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March 2014

Economic Revolution:

Song China & England

Ronald A. Edwards

Tamkang University Abstract: I claim that China during the Song Dynasty (960 1279 AD) (Song China hereafter) experienced the onset of an Economic Revolution, preceding Englands by nearly a millennium. The concept of Economic Revolution is defined to include two types one Premodern (non-science based) with a low growth rate of per capita product and one Modern (science-based) with a high growth rate of per capita product. It is argued that the Song China vs. England comparison is more relevant than other comparisons with England. Using both the Song China and England episodes, I introduce a new definition of the onset of an Economic Revolution that identifies preliminary social changes. I call this the Embryonic Stage and contend that it causes firm formation, household changes and an increase in the pace of technological innovation. I argue the Embryonic Stage more clearly identifies and dates the onset of an Economic Revolution. This has important implications for causal theories.

See page 2.

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* Contact info.: www.ronaldaedwards.com I would like to thank Atsushi Aoki (), Toshi Arimura ( ), Pin-tsun Chang (), Mingguang Chen (), Qiang Chen (), Yongqin Chen (), Ryokichi Chida (), Yi-nan Chin (), David Cook, Kent Deng, Jared Diamond, Matthias Doepke, Mark Elvin, Stanley Engerman, Roger E.A. Farmer, Yingjie Feng (), Gerhard Glomm, Peter J. Golas, Miriam Golden, Doug Gollin, Gary Hansen, Toshiya Hatano (), Chao He (), Hui He (), Berthold Herrendorf, Shigeki Hirata (), Masashi Hoshino (), Farn-guang Hwang (), Hide Ichimura (), Chris Isset, Tatsuro Iwaisako (), Xiuxian Jiang (), Eric L. Jones, Junichi Kanzaka (), Tsuyoshi Katayama (), Nanny Kim, Mio Kishimoto (), Nobu Kiyotaki (), David Kleykamp, Akira Konita (), Akinobu Kuroda (), Nap-yin Lau (), Bozhong Li (), Huarui Li (), Ken-yao Liang ( ), Ping Lin (), Guangfeng Liu (), Guanglin William Liu (), Lanxi Liu (), Igor Livshits, Weijing Lu (), Robert E. Lucas, Jr., Francis T. Lui (), Chicheng Ma (), Tomoya Matsumoto (), Brian E. McKnight, Andy McLennan, William H. McNeill, James A. Mirrlees, Chiaki Moriguchi (), Tomo Nakajima (), Chikayoshi Nomura (), Masao Ogaki (), Lee E. Ohanian, Koki Oikawa (), Tetsuji Okazaki (), Kelly Olds, Hiroshi Onishi (), Keijiro Otsuka (), Albert Park, Charles A. Peterson, Edward C. Prescott, Thomas G. Rawski, Matthew C.J. Rudolph, Yoshinobu Shiba (), Shengmin Sun (), Kojiro Taguchi (), Shuhei Takahashi (), Robert Tamura, Arilton Teixeira, Juro Teranishi (), Werner Troesken, Masayuki Ueno (), Yeh-Chien Wang (), Mingkong Wei (), Chenggang Xu (), Tomoaki Yamada (), Yang Yao (), Minoru Yasumoto () and Dongmei Zhao () for useful comments and discussions. I also thank seminar participants at Academia Sinica, Aoyama University, Central University of Finance and Economics, Chinese Academy of Social Sciences, Chinese University of Hong Kong, Hitotsubashi University, Hong Kong University of Science and Technology, Keio University, Kyoto University, Lingnan University, Meiji University, National Graduate Institute for Policy Studies (GRIPS), National Taiwan University, Osaka City University, Osaka University, Peking University, Renmin University of China, Shandong University, Toyo Bunko, Tsinghua University (Beijing), UCLA, University of Hong Kong, University of Tokyo, Waseda University and participants of the annual meetings of the American Historical Association, American Political Science Association, Hong Kong Economic Association, Socio-Economic History Society of Japan (Kanto branch), Tsinghua Workshop in Macroeconomics for Young Economists, Society for Economic Dynamics, and the World History Association and the Lessons from History Conference held at Lingnan University, Hong Kong for helpful comments on earlier versions of this paper.

