Economic history: What was the Great Divergence?

This post has been updated to include a suggested reading list.A better understanding of economic history might have helped the world avoid the worst of the recent crisis. Free exchange continues its discussion of milestones in economic history, showing how they contributed to the development of economic thought. You can read the first entry here.A FEW centuries ago it would have been difficult to tell Europe apart from the rest of the world—in economic terms, at least. Indeed, half a millenium ago Europe might justly have been considered a laggard. The three inventions which, in the words of Karl Marx, “ushered in bourgeois society” were not invented in Europe. Gunpowder, the compass and the printing press were probably all invented in China.But by the 19th century, things were rather different. Western Europe and parts of North America had become fabulously wealthy. Almost everywhere else was horribly poor. Economic historians refer to this as the “Great Divergence”.

The timing of the divergence is hotly debated. Some think that it really took off around 1800. Others reckon that it was earlier. Such debates will probably never be resolved with much precision, given the unreliability of the evidence. But the question of what caused the divergence might be of more interest.Cultural factors are a popular explanation for European ascendancy. Max Weber, a German sociologist, …

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