Global economic history
S. L. RAO
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Analysis of the growth and performance of various economies over centuries
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THE WORLD ECONOMY, Vol.1 — A Millennial Perspective; Vol.2 — Historical Statistics: Angus Maddison; Academic Foundation, 4772-73/23 Bharat Ram Road (23 Ansari Road), Daryaganj, New Delhi-110002. Rs. 1295.
Economics is based on facts, laboriously observed, collected and analysed, using the best statistical tools and techniques. It is only in recent years that more economists have begun to relate these facts to sociological and anthropological factors and to place them in the context of history.
I remember that the best explanations for the famous Kerala Model of development that included women's empowerment, village level participation in delivery of government services, universal education and good health services, came from a distinguished Australian historian, Robin Jeffrey in two insightful books, not from economists.
Angus Maddison is a distinguished economic historian who in this book presents the findings of what must be a lifetime of research. It is no less than a history of the world economy, with large amounts of information including valuable new nuggets, and many attempts at finding causalities.
Progress and decline
Any review can only pick bits and pieces for comment from this vast compendium. Over the book he elaborates his proposition in detail, that "advances in population and income over the past millennium have been sustained by three interactive processes." These processes were conquest and settlement, international trade and capital movements, and technological and institutional innovation.
As one example he cites "the Chinese settlement of the relatively empty and swampy lands south of the Yangtse" with new rice strains from Vietnam, between the 8th and 13th centuries that resulted in a demographic and economic transformation. The European encounter with the Americas is another example of conquest that brought about a transformation in not only the population composition but in agriculture, industry, transportation, environment and ecology.
In the year 1000 A.D. GDP in 1990 billion international dollars was 10.2 in Western Europe and 6961 in 1998; Asia (excluding Japan) was 13.7 and 9953 respectively; and Africa was 13.7 and 1039. Over 1000 years the order became very unequal.
He identifies many factors to explain this relative progress in Europe and decline in Asia and Africa. One was declining populations then replaced by immigrants with different skills and lifestyles. In the American continents the inadvertent introduction of European diseases and traffic in slaves decimated the indigenous populations. In Australia indigenous populations were reduced by disease and deliberate extermination of local people, replaced by European immigrants.
In Asia wars to establish or maintain colonies and trading privileges enabled conquest and transformation of the economies. There was a drain of Indian resources to the United Kingdom. Maddison estimates this drain as being, between 1868 and 1930, at about 0.9 to 1.3 per cent of India's national income. In addition was 5 per cent of national income representing consumption by British personnel in India which otherwise might have been used for Indian development.
Impact of British rule
Maddison considers the impact of British rule on Indian industry. Between 1757 and 1857 the British wiped out the Moghul court and 3/4th of the aristocracy. "As a result of these political and social changes, about three quarters of the domestic demand for luxury handicrafts was destroyed. This was a shattering blow to manufacturers of fine muslins, jewellery, luxury clothing and footwear, decorative swords and weapons." Obviously this meant not merely the loss of markets but also of employment and the consequent impoverishment of many millions. Subsequent massive imports of cheap textiles from England after the Napoleonic wars greatly reduced home spinning. Tariff protection to Indian cotton textiles came only after Japan started exporting cheap textiles in the 1920s. Thus, in 1896, Indian mills supplied 8 per cent of Indian cloth consumption, 20 per cent in 1913, and 76 per cent in 1945.
Indian industrial efficiency was hampered by the British neglect of technical education and the reluctance of British managing agencies to provide training or managerial experience to Indians. This hurt productivity and cost competitiveness of the Indian industry.
Productive upsurge
Maddison also points to the new productive upsurge in the Americas because of new crops, new edible animals, new transportation animals and wheeled carriages. Similarly in India the British rule created a unified national market. They changed the Moghul taxation system of land revenue at about 15 per cent of national income to one in which by 1947 land tax was only one per cent while the total tax burden was 6 per cent. While the main gains of tax changes went to upper castes, zamindars and moneylenders, the wasteful warlord aristocracy of the Moghuls was eliminated.
This is a book that economists, businessmen and others who want to understand why the world is as it is, must keep as a handy reference. It is rich in facts, puts history into measured numbers, and attempts at the same time to find causal relationships for the facts. The low price of such a rich compendium makes it irresistible.
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