The Great Divergence or European miracle is the socioeconomic shift in which Western Europe along with former settler colonies in Northern America and Australasia overcame pre-modern growth constraints and emerged as the most powerful and wealthy world civilization, eclipsing other previously dominant or comparable Eurasian civilizations such as Qing China, Mughal India, the Ottoman Empire, Safavid Iran, and Tokugawa Japan, among others. Scholars have proposed a wide variety of theories to explain why the Great Divergence happened, including mineral deposits, geography, culture, institutions, and luck. There is also disagreement about its timing. While some scholars cite the Commercial Revolution or emphasize slow, long-term structural social changes rooted in the medieval period, others point to the early modern era (15th or 16th century) as the definitive beginning, citing the origins of mercantilism and capitalism during the Renaissance and the Age of Discovery, the rise of the European colonial empires, proto-globalization, the Scientific Revolution, or the Age of Enlightenment. Because the most significant surge in economic productivity happened in the late 18th and 19th centuries with the Industrial Revolution, the "California school" considers only this later period to be the "great" divergence. Technological advances, in areas such as transportation, mining, and agriculture, were embraced to a higher degree in western Eurasia than the east during the Great Divergence. Technology led to increased industrialization and economic complexity in the areas of agriculture, trade, fuel, and resources, further separating east and west. Britain's extensive pre-industrialization use of coal as an energy substitute for wood in the 18th century gave it a major head start in modern energy production.
Terminology and definition The term "Great Divergence" was coined by Samuel P. Huntington in 1996 and used by Kenneth Pomeranz in his book The Great Divergence: China, Europe, and the Making of the Modern World Economy (2000). The same phenomenon was discussed by Eric Jones, whose 1981 book The European Miracle: Environments, Economies and Geopolitics in the History of Europe and Asia popularized the alternative term "European Miracle". Broadly, both terms signify a socioeconomic shift in which European countries advanced ahead of others during the modern period.
The timing of the Great Divergence is in dispute among historians. The traditional dating is as early as the 16th (or even 15th) century, with scholars arguing that Europe had been on a trajectory of higher growth since that date. Pomeranz and others of the California school argue that the period of most rapid divergence was during the 19th century. Citing nutrition data and chronic European trade deficits as evidence, these scholars argue that before that date the most developed parts of Asia, in terms of grain wage, had comparable economic development to Europe, especially Qing China in the Yangtze Delta and South Asia in the Bengal Subah. Economic historian Prasannan Parthasarathi argued that wages in parts of South India, particularly Mysore, could have been on par with Britain, but noted his research on the matter was not conclusive. Some argue that the cultural factors behind the divergence can be traced to the Middle Ages — when foundational institutional and psychological differences began to emerge — or to the Renaissance and the Chinese imperial examination system. Broadberry asserts that in terms of silver wages, even the most advanced pre-industrial regions of Asia were trailing Western Europe as early as the 16th century. He cites statistics comparing England to the Yangzi Delta (the most developed part of China by a good margin) showing that by 1600 the former had three times the latter's average wages when measured in silver, 15% greater wages when measured in wheat equivalent (the latter being used to approximate buying power for basic subsistence goods and the former to approximate buying power for craft goods, especially traded ones), and higher urbanization. England's silver wages were also five times higher than those of India in the late 16th century. Grain wages started to diverge more sharply from the early 18th century, with English wages being two and a half times higher than India or China's in wheat equivalent while remaining about five times higher in silver at that time. However, this disparity only applied to Western Europe; Broadberry states that silver wages in Central and Eastern Europe did not surpass advanced parts of Asia until 1800.
