Big Think and the nature of capitalism

Jack Goody was one of those rare thinkers that tried to think big. Not common in economics anymore, and less clear in other social sciences, as somewhat narrowly defined techniques take over the breadth of historical understanding. I've only read before his The Theft of History, somewhat iconoclastic book in which he debunks the idea that individualism, democracy and freedom were somehow invented by modern Western society.

I started reading now his Metals, Culture and Capitalism. There are already some interesting things associated to his emphasis on iron, rather than precious metals, in the trade interaction between the West and the Rest. Note that this suggests, probably against the grain of Goody's concern, that the metallurgic advantages of the West, played an early role in the so-called Rise of the West.

But what caught my eye is the following quote:

“In this piece I have covered a long period of time and will undoubtedly have got some things wrong, although I hope my references will usually bear me out. On few, perhaps none, of the subjects am I expert, but the expert does not always see the wood for the trees. One reason for my taking a long time-span is that historians have taken a much too restricted view of their subject and this has prevented them from going back to the commonalities which join us both to the Near and the Far East of what is essentially one continent. For this reason I would question the history cultivated in part of that region, in Europe since the eighteenth, but especially the nineteenth and twentieth centuries when the west led the way in many things. They emphasised the development of ‘capitalism’ as a new mode of production in Europe (an idea not limited to Marxism) and have therefore overlooked the commonalities of which I have spoken.”

First of all, there is the admission that to think big it requires to deal in areas that one is not a specialist, and that leads to mistakes. But most of the mistakes are not central to the argument in my view (see for example, the discussion with Brad DeLong related to David Graeber's book on debt; see comments section).

The second and more relevant point is that he seems, as much as Gunder Frank in ReOrient, to suggest that the notion of mode of production is problematic, and that the very idea of capitalism should be questioned. While I find revisionism with regards the timing and the causes of the Rise of the West (including the work of Gunder Frank, but even more Pomeranz and Bin Wong) relevant to understand the limits of conventional views on the subject, both that it happened much recent than normally thought and that demand forces might have played a role, I find the dismissal of the notion of capitalism problematic (I discussed some of that here). In extremely simplified way, one could argue that it's capitalism that is behind the Rise of the West.

Urbanization and the Great Divergence

The Great Divergence between Western Europe and Asia, in particular China, according to revisionist authors like Ken Pomeranz, André Gunder Frank and Roy Bin Wong, has been a recent phenomenon, from around the early nineteenth century (and some would argue it will be a short lived one too; I expressed my doubts here). The graph below (source: Persson, 2010) shows rates of urbanization in Western Europe and China for a very long period.

Note that, by the renaissance of the twelfth century, Italy, particularly Northern Italy, shows a significant increase in the rate of urbanization, eventually returning to the levels of the Roman Empire. Chinese rates of urbanization are flat, in comparison, in this period. Mind you, the Song Dynasty period was a period of rapid growth in China. By the sixteenth century the rates of urbanization in Western Europe take off, with nothing comparable in China, until recent times.

Rosenthal and Wong (2011, p. 111) argue that "war was responsible for Europe’s urban manufacturing," while Chinese manufacturing remained eminently rural. And there are good reasons associated with the Military Revolution Theory to suggest Western European hegemonic rise was associated to guns and sails, as famously put by Carlo Cipolla.

From my perspective what is great about the graph is the suggestion that Western European growth, and eventually the Industrial Revolution, can be associated to the growth in demand. Note that urbanization goes hand in hand with the expansion and transformation of the patterns of consumption. In cities, that have to be built and all sorts of infrastructure and services must be provided, people have access to new consumption goods, and the significant expansion of demand is what forces supply to adjust. In that sense, urbanization, more than population growth, is a good measure of consumption expansion. And urbanization is certainly one way in which Western Europe was already diverging from Asia as far back as the twelfth century.