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1. Introduction

Arguably, the most important question in all of the social sciences is: What caused the onset of Economic Revolution? Over the past several centuries human societies have undergone a transformation unimaginable to their predecessors. Almost every aspect of daily life has been influenced in some way. Scholars have struggled to understand and explain this major turning point in human history. No consensus has yet emerged and social scientists are not in agreement as to the important features of this social process.1 Without clear identification of its fundamental features, discovery of its cause seems unlikely. This study aims to tackle this part of the problem namely to more clearly identify some of the fundamental features of the onset of Economic Revolution with the purpose of identifying its cause. Englands Economic Revolution involved accelerated change in many aspects of society, transcending the artificial boundaries of narrowly defined economic dimensions. These include the role of religion in society, the culture of entertainment and womens rights to name a few. Yet the economic aspects seem fundamental to these changes, even if we do not fully understand their relationships to the non-economic aspects. In order to make this problem manageable, economic aspects will be emphasized. I will begin with the quantitative economic aspects.2 This starting point may seem overly restrictive to some but I would suggest withholding judgment at this point, since this analysis will take us deep into qualitative territory and explore aspects that border non-economic features.3

From a quantitative economic perspective, there is somewhat of a consensus that the distinctive features of economic growth are sustained increases in the growth rates of both per capita product and population.4 These features serve as the starting point of Simon Kuznets quantitative analysis of long-run economic growth. In a major study of 14 countries over the 1750 1950 period, Kuznets identified a set of quantitative regularities and used these features to define what he called modern

1 A detailed introduction to this vast literature is far beyond what can be presented here. For an excellent introductory review of the concept of the Industrial Revolution as well as of various views on the topic see Mokyr (1999), pp. 1 28. 2 This approach falls into one of the four schools of thought on the Industrial Revolution that Joel Mokyr calls the Macroeconomic School see Mokyr (1999), pp. 6 8. 3 For instance, the process of modernization, as studied by sociologists includes urbanization, which will play a central role in some qualitative analysis here see Kuznets (1973), p. 168. 4 This is true at least at the national aggregate level. Most notably, Simon Kuznets emphasizes these two quantitative features see Kuznets (1973), p. 1. The unification of the classical and modern theories of production comes to mind as a recent example of the importance of these quantitative features. See, for example, Hansen and Prescott (2002) and Lucas (2002), Ch. 5. Recently, quantitative growth economists have also begun to analyze the factors leading to the drop in fertility, which is a central component of this transition see for instance Doepke (2004) and Fernandez-Villaverde (2001).

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economic growth.5 Sustained increases in the growth rates of both per capita product and population played a prominent role in Kuznets definition of modern economic growth, but he went beyond them to include structural changes. In this study, the term Economic Revolution is related to Simon Kuznets definition of modern economic growth. I do not mean to imply that this definition is superior to all others; it is but one of many. Kuznets definition of modern economic growth is well established and contributed in no small part to his 1971 Nobel Prize.6 The goal of this study is to produce a new definition for the onset of Economic Revolution. By my definition, onset occurs in a country without contact with another country experiencing Economic Revolution. This is in contrast to the spread of Economic Revolution which does involve such contact. I argue that comparisons between onset cases are more relevant than onset vs. spread cases. One contribution of this research is to modify Kuznets definition to more clearly identify the early characteristics of the onset of Economic Revolution, which I call the Embryonic Stage. I suggest that judgments regarding the appropriateness of definitions focus on the resulting definition of the onset of Economic Revolution produced here rather than the initial reliance on Kuznets modern economic growth.

A brief comment here regarding my use of the term Economic Revolution as opposed to the traditional term Industrial Revolution will be helpful.7 I shall discuss the terms Economic and Revolution in turn. When one considers the case of China during the Song Dynasty (960 1279) (Song China hereafter) it becomes apparent that the role of heavy industry, unlike the case of England (1750 1850), did not play as important a role. This is not to say that the iron industry did not undergo unprecedented changes in Song China iron output per capita tripled in the 11th century, innovations in iron production took place and the Chinese made the switch to coal and even coke as fuel sources. Nonetheless, the influence of these developments, which were largely concentrated in northeast China, were naturally limited in a country with a population of 100 million people spread out over one million square miles. Closely associated with industry, in the case of England (1750 1850), were mechanized factories. Although some mechanized factory production appeared in Song China it did not take root as it did in England (1750 1850). The analysis in this study focuses on the comparison between England (1750 1850) an