Advanced pre-industrial regions
China
China has had a larger population than Europe throughout the last two millennia. Unlike Europe, it was politically united for long periods during that time. During the Song dynasty (960–1279), the country experienced a revolution in agriculture, water transport, finance, urbanization, science and technology, which made the Chinese economy the most advanced in the world from about 1100. Mastery of wet-field rice cultivation opened up the hitherto underdeveloped south of the country, while later northern China was devastated by Jurchen and Mongol invasions, floods and epidemics. The result was a dramatic shift in the center of population and industry from the home of Chinese civilization around the Yellow River to the south of the country, a trend only partially reversed by the re-population of the north from the 15th century. By 1300, China as a whole had fallen behind Italy in living standards and by 1400, England had also caught up with it in all but its wealthiest regions, especially the Yangtze Delta, may have remained on par with those of Europe until the early 18th century. In the late imperial period (1368–1911), comprising the Ming and Qing dynasties, taxation was low, and the economy and population grew significantly, though without substantial increases in productivity. Chinese goods such as silk, tea, and ceramics were in great demand in Europe, leading to an inflow of silver, expanding the money supply and facilitating the growth of competitive and stable markets. By the end of the 18th century, population density levels exceeded those in Europe. China had more large cities but far fewer small ones than in contemporary Europe.
Western Europe
After the Viking, Muslim, and Magyar invasions waned in the 10th century, the Latin West entered a period of prosperity, population growth and territorial expansion known as the High Middle Ages. Medieval Europe became perhaps the first society in human history to build an economy on nonhuman power and thousands of new towns were founded between the 11th and 14th centuries. The oldest university currently in continuous operation in the world appeared in the late 12th century in Italy (the University of Bologna) and two more were established in the early 13th century in France (the University of Paris) and England (the University of Oxford). European population tripled between the years 1000 to 1348 and is estimated to have reached a peak of 73.5 million to as high as 100 million, substantially higher than the population of the Roman Empire at its peak. The 14th century, then, brought a series of calamities: famines, wars, the Black Death and other epidemics.
From a single print shop in Mainz, Germany around 1440, the movable type printing-press had spread to no less than around 270 cities in Central, Western and Eastern Europe and had already produced more than 20 million volumes by the end of the 15th century. At the same time, the number of universities had grown to more than 60. In the Age of Discovery, navigators using new ship technology discovered new routes to the Americas and Asia. Medieval technology had advanced far beyond anything known in antiquity and commerce expanded together with innovations such as joint stock companies and various financial institutions. According to medieval historian C. Warren Hollister by 1500 - two centuries before the Industrial Revolution and a century before the Scientific Revolution - Europe's technology and advanced political and economic organization had already "given it a decisive edge over all other civilizations on earth."
According to a 2014 study, "levels of GDP per capita are quite high in large parts of western Europe...the average for western Europe was about 1,100–1,300 dollars between 1400 and 1800, which is much higher than (for example) the Roman Empire, Iraq in the eighth century, or any other pre-1800 society." Within Europe, there was "consistent growth of GDP per capita in the North Sea area from c. 900 dollars before the Black Death, to more than 2,000 dollars in about 1800, making it into the most prosperous part of the world economy at that time (even averaging over the whole of western Europe clearly shows this to be the wealthiest region in the world during that period)." According to a 2021 review of existing evidence by Jack Goldstone, the Great Divergence only arose after 1750 (or even 1800) in northwestern Europe. Prior to that, economic growth rates in northwestern Europe were neither sustained nor remarkable, and income per capita was similar to "peak levels achieved hundreds of years earlier in the most developed regions of Italy and China".Even England and Holland, according to Gladstone, show no evidence of a marked divergence from the rest of the world in economic output per capita until after 1780.
