chapter  12
23 Pages

Labour- intensive industrialization and global economic development: reflections

WithGARETH AUSTIN

Reciprocal integration of the economic histories of ‘the Rest’ and the West There is nothing new about analytically integrating the economic history of Europe and the former colonies of concentrated European settlement with that of the rest of the world. Traditionally, however, this is done in ways that combine the Eurocentrism of agency with the Eurocentrism of theory: Europeans made history, and the history is written in analytical categories derived from the perceived experience of Europe. The basic proposition was/is that (Northwestern) Europe was unique in its economic dynamism, which created the material foundation for Europe to determine the economic destinies of the rest of the planet. In colonies where Europeans settled in large numbers, they established their characteristic capitalist systems of property rights, and realized – and further developed – the potential of their technological advances. Meanwhile the rest of the world fell behind, either because the dissemination of European best practice, institutional and technological, was too slow to keep up with the further advance of the West; and/or because the development of the Rest was actively impeded by Western imperialism, from formal colonization to unequal treaties. In various forms, this kind of interpretation has been mainstream on both ‘left’ and ‘right’, from orthodox marxism to dependency theory, and from diagnoses of European exceptionalism as fundamentally cultural to fundamentally institutional. The presumed economic stagnation of Asian and African economies before colonization and before Commodore Perry was challenged by the work of a generation of scholars exemplified by T. C. Smith (1959, 1988) on ‘native sources of Japanese industrialization’ in the Tokugawa period, Irfan Habib (1969) on ‘potentialities of capitalistic development’ in Mughal India, K. N. Chaudhuri’s demonstration of the vitality of pre-modern Asian trade (Chaudhuri 1985, 1990), and A. G. Hopkins’ (1973) analysis of resource-allocation in precolonial West Africa as consistent with the economizing logic of relative scarcity. A set of new regional economic historiographies emerged, each with a range of contributors. Though each of these contributions emerged from and contributed to a partly

autonomous national or regional literature, taken together their studies demonstrated that markets and broadly ‘rational’ economic behaviour were much more widely found in ‘pre-modern’ economies than had previously been accepted, and that non-Western institutions did not necessarily inhibit markets (there is a parallel with the ‘Revolt of the Early Modernists’ in European economic historiography (de Vries 2008: 7), with ‘pre-modern’ substituted for ‘non-Western’). By the 1990s, this stream of research had continued to the point where specialists on preindustrial economies generally, and on various parts of Asia in particular, were beginning to insist that not only allocative efficiency, but even economic growth, sustained beyond a mere run of good harvests, had been a normal, though slow and very discontinuous, feature of preindustrial economies (Jones 1988; Richards 1993: 79-93, 185-204, 285, 292; Wong 1997). This accumulation of research, especially that on East and South Asia, established the foundation for a different approach to synthesizing the economic histories of different parts of the ‘early modern’ world. This approach, announced in Kenneth Pomeranz’s The Great Divergence (2000) uses our increased knowledge of non-Western economies to reassess the nature and significance of Western exceptionalism, and does so through the two-way mirror of what Pomeranz termed ‘reciprocal comparison’, defined as ‘viewing both sides of the comparison as “deviations” when seen through the expectations of the other, rather than leaving one as always the norm.’ Thus, it is equally necessary to ask why Europe differed from China, as why China differed from Europe (Pomeranz 2000: 8; see also Wong 1997; Austin 2007). Besides Pomeranz’s work, there were very important contributions by Wong (1997) and Joseph Inikori (2002, 2007) (and now, further, Parthasarathi 2011; Rosenthal and Wong 2011). Sugihara’s ‘two paths’ thesis was itself a crucial part of this turn-of-the-century breakthrough.2 Like the other Asian and African specialists just mentioned, his conceptual and interpretative contributions have been linked, among other things, to his own long-term empirical research, in his case particularly on intraAsian trade (for a recent example, see Sugihara 2009). Sugihara’s argument integrates analytically the economic history of the West and the East, without the simplicity of trickle-down diffusion, or the radical pessimism of dependency theory and Acemoglu, Johnson and Robinson’s ‘reversal of fortune’ thesis. An example of reciprocal comparison, it explains the contrast between the ‘paths’ of West and East as equally logical responses to their respective sets of prevailing factor endowments, rather than – for instance – seeing the latter as a mistake, perhaps a culturally-or politically-bound inferior solution. The way in which Sugihara challenges the Eurocentric tradition in global economic history, however, is different from Pomeranz’s. Sugihara’s analysis of preindustrial economies and the original industrial revolution combines an insistence on the validity of the revisionist account of the preindustrial economies of Asia with a concession to the strongest part of the traditional case for European exceptionalism. In The Great Divergence, having emphasized the long-standing parity (or primacy) of the Chinese economic ‘core’ with (or over) the European economic ‘core’, the fact that industrialization happened in Europe appears as

