Most grateful for being here. I think this is a long view conversation between global historians and custodians of capitalism on economic historians,
I think is stopping calling names to each other and engaging in a conversation.
We'd be very helpful. So here we are. This panel is about the timing and causality 20 years later.
So I'm going to focus on the timing of great the great diversion.
I'm trying to provide a new approach, a new look.
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.
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.
So I was looking at divergence, meaning there are two meanings drawing apart on deviation from that course or standard.
But this matters because there are therefore two ways of measuring divergence.
One is looking at the gap whether there is an increasing gap in, say, a ratio between Europe and Asia,
or whether is increasing dispersion in average incomes within a ratio.
And I'm going to use these two concepts as May.
All of us, including economic historians, are very sceptical about the data we use.
Actually, as Goddess would say, there is no data, but in a strictly strictly speaking.
But there are some quantitative conjectures, if you like. So there are two ways of providing quantitative indicators.
One is wages. The other one is output per head.
And here I'm least in the short comment. I'm not going to go into that.
But obviously, wages are the returns to only one factor of production labour, whereas output per head covers all of them.
But any any of them have serious problems.
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.
No, we go to the debate. I was telling you that there are two ways of approaching the divergence once through
the an increasing income gap between Europe and Asia or looking at the dispersion.
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,
but to Britain, or what Jonathan Franzen then calls the North Sea area, which is Flanders, Holland and England and Asia.
That I'm calling to Asia three because it's basically China or sometimes they yangzi Delta.
And now, thanks to Bishnu work, it is also India and more Japan and.
In terms of looking at the increasing income gap, historians, economic historians are defining convergence in two ways.
One which is more stringent than the other. The first one is the great divergence happens when a new path of sustained growth emerged.
And obviously in Britain or the North Sea area, another way of approaching it is when.
A country, Britain or the north Syria achieves higher income levels than ever before by any other region of the world,
according to the more generous, the more the soft definition.
There is a debate. Broad variance on something would say everything starts this divergence.
It starts with like this. And as you know, Pomerantz and Goldstone would say, happens after 18 18:00.
But if you use the second criteria,
then you have this idea that great diversion happens when Britain or the North area achieve higher income levels than any other region before,
Goldstone would say. This is only during the industrial revolution.
OK, so I'm going to broaden the the focus are looking at three questions.
One is when did the little divergence, which is part of the debate?
Steve Robbery has emphasised much that you have an increasing gap between Asia and Europe.
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.
So there is this idea of that dispersion within Europe, dispersion within Asia, an increasing gap between the two regions.
So I'm going to look take a look to what happened in terms of lethal divergence within Asia and Europe.
Then I'm going to look at. The gap between the two a continent.
Plus the contribution of the little dignitaries.
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.
This is real. This is what people do. Basically, what people are researching on or on divergence, what they do, Lou.
They look at specific national cases.
So here you have three columns of the level of a per capita income if you wanted the blue line is Japan,
the that the Orange is India and the grey is China.
So here you can see that there is changes in the relative position.
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.
It is Japan. And in fact, you could say that there is what people call a reversal a mild reversal of fortune,
which means that the richest becomes poorer and the poorer becomes richer.
And that happens between fourteen hundred and sixteen hundred, and there is a stronger process of reversal of fortune after its 1750,
basically when Japan takes over and reverse the relationship between China and Japan.
OK, so this is one finding finding if we look at the three countries population weighted average.
So that would be a capture more or less Asia. This kind of restrictive definition of Asia.
What you can see is that the level of income per head remains roughly a stable up to 7500.
And then there is a decline in which obviously China plays an important role from 17:00 to 1850.
If you move from the income gap, increasing income gap into the dispersion, this is what you get.
And remember that the higher the columns, the higher the dispersion.
So if you are, you can see there are two colours here. One is blue and the other one is is orange.
What do they mean? The blue means. Is this person but taking each country as equals, two of the others, regardless the population size?
OK, so this is the usual way economists approach it in the 1990s, the conversion convergence debate.
And the reason was that. No nation states have their own policies, and this is what they were looking at.
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.
Each country's income by population, okay, because your approach to what happens to inhabitants of that region.
So here you have basically two stories. There is a story of, believe it or not, convergence.
There was convergence between 14:00 and 16:00. There was convergence in the second part of the 17th century,
and there was divergence in the in the in the late 17th century and especially after 1750.
OK. And it's very interesting.
