1 00:00:06,330 --> 00:00:21,660 Most grateful for being here. I think this is a long view conversation between global historians and custodians of capitalism on economic historians, 2 00:00:21,660 --> 00:00:26,940 I think is stopping calling names to each other and engaging in a conversation. 3 00:00:26,940 --> 00:00:36,720 We'd be very helpful. So here we are. This panel is about the timing and causality 20 years later. 4 00:00:36,720 --> 00:00:42,400 So I'm going to focus on the timing of great the great diversion. 5 00:00:42,400 --> 00:00:47,040 I'm trying to provide a new approach, a new look. 6 00:00:47,040 --> 00:01:00,690 So let me start us, as you know, is some of, you know, I have a perfect English accent, but I use this this accent for the sake of exoticism. 7 00:01:00,690 --> 00:01:10,530 So I'm trying to capture your attention. And one of the things I do is to look words up in the dictionary, try not to make a mistake. 8 00:01:10,530 --> 00:01:19,860 So I was looking at divergence, meaning there are two meanings drawing apart on deviation from that course or standard. 9 00:01:19,860 --> 00:01:25,050 But this matters because there are therefore two ways of measuring divergence. 10 00:01:25,050 --> 00:01:33,480 One is looking at the gap whether there is an increasing gap in, say, a ratio between Europe and Asia, 11 00:01:33,480 --> 00:01:40,410 or whether is increasing dispersion in average incomes within a ratio. 12 00:01:40,410 --> 00:01:46,200 And I'm going to use these two concepts as May. 13 00:01:46,200 --> 00:01:52,200 All of us, including economic historians, are very sceptical about the data we use. 14 00:01:52,200 --> 00:01:57,870 Actually, as Goddess would say, there is no data, but in a strictly strictly speaking. 15 00:01:57,870 --> 00:02:04,110 But there are some quantitative conjectures, if you like. So there are two ways of providing quantitative indicators. 16 00:02:04,110 --> 00:02:08,730 One is wages. The other one is output per head. 17 00:02:08,730 --> 00:02:12,480 And here I'm least in the short comment. I'm not going to go into that. 18 00:02:12,480 --> 00:02:22,350 But obviously, wages are the returns to only one factor of production labour, whereas output per head covers all of them. 19 00:02:22,350 --> 00:02:26,490 But any any of them have serious problems. 20 00:02:26,490 --> 00:02:34,980 So we have to to take what I'm going to say with a grain of salt, but I'm going to focus on output per head. 21 00:02:34,980 --> 00:02:42,270 No, we go to the debate. I was telling you that there are two ways of approaching the divergence once through 22 00:02:42,270 --> 00:02:51,750 the an increasing income gap between Europe and Asia or looking at the dispersion. 23 00:02:51,750 --> 00:03:02,700 But in fact, the debate so far focuses just on the first one on increasing the income gap and narrows down the focus not to Europe, 24 00:03:02,700 --> 00:03:12,840 but to Britain, or what Jonathan Franzen then calls the North Sea area, which is Flanders, Holland and England and Asia. 25 00:03:12,840 --> 00:03:18,390 That I'm calling to Asia three because it's basically China or sometimes they yangzi Delta. 26 00:03:18,390 --> 00:03:27,410 And now, thanks to Bishnu work, it is also India and more Japan and. 27 00:03:27,410 --> 00:03:36,860 In terms of looking at the increasing income gap, historians, economic historians are defining convergence in two ways. 28 00:03:36,860 --> 00:03:47,270 One which is more stringent than the other. The first one is the great divergence happens when a new path of sustained growth emerged. 29 00:03:47,270 --> 00:03:56,110 And obviously in Britain or the North Sea area, another way of approaching it is when. 30 00:03:56,110 --> 00:04:05,590 A country, Britain or the north Syria achieves higher income levels than ever before by any other region of the world, 31 00:04:05,590 --> 00:04:12,160 according to the more generous, the more the soft definition. 32 00:04:12,160 --> 00:04:17,980 There is a debate. Broad variance on something would say everything starts this divergence. 33 00:04:17,980 --> 00:04:26,080 It starts with like this. And as you know, Pomerantz and Goldstone would say, happens after 18 18:00. 34 00:04:26,080 --> 00:04:29,260 But if you use the second criteria, 35 00:04:29,260 --> 00:04:41,620 then you have this idea that great diversion happens when Britain or the North area achieve higher income levels than any other region before, 36 00:04:41,620 --> 00:04:45,310 Goldstone would say. This is only during the industrial revolution. 