[PEN-L:3893] Asia's Model of Development

["Ricardo Duchesne" <RDUCHESN@xxxxxxxx>]

I said earlier that, according to Frank, China's decision to continue
to rely on its old technology was "rational" given China's
cheap labor.  Cheap not because it was poor but because of its
agricultural efficiency and productivity which, by
providing cheap and plentiful foodstuffs, allowed wages to stay low.

"[N]o matter through what institutional mechanisms those
cheap subsistence wage goods were or were not distributed, they could
only have been made available by an agriculture that was more
productive and thereby able to produce those wage goods cheaper in
China that in Britain and Europe" (307).

I then went on to examine Elvin's "high level
equilibium trap" to conclude that China's post-1400 *extensive*
growth had reached a point beyond which it could not continue without
substantial technological changes. But we still have to answer the
question why China's extensive agricultural growth could provide such
cheap foodstuffs. The answer lies in Adam Smith, whose observations
about India equally apply to China as we will soon see in another
quote: "as the money price of food is much lower in India than in
Europe, the money price of labour is there lower...But in countries
of equal art and industry, the money price of the greater part of
manufactures will be in proportion to the money price of
labour....The money price of the greater part of manufactures,
therefore, will naturally be much lower in [India] than it is
any-where in Europe".

Asia was more competitive in the world market because of it cheaper
labour because of the lower price of food. But why was the food
cheaper? Smith continues: "In rice countries, which generally yield
two, sometimes three crops in the year, each of them more plentiful
than any common crop of corn, the abudance of food must be much
greater than in any corn country of equal extent...The precious
metals, therefore, would naturally exchange in India...for a much
greater quantity than in Europe. The money price...of food, the first
of all necessaries, [would be] a great deal lower in the one country
than the other."

Apparently Frank did not deem these passages fit for his argument in
a book which otherwis  makes multiple references to Smith's keen grasp
of Asia. Perhaps he thought these passages would take away something
from his argument  - that it was China's (and India's) superior
productivity in agriculture which accounted for its cheap wages.

However, I took these passages from Prasannan Parthasarathi's just
published article "Rethinking Wages and Competitiveness in the 18th
century: Britain and South India";  where it is argued, *in tandem with
Frank's thesis*,  that "agricultural productivity, not oppressed labourers,
was the secret to South Asia's pre-eminent position in the world
textile trade" (102). Parthasarathi (P), in other words, does not think
that India's greater productivity was a matter of chance - which I
don't either - due to the greater *natural* output-to-seed ratio of
rice over wheat. Well, he does say at one point that this "difference [in
productivity] was due in part to the intrinsic qualities of rice,
which crops more abudantly than wheat", but adds that "we must not
underestimate the importance of the sophisticated cultivation regime
in South India".

Sophisticated cultivation is one thing, *increasing* output per
capita (due to innovations) another, as we saw happenning in Britain.
But P also says that land in India was more productive, that output
per acre was higher - an issue which seems to me difficut to separate
from output per seed; I mean how do we compare output per acre for
wheat and rice in terms of land fertility or productivity independently of
output-to-seed ratio?

Anyways, P concludes, without equivocation, that "South Asian
textiles owed their competitiveness to the *superior* productivity of
Indian agriculture. In Europe, industrialization was a means to
overcome relative agricultural backwardness"  Forget the "intrinsic"
superiority of rice, or that India just had a "sophisticated cultivation
regime"; no, India was superior technologically (in contrast to
"backward" Europe).

Now it is clear that when P wrote this article he had not yet read
Re-Orient (we will see later that P's findings on Indian wages are
opposite to Frank's). And while P raises the inevitable question
why Europe industrialized first if it was not superior
economically to Asia, he does not go into Asia's decline, or into
Elvin's idea about China's high-level equilibrium trap. But I think
we can argue that Asia's superior output-to-seed ratio regime
was indeed facing a crisis in the 18th century, in the sense that
an upper limit had been reached as to how much produce could be
obtained from the land without further innovations. Can one argue
that Asia was facing a high level equilibrium trap eventhough it had
a superior output-to-seed than Europe's? (Remember Frank himself
has taken us down this road - except that he interprets the "trap" as
lack of incentive to invest existing  sources of capital due to the
presence of cheap labor and higher agricultural productivity). But I
am saying that this higher productivity was due to a higher
output-to-seed agriculture, and not innovations; and that by the 18th
century this agricultural regime could not grow any further, as it
had done so extensively in the previous centuries, without
technological change.