The Industrial Revolution Myth - Page 4 - Historum

**spellbanisher** · May 7th, 2012, 10:36 AM

Krugman offers a perspective counter to that of Allens. In his paper "The Myth of Asia's Miracle," Krugman argues that planned economies, such as Japan, China, and the Asian Tigers, grew through the sheer marshalling of resources, and by increasing the amount of work performed and the percentage of the educated population, whereas in the West growth was based on both inputs and outputs (increases in the efficiency of the inputs). I think he makes a strong argument, which is substantiated by the differentials in working hours. Japan, South Korea, Germany, France, and the United Kingdom all have roughly the same GDP per capita. Yet the differences in average working hours per worker are dramatic; in South Korea, the average worker puts in 2,193 hours a year, compared to 1,419 hours in Germany, 1,554 hours in France, and 1,657 hours in the United Kingdom, meaning that workers in Western Europe produce the same levels of GDP while working 40-50% fewer hours than the average worker in Korea. Japan does a lot better at 1,733 hours, but still a significant gap compared to the European export giant, Germany, whose workers put in 22% fewer hours (and Germany has a higher overall per capita GDP of about 38,000 compared to 35,000 in Japan).

Still, I think the Allen excerpt does show that Japan's dominance in the automobile and steel industries was a result of improvements in efficiency of output, not just input improvements, improvements that likely would not have happened without the MITI. Also, you have to ask whether the Asian Tigers would have industrialized at all without the "Big Push." Afterall, we still haven't seen anywhere near those levels of economic development in Africa and Latin and America as in East Asia. Chile might be the most successful example in Latin America (although with high levels of poverty and inequality), but their GDP per capita is only about half that of South Korea. And Chile's most successful is copper exports, an industry owned by the government.

Average annual hours actually worked per worker
List of countries by GDP (PPP) per capita - Wikipedia, the free encyclopedia

The Myth of Asia's Miracle

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Popular enthusiasm about Asia's boom deserves to have some cold water thrown on it. Rapid Asian growth is less of a model for the West than many writers claim, and the future prospects for that growth are more limited than almost anyone now imagines. Any such assault on almost universally held beliefs must, of course, overcome a barrier of incredulity. This article began with a disguised account of the Soviet growth debate of 30 years ago to try to gain a hearing for the proposition that we may be revisiting an old error. We have been here before The problem with this literary device, however, is that so few people now remember how impressive and terrifying the Soviet empire's economic performance once seemed. Before turning to Asian growth, then,it may be useful to review an important but largely forgotten piece of economic history...

It is a tautology that economic expansion represents the sum of two sources of growth. On one side are increases in "inputs": growth in employment, in the education level of workers, and in the stock of physical capital (machines, buildings, roads, and so on). On the other side are increases in the output per unit of input; such increases may result from better management or better economic policy, but in the long run are primarily due to increases in knowledge...

How, then, have today's advanced nations been able to achieve sustained growth in per capita income over the past 150 years? The answer is that technological advances have led to a continual increase in total factor productivity--a continual rise in national income for each unit of input. In a famous estimate, MIT Professor Robert Solow concluded that technological progress has accounted for 80 percent of the long-term rise in U.S. per capita income, with increased investment in capital explaining only the remaining 20 percent...

Soviet growth was based on rapid--growth in inputs--end of story. The rate of efficiency growth was not only unspectacular, it was well below the rates achieved in Western economies. Indeed, by some estimates, it was virtually nonexistent.(4) ..

First, claims about the superiority of planned over market economies turned out to .be based on a misapprehension. If the Soviet economy had a special strength, it was its ability to mobilize resources, not its ability to use them efficiently. It was obvious to everyone that the Soviet Union in 1960 was much less efficient than the United States. The surprise was that it showed no signs of closing the gap.

Second, because input-driven growth is an inherently limited process, Soviet growth was virtually certain to slow down. Long before the slowing of Soviet growth became obvious, it was predicted on the basis of growth accounting. (Economists did not predict the implosion of the Soviet economy a generation later, but that is a whole different problem.)...