37 00:04:45,310 --> 00:04:53,530 OK, so I'm going to broaden the the focus are looking at three questions. 38 00:04:53,530 --> 00:04:58,510 One is when did the little divergence, which is part of the debate? 39 00:04:58,510 --> 00:05:05,380 Steve Robbery has emphasised much that you have an increasing gap between Asia and Europe. 40 00:05:05,380 --> 00:05:15,940 Basically, Britain and the three Asian countries, and even though Japan grows a lot but start from a lower level and growth at a slower pace. 41 00:05:15,940 --> 00:05:24,700 So there is this idea of that dispersion within Europe, dispersion within Asia, an increasing gap between the two regions. 42 00:05:24,700 --> 00:05:33,010 So I'm going to look take a look to what happened in terms of lethal divergence within Asia and Europe. 43 00:05:33,010 --> 00:05:40,470 Then I'm going to look at. The gap between the two a continent. 44 00:05:40,470 --> 00:05:45,210 Plus the contribution of the little dignitaries. 45 00:05:45,210 --> 00:05:57,480 So let me start with Asia, and I apologise to Karl and to be and to all and obviously to the dunker for my boldness. 46 00:05:57,480 --> 00:06:08,010 This is real. This is what people do. Basically, what people are researching on or on divergence, what they do, Lou. 47 00:06:08,010 --> 00:06:12,210 They look at specific national cases. 48 00:06:12,210 --> 00:06:22,020 So here you have three columns of the level of a per capita income if you wanted the blue line is Japan, 49 00:06:22,020 --> 00:06:27,120 the that the Orange is India and the grey is China. 50 00:06:27,120 --> 00:06:31,260 So here you can see that there is changes in the relative position. 51 00:06:31,260 --> 00:06:41,400 Basically, what you can observe is that there is a period in which China was ahead of the rest before 17:00 and after 18:00. 52 00:06:41,400 --> 00:06:50,610 It is Japan. And in fact, you could say that there is what people call a reversal a mild reversal of fortune, 53 00:06:50,610 --> 00:06:55,020 which means that the richest becomes poorer and the poorer becomes richer. 54 00:06:55,020 --> 00:07:08,130 And that happens between fourteen hundred and sixteen hundred, and there is a stronger process of reversal of fortune after its 1750, 55 00:07:08,130 --> 00:07:15,840 basically when Japan takes over and reverse the relationship between China and Japan. 56 00:07:15,840 --> 00:07:24,000 OK, so this is one finding finding if we look at the three countries population weighted average. 57 00:07:24,000 --> 00:07:30,120 So that would be a capture more or less Asia. This kind of restrictive definition of Asia. 58 00:07:30,120 --> 00:07:39,630 What you can see is that the level of income per head remains roughly a stable up to 7500. 59 00:07:39,630 --> 00:07:48,510 And then there is a decline in which obviously China plays an important role from 17:00 to 1850. 60 00:07:48,510 --> 00:07:57,810 If you move from the income gap, increasing income gap into the dispersion, this is what you get. 61 00:07:57,810 --> 00:08:02,970 And remember that the higher the columns, the higher the dispersion. 62 00:08:02,970 --> 00:08:10,140 So if you are, you can see there are two colours here. One is blue and the other one is is orange. 63 00:08:10,140 --> 00:08:22,180 What do they mean? The blue means. Is this person but taking each country as equals, two of the others, regardless the population size? 64 00:08:22,180 --> 00:08:30,460 OK, so this is the usual way economists approach it in the 1990s, the conversion convergence debate. 65 00:08:30,460 --> 00:08:39,040 And the reason was that. No nation states have their own policies, and this is what they were looking at. 66 00:08:39,040 --> 00:08:47,950 But if we want to look in terms of what happens within Asia or within any other region in the world, it matters to wait. 67 00:08:47,950 --> 00:08:54,160 Each country's income by population, okay, because your approach to what happens to inhabitants of that region. 68 00:08:54,160 --> 00:09:01,450 So here you have basically two stories. There is a story of, believe it or not, convergence. 69 00:09:01,450 --> 00:09:09,130 There was convergence between 14:00 and 16:00. There was convergence in the second part of the 17th century, 70 00:09:09,130 --> 00:09:20,590 and there was divergence in the in the in the late 17th century and especially after 1750. 71 00:09:20,590 --> 00:09:22,720 OK. And it's very interesting. 