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The following article was originally written as a comment to the Google Hangout that featured Colin and Andy (Praise of Folly Podcast Episode #17). I ended up writing more than I intended, so I thought I might as well post this as a full article.
The purpose of this article is to argue against the thesis that the discovery and subsequent colonization of the New World is what caused the Great Divergence, which ultimately led to the industrialization of Western Europe and the rise of the Modern World. In contrast to this theory, I would argue that the Great Divergence was already well underway during the high and late middle ages when Western European countries were experiencing a period of steady and sustained growth in technological and economic development.
This growth can be seen in the gradual rise of per capita GDP in many Western countries prior to and before the age of exploration and colonization. Now, why is per capita GDP important? According to Investopedia, “A rise in per capita GDP signals growth in the economy and tends to translate as an increase in productivity.”
According to the estimates of Angus Maddison, economic productivity in Europe – as measured in per capita GDP – was steadily rising at a consistent rate since the early 14th century (see chart below), long before the New World was discovered in the 1490s. This rise in economic productivity was caused by several internal factors, so it is erroneous to say that the technological and economic rise of Europe was exclusively the result of colonization. Rather, it would be more accurate to say that technological and economic developments allowed Europe to develop technologies which allowed it to colonize the world.
Another problem that I see with the Colonization = Great Divergence Theory is the issue of Spain and Portugal. If the discovery of the New World were the primary cause of economic and technological growth in Europe then it should have been Spain and Portugal – not England, France and the Dutch – that should have ushered in the Scientific and Industrial Revolutions, since they were the first in the colonization game, and therefore should have been the first to reap its rewards, and yet that was not the case. Even during the 16th century when Spain and Portugal were still in their prime, neither of these powers contributed as many major scientific or technological developments as the French, the Dutch, and the British.
At best, Spanish conquest of the New World facilitated the Price Revolution and the rise of Mercantilism. Furthermore, I would argue that the effects of colonial ventures were primarily funneled into the formation of European Nation-States, as opposed to technological development per se.
Finally, it's worth mentioning that the start of the Scientific Revolution (1540s), which could arguably be described as the main cause of the Great Divergence, preceded the earliest British colonies (1580s) and Dutch colonies (1600s), and took place shortly after the founding of the first French American colonies (1530s). So, if the Great Divergence, which was largely technological and economic in nature, had indeed been the result of colonization, then the Scientific Revolution should have taken place many years after those nations involved in it had exploited the wealth of the New World. But the dates simply do not add up.
So, if the colonization was not the primary cause of the Great Divergence, then what was it? Why did Europe, and not other civilizations, create the modern world despite being not as large or as populous as other civilizations?
I would argue that it’s because European societies throughout most of history possessed large amounts of social capital, which could be defined either as a society’s ability to absorb investment, or as the ability to construct commons. The fact that many European communities are described as "high-trust" offers some proof to this thesis, but I am not entirely sure. I don’t think any single factor or answer would suffice (and yes, this includes race and IQ). I am neither an historian nor an economist, but whatever the reason may be, based on the evidence, it’s reasonable to state that Europe did not create the modern world because of colonization. That process began much sooner.
The purpose of this article is to argue against the thesis that the discovery and subsequent colonization of the New World is what caused the Great Divergence, which ultimately led to the industrialization of Western Europe and the rise of the Modern World. In contrast to this theory, I would argue that the Great Divergence was already well underway during the high and late middle ages when Western European countries were experiencing a period of steady and sustained growth in technological and economic development.
This growth can be seen in the gradual rise of per capita GDP in many Western countries prior to and before the age of exploration and colonization. Now, why is per capita GDP important? According to Investopedia, “A rise in per capita GDP signals growth in the economy and tends to translate as an increase in productivity.”
According to the estimates of Angus Maddison, economic productivity in Europe – as measured in per capita GDP – was steadily rising at a consistent rate since the early 14th century (see chart below), long before the New World was discovered in the 1490s. This rise in economic productivity was caused by several internal factors, so it is erroneous to say that the technological and economic rise of Europe was exclusively the result of colonization. Rather, it would be more accurate to say that technological and economic developments allowed Europe to develop technologies which allowed it to colonize the world.
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Another problem that I see with the Colonization = Great Divergence Theory is the issue of Spain and Portugal. If the discovery of the New World were the primary cause of economic and technological growth in Europe then it should have been Spain and Portugal – not England, France and the Dutch – that should have ushered in the Scientific and Industrial Revolutions, since they were the first in the colonization game, and therefore should have been the first to reap its rewards, and yet that was not the case. Even during the 16th century when Spain and Portugal were still in their prime, neither of these powers contributed as many major scientific or technological developments as the French, the Dutch, and the British.
At best, Spanish conquest of the New World facilitated the Price Revolution and the rise of Mercantilism. Furthermore, I would argue that the effects of colonial ventures were primarily funneled into the formation of European Nation-States, as opposed to technological development per se.
Finally, it's worth mentioning that the start of the Scientific Revolution (1540s), which could arguably be described as the main cause of the Great Divergence, preceded the earliest British colonies (1580s) and Dutch colonies (1600s), and took place shortly after the founding of the first French American colonies (1530s). So, if the Great Divergence, which was largely technological and economic in nature, had indeed been the result of colonization, then the Scientific Revolution should have taken place many years after those nations involved in it had exploited the wealth of the New World. But the dates simply do not add up.
So, if the colonization was not the primary cause of the Great Divergence, then what was it? Why did Europe, and not other civilizations, create the modern world despite being not as large or as populous as other civilizations?
I would argue that it’s because European societies throughout most of history possessed large amounts of social capital, which could be defined either as a society’s ability to absorb investment, or as the ability to construct commons. The fact that many European communities are described as "high-trust" offers some proof to this thesis, but I am not entirely sure. I don’t think any single factor or answer would suffice (and yes, this includes race and IQ). I am neither an historian nor an economist, but whatever the reason may be, based on the evidence, it’s reasonable to state that Europe did not create the modern world because of colonization. That process began much sooner.
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