India
According to a 2020 study and dataset, the Great Divergence between northern India (from Gujarat to Bengal) and Britain began in the late 17th century. It widened after the 1720s and exploded after the 1800s. The study found that it was "primarily England's spurt and India's stagnation in the first half of the nineteenth century that brought about most serious differences in the standard of living". Throughout its history, India, especially the Bengal Sultanate, has been a major trading nation that benefited from extensive external and internal trade. Its agriculture was highly efficient as well as its industry. Unlike China, Japan and western and central Europe, India did not experience extensive deforestation until the 19th and 20th centuries. It thus had no pressure to move to coal as a source of energy. From the 17th century, cotton textiles from Mughal India became popular in Europe, with some governments banning them to protect their wool industries. Mughal Bengal, the most developed region, in particular, was globally prominent in industries such as textile manufacturing and shipbuilding. In early modern Europe, there was significant demand for products from Mughal India, particularly in cotton textiles, as well as goods such as spices, peppers, indigo, silks, and saltpeter (for use in munitions). European fashion, for example, became increasingly dependent on Indian textiles and silks. In the 17th and 18th centuries, India accounted for 95% of British imports from Asia. Amiya Kumar Bagchi estimates 10.3% of Bihar's populace were involved in hand spinning thread, 2.3% weaving, and 9% in other manufacturing trades, in 1809–1813, to satisfy this demand. In contrast, there was very little demand for European goods in India, which was largely self-sufficient, thus Europeans had very little to offer, except for some woolen textiles, unprocessed metals and a few luxury items. The trade imbalance caused Europeans to export large quantities of gold and silver to India in order to pay for Indian imports.
Middle East
The Middle East was more advanced than Western Europe in 1000, on par by the middle of the 16th century, but by 1750, leading Middle Eastern states had fallen behind Western European states such as Britain and the Netherlands. An example of a Middle Eastern country that had an advanced economy in the early 19th century was Ottoman Egypt, which had a highly productive industrial manufacturing sector, and per-capita income that was comparable to Western European countries such as France and higher than that of Japan and Eastern Europe. In 1819, Egypt under Muhammad Ali began programs of state-sponsored industrialization, which included setting up factories for weapons production, an iron foundry, large-scale cotton cultivation, mills for ginning, spinning and weaving of cotton, and enterprises for agricultural processing. By the early 1830s, Egypt had 30 cotton mills, employing about 30,000 workers. Under Muhammad Ali of Egypt in the early 19th century, steam engines were introduced to Egyptian industrial manufacturing. Boilers were manufactured and installed in Egyptian industries such as ironworks, textile manufacturing, paper mills, and hulling mills. Compared to Western Europe, Egypt also had superior agriculture and an efficient transport network through the Nile. Economic historian Jean Batou argues that the necessary economic conditions for rapid industrialization existed in Egypt during the 1820s–1830s. After the death of Muhammad Ali in 1849, his industrialization programs fell into decline, after which, according to historian Zachary Lockman, "Egypt was well on its way to full integration into a European-dominated world market as supplier of a single raw material, cotton." Lockman argues that, had Egypt succeeded in its industrialization programs, "it might have shared with Japan [or the United States] the distinction of achieving autonomous capitalist development and preserving its independence."
Japan
Japanese society was governed by the Tokugawa shogunate, which divided Japanese society into a strict hierarchy and intervened considerably in the economy through state monopolies and restrictions on foreign trade. However, in practice, the Shogunate's rule was often circumvented. From 730 to 1874, Japan experienced average annual GDP per capita growth estimated at between 0.05% and 0.09%, with most of this growth occurring from 1450 to 1600 and after 1721. There were no significant periods of sustained growth reversals. Relative to the United Kingdom, GDP per capita was at roughly similar levels until the middle of the 17th century. By 1850, per capita incomes in Japan were approximately a quarter of the British level.