fortuitous: the result of the availability of coal and of the ‘ghost acres’ of the Americas, which – in part through the application of slave labour obtained from Africa – together enabled Britain to get through the kind of fuel bottleneck that, in Pomeranz’s analysis, curtailed economic expansion in the Yangzi Delta. In Sugihara’s account, on the other hand, the European location of the first industrial revolution is seen as endogenous within the dynamic of long-term development paths defined by contrasting factor endowments. In Sugihara’s view (cf. Sugihara 2007: 136), despite the ingenuity of Asian production techniques, it would be surprising if economies in which it was profitable to apply relatively high proportions of labour to capital would create as much incentive, or generate as many practical opportunities, for mechanical inventions and for their adoption as would economies with the opposite set of relative factor prices (Sokoloff and Dollar (1997) made a related point in an Anglo-American context). This recognition is consistent with the sequence of scientific and technical advances in seventeenth-and eighteenth-century Europe, especially Britain. In this respect Sugihara’s ‘two paths’ is supported by Robert Allen’s recent book arguing that the British Industrial Revolution was a substitution of capital for labour in an unusually high-wage economy (Allen 2009; see also Broadberry and Gupta 2009). However, over a rather longer timescale, Sugihara emphasizes the generic similarities of the capital-intensive path in Western Europe rather than British exceptionalism. Some of the early chapters in this volume make further additions to the reciprocal integration of the economic histories of East and West. In particular, the essays by Jan de Vries and Osamu Saito compare different conceptions of the scale and motivation of increased labour inputs in Asian and European history. We will come to Saito’s argument below. De Vries makes a powerful case that the ‘industrious revolution’ in the West (a concept of which he himself has been the proponent) was more market-based than the ‘industrious revolution’ in East Asia (as diagnosed by Akira Hayami).3 De Vries’ argument that markets were more important in the European case in determining the extent to which household decision makers had both motive (as consumers) and capacity (as producers) to put more labour into production for the market fits well with the timing of the Industrial Revolution, if we acknowledge that much of its origins lay deep in the early modern period (de Vries, this volume). Conversely, the progressive, even longer-term specialization in labour-intensive production, supported by labour-absorbing institutions, helps to explain the capacity of Japanese rural households to respond to the economic pressures and opportunities of the Meiji Restoration era. Then again, Saito points to increasing specialization between regions in different phases of silk and cotton production during the Tokugawa period, and sees this as ‘Smithian’, i.e. market-led growth (Saito, this volume). Some of the later chapters in the volume illustrate the inter-connectedness of modern economic development in the West and the Rest. For example, it was solely the industrialization of Europe that created the markets for agricultural exports from West Africa (from the vegetable oils of ‘legitimate commerce’ to wash the masses, and to provide their candles at home and in the factory, to the

invention of the rubber tyre and milk chocolate). This permitted the realization of West Africa’s potential comparative advantage in land-extensive agricultural exports, in large part – though not completely – at the expense of dry-season handicraft manufacturing (Austin, this volume).