And yet there are surprising similarities. The newly industrializing countries of Asia, like the Soviet Union of the 1950s, have achieved rapid growth in large part through an astonishing mobilization of resources. Once one accounts for the role of rapidly growing inputs in these countries' growth, one finds little left to explain. Asian growth, like that of the Soviet Union in its high-growth era, seems to be driven by extraordinary growth in inputs like labor and capital rather than by gains in efficiency.(5) Consider, in particular, the case of Singapore. Between 1966 and 1990, the Singaporean economy grew a remarkable 8.5 percent per annum, three times as fast as the United States; per capita income grew at a 6.6 percent rate, roughly doubling every decade. This achievement seems to be a kind of economic miracle. But the miracle turns out to have been based on perspiration rather than inspiration: Singapore grew through a mobilization of resources that would have done Stalin proud. The employed share of the population surged from 27 to 51 percent. The educational standards of that work force were dramatically upgraded: while in 1966 more than half the workers had no formal education at all, by 1990 two-thirds had completed secondary education. Above all, the country had made an awesome investment in physical capital: investment as a share of output rose from 11 to more than 40 percent.(6)...

Even without going through the formal exercise of growth accounting, these numbers should make it obvious that Singapore's growth has been based largely on one-time changes in behavior that cannot be repeated. Over the past generation the percentage of people employed has almost doubled; it cannot double again. A half-educated work force has been replaced by one in which the bulk of workers has high school diplomas; it is unlikely that a generation from now most Singaporeans will have Ph.D.s. And an investment share of 40 percent is amazingly high by any standard; share of 70 percent would be ridiculous. So one can immediately conclude that Singapore is unlikely to achieve future growth rates comparable to those of the past. But it is only when one actually does the quantitative accounting that the astonishing result emerges: all of Singapore's growth can be explained by increases in measured inputs. There is no sign at all of increased efficiency. In this sense, the growth of Lee Kuan Yew's Singapore is an economic twin of the growth of Stalin's Soviet Union--growth achieved purely through mobilization of resources. Of course, Singapore today is far more prosperous than the U.S.S.R. ever was--even at its peak in the Brezhnev years--because Singapore is closer to, though still below, the efficiency of Western economies. The point, however, is that Singapore's economy has always been relatively efficient; it just used to be starved of capital and educated workers.
Singapore's case is admittedly the most extreme. Other rapidly growing East Asian...

economies have not increased their labor force participation as much, made such dramatic improvements in educational levels, or raised investment rates quite as far. Nonetheless, the basic conclusion is the same: there is startlingly little evidence of improvements in efficiency. Kim and Lau conclude of the four Asian "tigers" that "the hypothesis that there has been no technical progress during the postwar period cannot be rejected for the four East Asian newly industrialized countries." Young, more poetically, notes that once one allows for their rapid growth of inputs, the productivity performance of the "tigers" falls "from the heights of Olympus to the plains of Thessaly."

Bart Dale · May 7th, 2012, 12:54 PM

In England the average life expectancy was 31.6-34 years in 1780, in France 27.5 years, 24.7 in East and West Prussia, 29.8 in the Rhine province, and 31.3 in Westphalia. Meanwhile, in China it was 39.6 years. There's not enough evidence from Southeast Asia to make any estimations there. [/quote]

I question the accuracy of Kenneth Pemeranz, who is your source for the above* statement. Other sources I have read have given significantly lower life expectancy for China. According to one source, life expectancy China at the beginning of the 20th century was only 30 years, which meant that Chinese life expentancy dropped 25% at the same time it rose by the same amount in Europe.

*See http://en.wikipedia.org/wiki/Great_D...EFPomeranz2000

"The Chinese average life expectancy has risen to 71 from just over 30 years old at the beginning of this century (i.e., 20th centur), said an expert on demography.

This can be attributed to the advancement of science and technology, especially in medical science, said Zhao Baohua, vice-director of China Association for Aged People, at a seminar being held in the port city of Qingdao.

At the beginning of 18th century, there were no countries with an average lifespan over 35 years old, he said.

In the 19th century, however, people's life expectancy in some countries was extended to 40 years old thanks to the invention of a vaccination against smallpox. " Chinese Life Expectancy Rises by 41 Years in One Century

The question is what are the sources of data? The written sources for the West (Europe and US) are more complete, or at least, more accessible, than for the same time periods in China. Relatively few non Chinese scholars can even read the ancient Chinese records, whereas anyone on this Forum could puzzle out the church baptism records, wills, and legal records if they tried. Even if they don't know Latin, they could still puzzle out birth and death dates, and I imagine even if you only knew English, knowing just a few words could make out birth and death dates from French records, which is not true in ancient Chinese.

For example, the life expectancy of male Qing nobles was only 31 years in 1750-1760. and 37 years in 1800 to 1810, while male British Peerage at the same time was 44 years and 47 years. (See table 3A & 3B in http://csde.washington.edu/downloads/98-5.pdf). If anyone who have accurate and complete records, it would be the nobles in both countries. The custom of baptizing children and recording their name in Church records I suspect gives a more complete record of births than Chinese records, especially of femails, and without an accurate number of births, you calculations of life expenctancy will be off. Given the ancient Chinese attitude toward females, I suspect that female children who died shortly after birth would be less likely to be recorded than in the West, leading to under reporting of infant mortality, and a resulting higher value in life expectancy.