Sub-Saharan Africa
Pre-colonial sub-Saharan Africa was politically fragmented, just as early modern Europe was. Africa was home to numerous wealthy empires which grew around coastal areas or large rivers that served as part of important trade routes. Africa was however far more sparsely populated than Europe. According to University of Michigan political scientist Mark Dincecco, "the high land/labor ratio may have made it less likely that historical institutional centralization at the 'national level' would occur in sub-Saharan Africa, thwarting further state development". The transatlantic slave trade may have further weakened state power in Africa. However, historian and Africanist John Thornton has observed that in the 17th century there were large areas on the continent, such as the Lower Guinea Coast, that had high population densities when compared with Europe. According to some estimates, the population density of the Lower Guinea coast in the 18th century was higher than the European average and almost comparable to that of the European "heartland" of the Rhine and northern Italy. Thornton further argues, drawing on historical data, that Africa had some highly productive regions, both agriculturally and industrially, comparable to those of pre-industrial Europe. He argues that African demand for European and Asian goods, such as textiles, should not be interpreted as the inability of local industries to meet domestic demand, but rather as a demand motivated by the exotic value of such goods, which signaled the buyer's status and wealth. A series of states developed in the Sahel on the southern edge of the Sahara which made immense profits from trading across the Sahara, trading heavily in gold and slaves for the trans-Saharan slave trade. Kingdoms in the heavily forested regions of West Africa were also part of trade networks. The growth of trade in this area was driven by the Yoruba civilization, which was supported by cities surrounded by farmed land and made wealthy by extensive trade development. For most of the first millennium AD, the Axumite Kingdom in East Africa had a powerful navy and trading links reaching as far as the Byzantine Empire and India. Between the 14th and 17th centuries, the Ajuran Sultanate in modern-day Somalia practiced hydraulic engineering and developed new systems for agriculture and taxation, which continued to be used in parts of the Horn of Africa as late as the 19th century. On the east coast of Africa, Swahili city-states participated in a prosperous trading network. Swahili cities were important trading ports along the Indian Ocean, engaging in trade with the Middle East and Far East. Kingdoms in southeast Africa also developed extensive trade links with other civilizations as far away as China and India. The institutional framework for long-distance trade across political and cultural boundaries had long been strengthened by the adoption of Islam as a cultural and moral foundation for trust among and with traders.
Possible factors Scholars have proposed numerous theories to explain why the Great Divergence occurred.
Coal
In metallurgy and steam engines the Industrial Revolution made extensive use of coal and coke – as cheaper, more plentiful and more efficient than wood and charcoal. Coal-fired steam engines also operated in the railways and in shipping, revolutionizing transport in the early 19th century. Kenneth Pomeranz drew attention to differences in the availability of coal between West and East. Due to regional climate, European coal mines were wetter, and deep mines did not become practical until the introduction of the Newcomen steam engine to pump out groundwater. In mines in the arid northwest of China, ventilation to prevent explosions was much more difficult. Another difference involved geographic distance; although China and Europe had comparable mining technologies, the distances between the economically developed regions and coal deposits differed vastly. The largest coal deposits in China are located in the northwest, within reach of the Chinese industrial core during the Northern Song (960–1127). During the 11th century, China developed sophisticated technologies to extract and use coal for energy, leading to soaring iron production. The southward population shift between the 12th and 14th centuries resulted in new centers of Chinese industry far from the major coal deposits. Some small coal deposits were available locally, though their use was sometimes hampered by government regulations. In contrast, Britain contained some of the largest coal deposits in Europe and already used more coal than wood even before the Industrial Revolution began. The centrality of coal to the Industrial Revolution was criticized by Gregory Clark and David Jacks, who show that coal could be substituted without much loss of national income. Similarly, Deirdre N. McCloskey says that coal could easily have been imported to Britain from other countries. Moreover, the Chinese could move their industries closer to coal reserves.
