Tuesday, December 14, 2010

A Pattern Representing The Pattern of the Chinese Past

Economist's View via Daniel Little reviewed a new volume on visualizing economic data - Famous Figures and Diagrams in Economics  (Mark Blaug and Peter Lloyd) - and pulled out the following chart, presented by Mark Elvin "to represent his theory of a high-level equilibrium trap in agricultural development in The Pattern of the Chinese Past." The question - why was there no Industrial Revolution in China, given relative stability, prosperity, and advanced scientific methods? Elvin's answer, circa 1972 - there was enough cheap labor producing good enough yields, and there wasn't an impetus to pursue new technologies (and a bit of bad luck in the progress made generally not being disruptive technology.)

 Explanation below:
"This diagram represents several different kinds of historical change in one compact figure: gradual technical progress along a production curve, shift of production curves through technical innovation, and the maximum production possibility curve that lies above each of these. The axes represent "total output" and "rural population." The concave shape of each curve has a very specific economic and demographic meaning: as population grows within a given mix of techniques, output grows more slowly; so average output per capita approaches the subsistence line OS. The HLET is graphically and laconically indicated on the upper right quadrant of the graph; there is no further room for technical improvement, and population has increased to the point where there is no surplus to fund radical technological innovation. (Elvin's theory of the high-level equilibrium trap is discussed in my Microfoundations, Methods, and Causation; link.)"
 The theory has been well received by a number of economists, though many other explanations have been offered - I'm not that familiar with this but there's the "intellectual culture was hostile to rational scientific method" bucket (Joseph Needham), the more neoclassical "lack of domestic competition, property rights and all that free market love" bucket (which is closely tied to the "China was far away from everyone" bucket, Jared Diamond), the "silver drain and serial political instability" bucket, and a "Great Divergence AKA Europe got some colonies" bucket (Kenneth Pomeranz).

Hm. Hmmmmmmmmmm.

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