Also, I don't see the Chinese having the same amount of wills, deeds, birth, marriage records you can find through out Europe. Much of what we know about famous European writiers and inventers come from legal documents written at the time (the will of Shakespeare, his marriage record, the various lawsuits Gutenberg was involved in). I haven't heard of anything like the relatively recent discovering of the police files on the early 17th century painter Caravaggio's. BBC News - Caravaggio's crimes exposed in Rome's police files

And even a backwards place such as 11th century England produced something like the Doomsday books, recording all the farms, mills, holdings throughout the land. You would be hard pressed to find even in the later Ming and Qing China records of the same detail.

**spellbanisher** · May 7th, 2012, 01:25 PM

^Bart Dale, I did note that the data is tentative. I must also apologize, because I misremembered what I read. The life expectancies come from The Great Divergence. Average life expectancy in China actually declined considerably after 1820, as it did for the average Indian as well. The 39.6 came from Telford's study of geneologies from a relatively prosperous area. Another study by Lee and Campbell, whom Pomeranz notes had unusually good data for a village in rural Manchuria fro the years 1792-1867, show a life expectancy of 35.7 for males.

The most compelling argument, however, for comparable if not longer life expectancies in China is the rate of population increase, where from 1700-1800 the Chinese population increased by about 120% (150 million to 330 million), whereas in Europe it increased from 95 million to about 145 million (55%). With modern medicine and industrial agriculture you can have explosions in population even if you are overall a stagnant economy, but that was not true in a pre-industrial economy.

Bart Dale · May 7th, 2012, 03:24 PM

Quote:

Originally Posted by spellbanisher

^The most compelling argument, however, for comparable if not longer life expectancies in China is the rate of population increase, where from 1700-1800 the Chinese population increased by about 120% (150 million to 330 million), whereas in Europe it increased from 95 million to about 145 million (55%). With modern medicine and industrial agriculture you can have explosions in population even if you are overall a stagnant economy, but that was not true in a pre-industrial economy.

True, but during that same time span the Qing greatly expanded the area that China occupied. I would esitmate the area occupied by China during the Qing was double that of the Tang and Song donatly, and significantly more than the Ming.

Also, during the same time period, the most densely populated parts of Europe became increasingly urbanized. Highly urban populations do not grow as fast as more rural populations, and family sizes historically have been singicantly smaller for urban based population than rural ones. The amount of urbanization of China was significantly less than that of Europe, some 3% in 1800 versus a level 3 times that in Europe. Also, people with a higher standard of living typically have a lower rate of increase in population than those with a lower standard of living. Today, some of the poorest countries also have the highest population increase despite having lower life expectancy. The increase in Chinese population for that time period could have been similar those modern poor countries. Even today, the urbanization rate in China is barely above world average, and far less than either Europe or the US.

**Wenge** · May 7th, 2012, 03:54 PM

Quote:

Originally Posted by Bart Dale

True, but during that same time span the Qing greatly expanded the area that China occupied. I would esitmate the area occupied by China during the Qing was double that of the Tang and Song donatly, and significantly more than the Ming.

Also, during the same time period, the most densely populated parts of Europe became increasingly urbanized. Highly urban populations do not grow as fast as more rural populations, and family sizes historically have been singicantly smaller for urban based population than rural ones. The amount of urbanization of China was significantly less than that of Europe, some 3% in 1800 versus a level 3 times that in Europe. Also, people with a higher standard of living typically have a lower rate of increase in population than those with a lower standard of living. Today, some of the poorest countries also have the highest population increase despite having lower life expectancy. The increase in Chinese population for that time period could have been similar those modern poor countries. Even today, the urbanization rate in China is barely above world average, and far less than either Europe or the US.

According to many websites I have viewed China's urbanization rate is higher than that of The United States. Have you visited China recently. Just in the small city I live in the areas that are being urbanized is growing at an accelerated pace and I am sure the same is true for the majority of China.

Urbanization Rates of Countries

**spellbanisher** · May 7th, 2012, 04:16 PM

Quote:

Originally Posted by Bart Dale

True, but during that same time span the Qing greatly expanded the area that China occupied. I would esitmate the area occupied by China during the Qing was double that of the Tang and Song donatly, and significantly more than the Ming.