New World
A variety of theories posit Europe's unique relationship with the New World as a major cause of the Great Divergence. The high profits earned from the colonies and the slave trade constituted 7 percent a year, a relatively high rate of return considering the high rate of depreciation on pre–industrial capital stocks, which limited the amount of savings and capital accumulation. Early European colonization was sustained by profits through selling New World goods to Asia, especially silver to China. According to Pomeranz, the most important advantage for Europe was the vast amount of fertile, uncultivated land in the Americas which could be used to grow large quantities of farm products required to sustain European economic growth and allowed labor and land to be freed up in Europe for industrialization. New World exports of wood, cotton, and wool are estimated to have saved England the need for 23 to 25 million acres (100,000 km2) of cultivated land (by comparison, the total amount of cultivated land in England was just 17 million acres), freeing up immense amounts of resources. The New World also served as a market for European manufactures. Chen (2012) also suggested that the New World as a necessary factor for industrialization, and trade as a supporting factor causing less developed areas to concentrate on agriculture supporting industrialized regions in Europe.
Slave trade
In his book Capitalism and Slavery (1944), Eric Williams argued that the profits from slavery "provided one of the main streams of that accumulation of capital in England which financed the industrial revolution". This line of argument was not taken up by most economic historians in subsequent decades, but some of Williams' arguments have been revived in the twenty-first century. Historian James Walvin argues that slavery was "fundamental to the way the West emerged".
Political fragmentation
Jared Diamond and Peter Watson argue that a notable feature of Europe's geography was that it encouraged political balkanization, such as having several large peninsulas and natural barriers such as mountains and straits that provided defensible borders. By contrast, China's geography encouraged political unity, with a much smoother coastline and a heartland dominated by two river valleys (Yellow and Yangtze). Thanks to the topographical structure with "its mountain chains, coasts, and major marches, formed boundaries at which states expanding from the core areas could meet and pause". Hence, this helps European countries feel "in the same boat". Due to the location of mountain ranges, there were several distinct geographical cores that could provide the nuclei for future states. Another point in Europe's political fragmentation in comparison to, for example, China is the location of the Eurasian steppe. After horse domestication, steppe nomads (for instance, Genghis Khan and the Mongols) posed a threat to the sedentary population until the 18th century. The reason for the threat is "the fragile ecology of the steppe meant that during periods of drought or cold weather, steppe nomads were more likely to invade neighboring populations". Hence, this stimulated China, which is near the steppe, to build a strong, unified state. In his book Guns, Germs, and Steel, Diamond argues that advanced cultures outside Europe had developed in areas whose geography was conducive to large, monolithic, isolated empires. In these conditions policies of technological and social stagnation could persist. He gives the example of China in 1432, when the Xuande Emperor outlawed the building of ocean-going ships, in which China was the world leader at the time. On the other hand, Christopher Columbus obtained sponsorship from Queen Isabella I of Castile for his expedition even though three other European rulers turned it down. As a result, governments that suppressed economic and technological progress soon corrected their mistakes or were out-competed relatively quickly. He argues that these factors created the conditions for more rapid internal superpower change (Spain succeeded by France and then by the United Kingdom) than was possible elsewhere in Eurasia.
Justin Yifu Lin argued that China's large population size proved beneficial in technological advancements prior to the 14th century, but that the large population size was not an important factor in the kind of technological advancements that resulted in the Industrial Revolution. Early technological advancements depended on "learning by doing" (where population size was an important factor, as advances could spread over a large political unit), whereas the Industrial Revolution was the result of experimentation and theory (where population size is less important). Before Europe took some steps towards technology and trade, there was an issue with the importance of education. By 1800, literacy rates were 68% in the Netherlands and 