And I finish with this remark that when you wait by population, when you look at dispersion of Asian inhabitants income,
the dispersion is much milder than when you just take each country at face value, regardless the population size.
So these are basically my what I just said.
So I'm going to proceed with the case of Europe.
In Europe, we have much more information than ever.
So this is, as you can see, obviously sight test.
So remove your glasses, focus on the screen if you can distinguish the lines.
You don't need spectacles. Otherwise, you need to pay a visit to a high street or broad street or call market doctrine.
So here these are average income levels in in eight European countries between 13:00 and 1870.
And there I'm going to just to give you the highlights. One is that.
I like Madison's view, Europe was not European countries were much richer, probably twice, at least twice.
The World Bank poverty line absolute poverty. The second thing and in this case, my son was right.
There were changes in leadership us. There were in in in Asia.
Here you have a northern Italy. Then in the Renaissance, then in the 17th century in the Netherlands and then later on Britain.
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.
Britain. Only overcomes the rest after the 1780s, even if you add Britain to the Netherlands,
the North Korea only overcomes the arrest in the very late 18th century.
If you used Goldstone a stringent definition of convergence, then you would realise that only in the late 1830s,
Britain and the North Sea area would have overcome the level of Renaissance Italy.
OK, so this is more pessimistic perception. Second thing is, there is this view that the Europe was not perhaps Malthusian anymore.
These results are comparing green population and in red per capita income.
Suggest otherwise suggest that only in the early 17th century I'm sorry in the late 17th century.
Again. In the late 17th century and after 18:00, there is a simultaneous population growth on per capita income growth.
OK, so which is good and that's the definition of of growth.
I let me just look at the last slide for Europe, which is dispersion.
When you look at dispersion, remember again that I'm comparing and weighted on population weighted dispersion in dotted blue.
You have an weighted population dispersion in red, you have weighted population dispersion,
and you can see that there are three major episodes in the early 15th century,
in the early 17th century, in the early 19th century, whereas in the 4th, 14th and in the 16th century, there is convergence.
But the important thing is when you wait by population, the great little diversion divergence in the early 15th century is much more important
than the little divergence in the early 17th and in the early 19th century.
So let's add up everything and see what happens when you add these are the results I just told you.
Let me just move to the last part of the presentation.
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.
So you do get an assessment of the overall divergence in overall, a divergence in in erasure.
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.
What you'll find is that whether you use population weights or not.
Well, you can see is that the relative output per head in Asia compared to Europe only declines after 17:00.
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,
perhaps these 80 percent, this ratio in which Asia is four fifths of Europe would erase to some extent.
So basically, the divergence measured using an increasing income gap only happens after 17:00.
For instance, Steve Bradbury has confirmed this finding for the case of of of China,
but this goes against these early, early divergence that that other people have suggested.
Secondly, if you use this, the rise in dispersion,
this is population weighted because I'm trying to capture the dispersion within inhabitants of AirAsia.
What you find is the following you find that there is an episode of divergence in the late 17th century,
probably if you use unweighted data, that would increase a little bit.
But the main? The great divergence in terms of dispersion of incomes and incomes weighted by population only happens after 18:00 or after.
If you prefer. Yeah, after 18:00. OK, so this is to some extent a confirmation of Pomeranz and Goldstone views.
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?
Or, in other words, to what extent the Great Divergence is conditioned by the little divergences?
And here you have,
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.
This is the whole grey divergence decomposed into two parts.
One is the gap between Europe and Asia, and this is the blue part of each column.
And then you have yellow and red. The yellow and red are the little the confusion of the little divergences in yellow.
You have the contribution of Asia in red. The contribution of Europe, Europe, little divergence.
And as you can see in the great period of the great divergence between eighteen
hundred and eighteen seventy is basically the increasing gap between Asia,
Europe and Asia.
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.
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.
There is little evidence in that in the late 70s and in Europe in the early 17th century and vice versa.
So they probably would cancel each other the reversal of fortune, which is so often associated to little diversion.
They don't match each other all the time is basically in Asia in the 19th century, in Europe, in the 19th century.
Plus, I read that in the early 17th century on the timing of divergence.
Now there are two stories. The most pessimistic is the great divergence only happens after 18:00.
And this is when you use income dispersion, the increase in income dispersion.
But if you use increasing income gap, that would be after 17:00.
And you can say that the contribution of the lethal divergence to the great divergence was tiny.
It is the industrial revolution. What is the main driver of the Great Depression?
Think you that?