True, and that huge difference which would explain why the increase was so dramatic in the eighteenth (as opposed to the steady increases in previous centuries).
The Qing did do things that at the very least improved stability.

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The Ming, like the Song, tried to supply grain and horses to frontier garrisons by providing merchant incentives, but the economy was insufficiently monetized to make this work. By the mid-1700s, however, Qing officials could purchase large supplies on the markets of northwest China and ship them out to Xinjiang. And when prices in the northwest rose sharply, the civilian state granary system, another essentially mid-Qing innovation, could relieve local distress. The Qing also strengthened ties between newly conquered territories, principally Xinjiang, and China proper through large-scale Chinese settlement. Third, the new civilian granary system was symptomatic of a general increase, both secular and cyclic, in administrative efficiency during the early and mid-Qing.

Chinese Territorial Expansion II

But obviously, the civilian granary system would come no where close to explaining the difference.

Quote:

Originally Posted by Bart Dale

Also, during the same time period, the most densely populated parts of Europe became increasingly urbanized. Highly urban populations do not grow as fast as more rural populations, and family sizes historically have been singicantly smaller for urban based population than rural ones. The amount of urbanization of China was significantly less than that of Europe, some 3% in 1800 versus a level 3 times that in Europe. Also, people with a higher standard of living typically have a lower rate of increase in population than those with a lower standard of living. Today, some of the poorest countries also have the highest population increase despite having lower life expectancy. The increase in Chinese population for that time period could have been similar those modern poor countries. Even today, the urbanization rate in China is barely above world average, and far less than either Europe or the US.

While this is all true, I'd be careful not to ascribe what happens under economies already urbanized and industrialized (or industrializing) to preindustrial economies. Europe did see robust population growth relative to other parts of the world, just not relative to China.

The higher population growth in modern undeveloped countries is a result of high birthrates. China had practices to keep birthrates under control, such as delaying pregnancy after marriage. Apparently, the average Chinese female also had a shorter reproductive career than that of European women.

However, there is virtually no population growth in India and Africa, and I think it is pretty well established that India's economy, especially their manufacturing center, started to decline in 1750.

The trend for industrializing economies is to have robust population growth. For instance, in the nineteenth century England's population increased from 8 million to 30 million, whereas from 1700 to 1800 it only increased from 5 million to 8 million. In the United States it increases from 5 million to 76 million in the nineteeth century, although the United States is very different because it was a vast and mostly uninhabited continental-sized land mass. But Great Britain quadrupled their population, so I think that is pretty compelling. These are huge increases in population despite significant increases in urbanization.

I think all this strengthens my point that while there was some growth in Europe in the eighteenth century, it clearly wasn't our modern variant of exponential growth, and that nineteenth century growth was very different from pre nineteenth century as opposed to Guaporense's argument that nineteenth century growth was qualitatively the same just with an accelerated rate.

I don't have precise numbers for China from 1800 to 1900. In the wiki article, it increases from 260 million in 1750 to 1850 from 260 million to 412 million. The estimate from Biraben is 330 million in 1800, I've also seen 300 million, so if you use that then it is an increase of 19.9%-37% from 1800-1850. According to the Revolutionists, China's decline usually begins around 1820.

Of course population growth can mean different things in different contexts and institutions. But I don't perceive a great divergence between the core regions of Europe and the core regions of the rest of the world until the breakthrough in coal technology.

Demography_of_England

Demographics_of_the_United_States

Demographics_of_China

**Guaporense** · May 7th, 2012, 04:17 PM

Quote:

Originally Posted by mansamusa

Well, he sounds brilliant enough. But his idea of socialist planning or government planning is too exact, too narrow and too theoretical. He comes up with a definition that can be defeated in the abstract. In the real world and in real history, his theory or at least the absolutist interpretation of it does not stand a chance.

I see, so you don't really have any scientific definition of central planning (you don't agree or disagree with him, only says that "he is narrow and abstract").

Therefore, this discussion is futile.

Bart Dale · May 7th, 2012, 04:18 PM

Quote:

Originally Posted by Wenge

According to many websites I have viewed China's urbanization rate is higher than that of The United States. Have you visited China recently. Just in the small city I live in the areas that are being urbanized is growing at an accelerated pace and I am sure the same is true for the majority of China.

According to Wikipedia, the urbanization rate of China is only 51.3% of the population, barely more than the worldwide average of 50.5%. The CIA webpage of urbanization rates for all countries list China as 47%. https://www.cia.gov/library/publicat...elds/2212.html

I agree that the increase in urbanization is extremely rapid, and cities are growing at a tremodous rate. But China as whole is a large country, comparable in area to the US. There is a lot of less densely populated areas in the western provinces that may drag the average down. Of course, given the extremely rapid increase, the sources I cited may just be out of date. It may be that difference between calculations based on official census and calculations based on real estimates of population. The official census might undercount the actually population, either in urban areas or rural areas. Depending on where the under reporting occurs, that might raise or lower you estimates of urbanizatin.