50% in Britain and Belgium, whereas in non-European societies, literacy rates started to rise in the 20th century. At the early stages of the Industrial Revolution, there was no demand for skilled labor. However, during the next phases of the Industrial Revolution, factors that influence worker productivity—education, training, skills, and health—were the primary purpose. Economic historian Joel Mokyr has argued that political fragmentation (the presence of a large number of European states) made it possible for heterodox ideas to thrive, as entrepreneurs, innovators, ideologues and heretics could easily flee to a neighboring state in the event that the one state would try to suppress their ideas and activities. This is what set Europe apart from the technologically advanced, large unitary empires such as China. China had both a printing press and movable type, yet the industrial revolution would occur in Europe. In Europe, political fragmentation was coupled with an "integrated market for ideas" where Europe's intellectuals used the lingua franca of Latin, had a shared intellectual basis in Europe's classical heritage and the pan-European institution of the Republic of Letters. The historian Niall Ferguson attributes this divergence to the West's development of six "killer apps", which he finds were largely missing elsewhere in the world in 1500 – "competition, the scientific method, the rule of law, modern medicine, consumerism and the work ethic". Economic historian Tuan-Hwee Sng has argued that the large size of the Chinese state contributed to its relative decline in the 19th century:
The vast size of the Chinese empire created a severe principal–agent problem and constrained how the country was governed. In particular, taxes had to be kept low due to the emperor's weak oversight of his agents and the need to keep corruption in check. The Chinese state's fiscal weaknesses were long masked by its huge tax base. However, economic and demographic expansion in the eighteenth century exacerbated the problems of administrative control. This put a further squeeze on the nation's finances and left China ill-prepared for the challenges of the nineteenth century. One reason why Japan was able to modernize and adopt the technologies of the West was due to its much smaller size relative to China. Stanford political scientist Gary W. Cox argues in a 2017 study,
that Europe's political fragmentation interacted with her institutional innovations to foster substantial areas of "economic liberty", where European merchants could organize production freer of central regulation, faced fewer central restrictions on their shipping and pricing decisions, and paid lower tariffs and tolls than their counterparts elsewhere in Eurasia. When fragmentation afforded merchants multiple politically independent routes on which to ship their goods, European rulers refrained from imposing onerous regulations and levying arbitrary tolls, lest they lose mercantile traffic to competing realms. Fragmented control of trade routes magnified the spillover effects of political reforms. If parliament curbed arbitrary regulations and tolls in one realm, then neighboring rulers might have to respond in kind, even if they themselves remained without a parliament. Greater economic liberty, fostered by the interaction of fragmentation and reform, unleashed faster and more inter-connected urban growth.
Other geographic factors Fernand Braudel of the Annales school of historians argued that the Mediterranean Sea was poor for fishing due to its depth, therefore encouraging long-distance trade. Furthermore, the Alps and other parts of the Alpide belt supplied the coastal regions with fresh migrants from the uplands. This helped the spread of ideas, as did the east–west axis of the Mediterranean which lined up with the prevailing winds and its many archipelagos which together aided navigation, as was also done by the great rivers which brought inland access, all of which further increased immigration. The peninsulas of the Mediterranean also promoted political nationalism which brought international competition. One of the geographical issues that affected the economies of Europe and the Middle East is the discovery of the Americas and the Cape Route around Africa. The old trade routes became useless, which led to the economic decline of cities both in Central Asia and the Middle East and, moreover, in Italy. Economists William Easterly and Ross Levine compared the theories of that economic development is influenced directly by geographic endowments such as tropical location, germs, and crops, compared to the theory that these endowments only influence economic development indirectly, by influencing what types of institutions developed during colonization. They found no support for endowments directly effecting development beyond their ability to explain institutional development.
