by Rosenberg & Birdzell
My previous book review was of The Great Divergence, which attempted to explain why the economic fortunes of the West and China diverged so dramatically between 1500 and 2000. This book is an earlier attempt along similar lines. This question of the rise of the West is rapidly becoming one of the biggest problems in history scholarship, because historians are realizing just how advanced China was throughout much of history. How did the West suddenly spurt forward and surpass Chinese achievement so dramatically?
The authors address many of the contributing factors, but the one that they emphasize, and that stands out starkly, is the role of Western institutions. Yes, the West had superior navigational technology, and superior weaponry, superior science, and so forth, but these authors put a lot of money on Western institutions as the “secret weapon” of the West. The most important of these were economic: the West developed joint stock companies, which permitted the pooling of capital from many small sources so as to corral the large amounts of capital required to finance the ambitious projects that Western merchants undertook. The Chinese had lots of capital, but no reliable means for many people to pool their capital to fund large enterprises. This in turn made it difficult for the Chinese to undertake large enterprises – unless the government itself undertook them.
And why weren’t the Chinese able to form joint stock corporations? Because they didn’t have the nitpicky legal traditions that the West had developed. By 1600, Western laws were sophisticated enough, and the Western legal system was efficient enough, to insure that the complex contracts involved in joint stock corporations could be trusted by all concerned. Chinese business law was simply not detailed enough to address the fine points on which huge quantities of money turned. I am reminded of one of the most horrifying quotes I ever came across: a Chinese mandarin of the late nineteenth century criticizing Western law with the observation that the law needed to be vague enough to permit magistrates to apply judgement in their cases. That kind of attitude creates legal loopholes large enough to pull vast quantities of wealth through.
Another example of Western institutional innovation was the development of insurance companies. These were sort of “post hoc” joint stock companies: you paid in advance and got the same kind of safety in numbers that you’d get from a joint stock company. Again, there was nothing in Chinese business practice approaching the scale of Western insurance systems.
Rosenberg and Bidzell address a great many other factors, but this was the factor that they emphasized and the one that most struck me as an original contribution to the question. Most Western historians have become impatient with the classic explanation that it was Western technology that overwhelmed Asia. I think that they go too far in minimizing the role of technology; after all, the Chinese simply could not take advantage of the steam engine or the firearms technology that the West had developed, largely because they didn’t have the advanced metallurgical technologies that the West had mastered. Thus, when the British sent a few gunboats up the rivers to bombard Chinese cities, the Chinese were utterly helpless against them, which is why Britain crushed Chinese resistance in the Opium War.
Lastly, there was another crucial factor at work: Chinese vainglory. China had always been the center of the Asian cultural universe, and this status became so deeply ingrained in Chinese civilization that they were simply incapable of recognizing the significance of Western superiority. The Japanese, humiliated by the American “black ships” that breezed into Tokyo Bay in the 1850s and imposed new trade rules upon them, didn’t let their egos get in the way of their pragmatism: in 1868 the Meiji Restoration launched a revolution in Japanese attitudes. In a matter of a few decades, the Japanese had copied everything that the West had to offer, and in 1905 they crushed the Russian Navy in the catastrophic Battle of Tsushima. Meanwhile, the Chinese were still sitting on their hands, thinking themselves too superior to be concerned with Western barbarians. They paid for this in rivers of blood when the Japanese invaded in the 1930s and conquered much of China. Indeed, the first half of the twentieth century was nothing but one catastrophe for China after another. It is a tribute to Chinese energy that, having finally gotten their heads screwed on straight in the 1980s, they launched an economic revolution that has seen their economy explode at unprecedented sustained rates of growth. The Chinese learned a bitter lesson in the period from 1800 to 1950 – a lesson, I think, that they have learned from and will never repeat.