Quote:

Urbanization in the People's Republic of China

Quote:

increased in speed following the initiation of the reform and opening policy. By the end of 2011, the mainland of the People's Republic of China had a total urban population of 691 million or 51.3% of the total population, rising from 26% in 1990.

Urbanization in the People's Republic of China - Wikipedia, the free encyclopedia

**spellbanisher** · May 7th, 2012, 04:30 PM

Here are some visuals from something published in 2009 called "Agricultural Productivity and Rural Incomes in England and the Yangtze Delta c 1620-1820" by Robert C. Allen.

Agricultural productivity in Europe

Comment: As you can see, agricultural productivity is declining in Italy, Belgium, and Spain. After rising from 1300-1500, it falls to 1600 and rises rapidly afterwards in England. In the Netherlands it is level until 1600 and then rises fairly rapidly. The growth for Great Britain is about 75% in 2 centuries, about a 0.3% increase per year. So while that can be considered steady growth, it is by no means modern economic growth, where an industrializing economy will grow about 4%, which means productivity would increase at 2,500 times in 200 years, compared to the 3/4 times in England. For an industrialized economy, productivity growth will be 1.5-2% a year. For the United States, productivity grew 2.8% a year in the fifties and sixties, 1.1% in the seventies, 1.5% in the eighties, 2.1% in the nineties, and 2.5% over the last decade. Even at the stagnant seventies level productivity would increase by 9 times over 200 years, and at the nineties level 64 times over 2 centuries. Additionally, Englands productivity was still lower in 1800 than Belgium's was in 1350, even though it started growing in 1300. 500 years is an excruciating long time to catch up.

Comment: According to Allen, Yangtze agricultural productivity was flat in the early modern period, but still higher than Belgium, Italy and Spain in 1800 and higher than the Netherlands until a few decades in the eighteenth century and England in around mid eighteenth century.

By converting copper into pence, the most common form of wage in China, Allen is able to compare the wages of the English midlands to that of the Yangtze Delta. This is data for about 1820. According to Allen, the Yangtze Valley had much higher wages than any part of Europe in 1620, but by 1820 it was about the same as the English midlands. So we do see the closing of the gap, but that slow closing in the early modern period does not even closely imply the huge gap that opens up in the nineteenth century.

Agricultural Productivity and Rural Incomes in England and the Yangtze Valley, 1620-1820

Still, readers can make of it what they will. I've made my case.

Bart Dale · May 7th, 2012, 04:31 PM

Quote:

Of course population growth can mean different things in different contexts and institutions. But I don't perceive a great divergence between the core regions of Europe and the core regions of the rest of the world until the breakthrough in coal technology.

Demography of England - Wikipedia, the free encyclopedia
Demographics of the United States - Wikipedia, the free encyclopedia
Demographics of China - Wikipedia, the free encyclopedia

I would like to point the link to the Demographics of China illustrates my point about urban populations having significantly fertility rates than than rural ones. Note, the quote from the link you provided has cities with less than 1/2 the overall rale

[quote=According to the 2000 census, the TFR was 1.85 (0.86 for cities, 1.08 for towns and 1.43 for villages/outposts [/quote] TFR = total fertility rate.

Also, I think it highly significant that the average life expectancy of the malee British peerage was a full 10 years higher than their Quin noble counterpart, as I cited early. Both groups would have access to the best medical care and food there was available in their societies, and the much higer values for the British peerage indicates that medical technology was more advance in Europe at this time, if not as evenly distributed. In the past, until the 20th century, nobody was collecting the kind of accurate overal population statistics that we have today. A lot of estmates are based on incomplete and extrapolated data, which might not be correct. That is why I empashize the comparison between the 2 groups of nobles. If we have any accurate and complete data about populations, it will be these for these 2 groups. The other data in my opinion will be less reliable, subject to more noise.

The claim that China had a lower fertility rate would be affected if female births were under reported, as I think highly likely. That would give a lower fertility rate estimate. With a higher fertility rate, and significant increase in area, that would explain a significant population increase with resorting to the assumption of longer life expectancy. (We know of the traditional Chinese attitude for females, and even today there is a signifcant assymetry between male and female births that is not due to nature. I think that in such an environment, female births would be less likely to be reported. ).