Efficiency of markets and state intervention
A common argument is that Europe had more free and efficient markets than other civilizations, which has been cited as a reason for the Great Divergence. In Europe, market efficiency was disrupted by the prevalence of feudalism and mercantilism. Practices such as entail, which restricted land ownership, hampered the free flow of labor and buying and selling of land. These feudal restrictions on land ownership were especially strong in continental Europe. China had a relatively more liberal land market, hampered only by weak customary traditions. Bound labor, such as serfdom and slavery were more prevalent in Europe than in China, even during the Manchu conquest. Urban industry in the West was more restrained by guilds and state-enforced monopolies than in China, where in the 18th century the principal monopolies governed salt and foreign trade through Guangzhou. Pomeranz rejects the view that market institutions were the cause of the Great Divergence, and concludes that China was closer to the ideal of a market economy than Europe. Economic historian Paul Bairoch presents a contrary argument, that Western countries such as the United States, Britain and Spain did not initially have free trade, but had protectionist policies in the early 19th century, as did China and Japan. In contrast, he cites the Ottoman Empire as an example of a state that did have free trade, which he argues had a negative economic impact and contributed to its deindustrialization. The Ottoman Empire had a liberal trade policy, open to foreign imports, which has origins in capitulations of the Ottoman Empire, dating back to the first commercial treaties signed with France in 1536 and taken further with capitulations in 1673 and 1740, which lowered duties to only 3% for imports and exports. The liberal Ottoman policies were praised by British economists advocating free trade, such as J. R. McCulloch in his Dictionary of Commerce (1834), but later criticized by British politicians opposing free trade, such as prime minister Benjamin Disraeli, who cited the Ottoman Empire as "an instance of the injury done by unrestrained competition" in the 1846 Corn Laws debate:
There has been free trade in Turkey, and what has it produced? It has destroyed some of the finest manufactures of the world. As late as 1812 these manufactures existed; but they have been destroyed. That was the consequences of competition in Turkey, and its effects have been as pernicious as the effects of the contrary principle in Spain.
Wages and living standards Classical economists, beginning with Adam Smith and Thomas Malthus, argued that high wages in the West stimulated labor-saving technological advancements. Revisionist studies in the mid to late 20th century have depicted living standards in 18th century China and pre–Industrial Revolution Europe as comparable. According to Pomeranz, life expectancy in China and Japan was comparable to the advanced parts of Europe. Similarly, Chinese consumption per capita in calories intake is comparable to England. According to Pomeranz and others, there was modest per capita growth in both regions, the Chinese economy was not stagnant, and in many areas, especially agriculture, was ahead of Western Europe. Chinese cities were also ahead in public health. Economic historian Paul Bairoch estimated that China's GNP per capita in 1800 was $228 in 1960 US dollars ($1,007 in 1990 dollars), higher than Western Europe's $213 ($941 in 1990 dollars) at the time. Similarly for Ottoman Egypt, its per-capita income in 1800 was comparable to that of Western European countries such as France, and higher than the overall average income of Eastern Europe and Japan. Economic historian Jean Barou estimated that, in terms of 1960 dollars, Egypt in 1800 had a per-capita income of $232 ($1,025 in 1990 dollars). In comparison, per-capita income in terms of 1960 dollars for France in 1800 was $240 ($1,060 in 1990 dollars), for Eastern Europe in 1800 was $177 ($782 in 1990 dollars), and for Japan in 1800 was $180 ($795 in 1990 dollars). According to Paul Bairoch, in the mid-18th century, "the average standard of living in Europe was a little bit lower than that of the rest of the world." He estimated that, in 1750, the average GNP per capita in the Eastern world (particularly China, India and the Middle East) was $188 in 1960 dollars ($830 in 1990 dollars), higher than the West's $182 ($804 in 1990 dollars). He argues that it was after 1800 that Western European per-capita income pulled ahead. However, the average incomes of China and Egypt were still higher than the overall average income of Europe. According to Jan Luiten van Zanden, the relationship between GDP per capita with wages and standards of living is very complex. He gives Netherlands economic history as an example. Real wages in Netherlands declined during the early modern period between 1450 and 1800. The decline was fastest between 1450/75 and the middle of the sixteenth century, after which real wages stabilized, meaning that even during the Dutch Golden Age purchasing power did not grow. The stability remained until the middle of 18th century, after which wages declined again. Similarly citing studies of the average height of Dutch men, van Zaden shows that it declined from the Late Middle Ages. During 17th and 18th centuries, at the height of Dutch Golden