72 00:09:22,720 --> 00:09:32,980 And I finish with this remark that when you wait by population, when you look at dispersion of Asian inhabitants income, 73 00:09:32,980 --> 00:09:42,520 the dispersion is much milder than when you just take each country at face value, regardless the population size. 74 00:09:42,520 --> 00:09:47,980 So these are basically my what I just said. 75 00:09:47,980 --> 00:09:54,790 So I'm going to proceed with the case of Europe. 76 00:09:54,790 --> 00:09:59,090 In Europe, we have much more information than ever. 77 00:09:59,090 --> 00:10:04,930 So this is, as you can see, obviously sight test. 78 00:10:04,930 --> 00:10:10,390 So remove your glasses, focus on the screen if you can distinguish the lines. 79 00:10:10,390 --> 00:10:22,000 You don't need spectacles. Otherwise, you need to pay a visit to a high street or broad street or call market doctrine. 80 00:10:22,000 --> 00:10:34,450 So here these are average income levels in in eight European countries between 13:00 and 1870. 81 00:10:34,450 --> 00:10:40,280 And there I'm going to just to give you the highlights. One is that. 82 00:10:40,280 --> 00:10:50,510 I like Madison's view, Europe was not European countries were much richer, probably twice, at least twice. 83 00:10:50,510 --> 00:10:57,410 The World Bank poverty line absolute poverty. The second thing and in this case, my son was right. 84 00:10:57,410 --> 00:11:01,790 There were changes in leadership us. There were in in in Asia. 85 00:11:01,790 --> 00:11:13,130 Here you have a northern Italy. Then in the Renaissance, then in the 17th century in the Netherlands and then later on Britain. 86 00:11:13,130 --> 00:11:23,090 But if you think in terms of the previous definitions of of of convergence, remember in terms of income gap here, there are two interesting things. 87 00:11:23,090 --> 00:11:32,410 Britain. Only overcomes the rest after the 1780s, even if you add Britain to the Netherlands, 88 00:11:32,410 --> 00:11:37,750 the North Korea only overcomes the arrest in the very late 18th century. 89 00:11:37,750 --> 00:11:46,780 If you used Goldstone a stringent definition of convergence, then you would realise that only in the late 1830s, 90 00:11:46,780 --> 00:11:54,280 Britain and the North Sea area would have overcome the level of Renaissance Italy. 91 00:11:54,280 --> 00:12:08,920 OK, so this is more pessimistic perception. Second thing is, there is this view that the Europe was not perhaps Malthusian anymore. 92 00:12:08,920 --> 00:12:13,450 These results are comparing green population and in red per capita income. 93 00:12:13,450 --> 00:12:23,800 Suggest otherwise suggest that only in the early 17th century I'm sorry in the late 17th century. 94 00:12:23,800 --> 00:12:33,850 Again. In the late 17th century and after 18:00, there is a simultaneous population growth on per capita income growth. 95 00:12:33,850 --> 00:12:38,060 OK, so which is good and that's the definition of of growth. 96 00:12:38,060 --> 00:12:45,310 I let me just look at the last slide for Europe, which is dispersion. 97 00:12:45,310 --> 00:12:54,880 When you look at dispersion, remember again that I'm comparing and weighted on population weighted dispersion in dotted blue. 98 00:12:54,880 --> 00:13:02,650 You have an weighted population dispersion in red, you have weighted population dispersion, 99 00:13:02,650 --> 00:13:08,440 and you can see that there are three major episodes in the early 15th century, 100 00:13:08,440 --> 00:13:18,160 in the early 17th century, in the early 19th century, whereas in the 4th, 14th and in the 16th century, there is convergence. 101 00:13:18,160 --> 00:13:29,500 But the important thing is when you wait by population, the great little diversion divergence in the early 15th century is much more important 102 00:13:29,500 --> 00:13:33,940 than the little divergence in the early 17th and in the early 19th century. 103 00:13:33,940 --> 00:13:43,570 So let's add up everything and see what happens when you add these are the results I just told you. 104 00:13:43,570 --> 00:13:48,820 Let me just move to the last part of the presentation. 105 00:13:48,820 --> 00:14:00,640 So this is what happens if you add up a little divergence for each, for Asia and for Europe, plus the gap between Asia and Europe. 106 00:14:00,640 --> 00:14:12,940 So you do get an assessment of the overall divergence in overall, a divergence in in erasure. 