way? There is as yet no clear answer, and solutions will only be obtained by improving the statistical base for investigation. The innovatory work
of the last twenty years must be sustained. This is the task for the next generation of scholars working on the development of the Asian economy since 1800.