Age, the average height was 166 centimeters, about 4 centimeters lower than in 14th and early 15th century. This most likely indicates consumption declines during the early modern period, and average height would not equal medieval heights until the 20th century. Meanwhile, GDP per capita increased by 35 to 55% between 1510/1514 and the 1820s. Hence it is possible that standards of living in advanced parts of Asia were comparable with Western Europe in the late 18th century, while Asian GDP per capita was about 70% lower. Şevket Pamuk and Jan-Luiten van Zanden also show that during the Industrial Revolution, living standards in Western Europe increased little before the 1870s, as the increase in nominal wages was undermined by rising food prices. The substantial rise in living standards only started after 1870, with the arrival of cheap food from the Americas. Western European GDP grew rapidly after 1820, but real wages and the standard of living lagged behind. According to Robert Allen, at the end of the Middle Ages, real wages were similar across Europe and at a very high level. In the 16th and 17th century wages collapsed everywhere, except in the Low Countries and London. These were the most dynamic regions of the early modern economy, and their living standards returned to the high level of the late fifteenth century. The dynamism of London spread to the rest of England in 18th century. Although there was fluctuation in real wages in England between 1500 and 1850, there was no long term rise until the last third of 19th century. And it was only after 1870 that real wages begin to rise in other cities of Europe, and only then they finally surpassed the level of late 15th century. Hence while the Industrial Revolution raised GDP per capita, it was only a century later before a substantial raise in standard of living. However, responding to the work of Bairoch, Pomeranz, Parthasarathi and others, more subsequent research has found that parts of 18th century Western Europe did have higher wages and levels of per capita income than in much of India, Ottoman Turkey, Japan and China. However, the views of Adam Smith were found to have overgeneralized Chinese poverty. Between 1725 and 1825 laborers in Beijing and Delhi were only able to purchase a basket of goods at a subsistence level, while laborers in London and Amsterdam were able to purchase goods at between 4 and 6 times a subsistence level. As early as 1600 Indian GDP per capita was about 60% the British level. A real decline in per capita income did occur in both China and India, but in India began during the Mughal period, before British colonialism. Outside of Europe much of this decline and stagnation has been attributed to population growth in rural areas outstripping growth in cultivated land as well as internal political turmoil. Free colonials in British North America were considered by historians and economists in a survey of academics to be amongst the most well off people in the world on the eve of the American Revolution. The earliest evidence of a major health transition leading to increased life expectancy began in Europe in the 1770s, approximately one century before Asia's. Robert Allen argues that the relatively high wages in eighteenth century Britain both encouraged the adoption of labour-saving technology and worker training and education, leading to industrialisation.
Luxury consumption
Luxury consumption is regarded by many scholars to have stimulated the development of capitalism and thus contributed to the Great Divergence. Proponents of this view argue that workshops, which manufactured luxury articles for the wealthy, gradually amassed capital to expand their production and then emerged as large firms producing for a mass market; they believe that Western Europe's unique tastes for luxury stimulated this development further than other cultures. However, others counter that luxury workshops were not unique to Europe; large cities in China and Japan also possessed many luxury workshops for the wealthy, and that luxury workshops do not necessarily stimulate the development of "capitalistic firms".
Property rights Differences in property rights have been cited as a possible cause of the Great Divergence. This view states that Asian merchants could not develop and accumulate capital because of the risk of state expropriation and claims from fellow kinsmen, which made property rights very insecure compared to those of Europe. However, others counter that many European merchants were de facto expropriated through defaults on government debt, and that the threat of expropriation by Asian states was not much greater than in Europe, except in Japan. Government and policies are seen as an integral part of modern societies and have played a major role in how different economies have been formed. The Eastern societies had governments which were controlled by the ruling dynasties and thus, were not a separate entity. Their governments at the time lacked policies that fostered innovation and thus resulted in slow advancements. As explained by Cohen, the east had a restrictive system of trade that went against the free world market theory; there was no political liberty or policies that encouraged the capitalist market (Cohen, 1993). This was in contrast to the western society that developed commercial laws and property rights which allowed for the protection an