107 00:14:12,940 --> 00:14:22,690 If we use that data, the more intuitive a concept which is the income gap and this is what people have been using so far. 108 00:14:22,690 --> 00:14:28,720 What you'll find is that whether you use population weights or not. 109 00:14:28,720 --> 00:14:40,870 Well, you can see is that the relative output per head in Asia compared to Europe only declines after 17:00. 110 00:14:40,870 --> 00:14:53,050 Actually, if you would say that we are comparing Western Europe to to Asia, and we would be able to include Russia and Eastern Europe, 111 00:14:53,050 --> 00:15:02,620 perhaps these 80 percent, this ratio in which Asia is four fifths of Europe would erase to some extent. 112 00:15:02,620 --> 00:15:10,720 So basically, the divergence measured using an increasing income gap only happens after 17:00. 113 00:15:10,720 --> 00:15:15,970 For instance, Steve Bradbury has confirmed this finding for the case of of of China, 114 00:15:15,970 --> 00:15:22,720 but this goes against these early, early divergence that that other people have suggested. 115 00:15:22,720 --> 00:15:28,060 Secondly, if you use this, the rise in dispersion, 116 00:15:28,060 --> 00:15:34,690 this is population weighted because I'm trying to capture the dispersion within inhabitants of AirAsia. 117 00:15:34,690 --> 00:15:44,350 What you find is the following you find that there is an episode of divergence in the late 17th century, 118 00:15:44,350 --> 00:15:49,450 probably if you use unweighted data, that would increase a little bit. 119 00:15:49,450 --> 00:16:02,480 But the main? The great divergence in terms of dispersion of incomes and incomes weighted by population only happens after 18:00 or after. 120 00:16:02,480 --> 00:16:15,140 If you prefer. Yeah, after 18:00. OK, so this is to some extent a confirmation of Pomeranz and Goldstone views. 121 00:16:15,140 --> 00:16:25,010 And then the last slide. What happens to what is the contribution too of the little divergence in Asia and Europe to the great divergence? 122 00:16:25,010 --> 00:16:30,830 Or, in other words, to what extent the Great Divergence is conditioned by the little divergences? 123 00:16:30,830 --> 00:16:32,090 And here you have, 124 00:16:32,090 --> 00:16:41,900 because I'm using a statistical metric that can be break down into within and between inequality and what you have is the blue part. 125 00:16:41,900 --> 00:16:47,060 This is the whole grey divergence decomposed into two parts. 126 00:16:47,060 --> 00:16:54,290 One is the gap between Europe and Asia, and this is the blue part of each column. 127 00:16:54,290 --> 00:17:03,440 And then you have yellow and red. The yellow and red are the little the confusion of the little divergences in yellow. 128 00:17:03,440 --> 00:17:10,350 You have the contribution of Asia in red. The contribution of Europe, Europe, little divergence. 129 00:17:10,350 --> 00:17:16,910 And as you can see in the great period of the great divergence between eighteen 130 00:17:16,910 --> 00:17:25,120 hundred and eighteen seventy is basically the increasing gap between Asia, 131 00:17:25,120 --> 00:17:27,660 Europe and Asia. 132 00:17:27,660 --> 00:17:40,940 The conclusions are firstly, that the income gap is quite stable before before 17:00, and it might not have existed before seven didn't have it. 133 00:17:40,940 --> 00:17:52,790 Secondly is that you have episodes of little divergence, but only coincide in Asia and in and in Europe in the early 19th century, actually. 134 00:17:52,790 --> 00:17:59,930 There is little evidence in that in the late 70s and in Europe in the early 17th century and vice versa. 135 00:17:59,930 --> 00:18:07,850 So they probably would cancel each other the reversal of fortune, which is so often associated to little diversion. 136 00:18:07,850 --> 00:18:14,540 They don't match each other all the time is basically in Asia in the 19th century, in Europe, in the 19th century. 137 00:18:14,540 --> 00:18:19,790 Plus, I read that in the early 17th century on the timing of divergence. 138 00:18:19,790 --> 00:18:26,810 Now there are two stories. The most pessimistic is the great divergence only happens after 18:00. 139 00:18:26,810 --> 00:18:30,890 And this is when you use income dispersion, the increase in income dispersion. 140 00:18:30,890 --> 00:18:35,870 But if you use increasing income gap, that would be after 17:00. 141 00:18:35,870 --> 00:18:46,130 And you can say that the contribution of the lethal divergence to the great divergence was tiny. 142 00:18:46,130 --> 00:18:52,250 It is the industrial revolution. What is the main driver of the Great Depression? 143 00:18:52,250 --> 00:18:59,920 Think you that?