Pyramids vs. capitalism

Why China Did Not Industrialise First?
from Adam Smith's Lost Legacy by Gavin Kennedy

Interestingly, the turn away from a modern growth trajectory by China in the 14-15th century almost coincides with the re-appearnce of the commercial base activity that in three hundred years led to the beginning of the long epriod of increasing returns to scale, know as the IR today.

By the time, late last century, that China recovered from its distraous experiemnt with government ownership under communism, the 'barbarian' west had leapt forward to the highest living standards the world has ever know. Millennia of steady per capita subsistence gave way from the end of the 18th century to steadily growing per capita incomes of the mass of the people. The poor today in the developed countries enjoy an affluence (opulence Smith called it) greater than the rich elites of the previous eras, and the rich elites today are fabulously wealth on top.

All history before this transformation is the history of the rich and powerful elites in local societies gradually enjoying rising per capita incomes while the mass of the labouring and war fighting poor remained poor and on subsistence. But the crucial thing is what the rich elites of these previous societies spent the surpluses upon.

If they used them for productive purposes, allowing commercial societies to grow, slowly and gradually, and accumulated surpluses for further investment, they prepared the ground for what became known as the industrial revolution, or, more accurately for what is now known as capitalism.

If they used them for their glorification (pyramids), for wars, for waste and prodigality, they eventually declined, and Western Europe is covered by their ruins, called 'civilisations'. That knowledge accumulated, along with ignorance, is itself a precondition of science; that science allied to technology persisted is an explanation of why in Europe, but less so elsewhere once China stagnated, allied to commerce eventually flowered in the 18th century in North-west Europe and not China.