Thoughts on economics and liberty

For 12 out of the past 20 centuries, India was the world’s RICHEST “country”

[Note: I wrote a longish post but with an accidental stroke, without saving it on WordPress, lost it! I'm not going to re-type it. (It is horribly frustrating, for a person with RSI and eye strain, like me, to lose my typed work!)]

Basically, all I want to note that in 12 out of the past 20 centuries, India was the RICHEST region in the world (there were no "countries" then). In the remaining 8 centuries, it was the world's 2nd richest region. Only in the 19th and 20th centuries – and now – has India not been in the top two nations in the world. 

See details here.

See

a) Economic history of India

b) List of regions by past GDP (PPP)

Source: Angus Maddison's pathbreaking 2007 book.
 
 
I note that these estimates might not be 100% robust but in my view, at the level of aggregation we are talking about here, they are VERY CLOSE to the truth.
 
Further proof re: India's per capita income by 1750: "people in India had average incomes only 10 percent above those in England before the Industrial Revolution" [Source: Gregory Clark, A Farewell to Alms: a brief economic history of the world, p.44.]
 
"there is little sign of any great difference in the implied technological sophistication of Europe and either the Indian subcontinent or
East Asia on the eve of the Industrial Revolution." [Source: Gregory Clark, A Farewell to Alms: a brief economic history of the world, p.140.]
 
"in terms of the major production activity of these societies, agriculture, if there was any technological advantage in 1800 it likely lay with
the coastal regions of East Asia" [Source: Gregory Clark, A Farewell to Alms: a brief economic history of the world, p.142.] [Sanjeev: I'd argue that India was pretty much there, as well]
 
"When Marco Polo visited China in the 1290s he found that the Chinese were far ahead of the Europeans in technical prowess."[Source: Gregory Clark, A Farewell to Alms: a brief economic history of the world, p.143.]
 
By 1800, though, "In terms of wages, stature, diet, and occupations Japan, China, and India seem much poorer in 1800 and earlier than Europe." [Source: Gregory Clark, A Farewell to Alms: a brief economic history of the world, p.69.]
 
"We are today familiar with Europe’s recent history of world domination, but the Europeans’ rise was not inevitable, and to contemporaries it would have seemed an absurd proposition. As late as 1776 in his Wealth of Nations Adam Smith could write that: ‘China is a much richer country than any part of Europe . . . The retinue of a grandee in China or Indostan accordingly is, by all accounts, much more numerous and splendid than that of the richest subjects in Europe.’ The economic historian Paul Bairoch has confirmed that, in Adam Smith’s day, China still indeed accounted for 33 per cent of the world’s manufacturing output, and India 25 per cent, when Europe could account for only 23 per cent. GDP per capita, moreover, was higher in the great empires of the east than it was in Europe." (Terence Kealey, 2008. Sex, Science And Profits. Random House UK, p.26).
 

CONCLUSION

The rules of the game changed between 1400 and 1750. Just like big companies that do not change with the times, die, India almost entirely lost its capacity to innovate by around 1750. Others, earlier far behind, rushed ahead. Every Tom Dick and Harry, including Japan, South Korea, Hong Kong, Singapore, Taiwan went ahead.

India continued to lives in its dreamworld, as confused as Islamic cultures are about their precipitous downfallTragically, till today, most Indians REFUSE to recognise that the rules have changed long ago. The competition is no longer the same. It is 10 times tougher.

India can NEVER become  No.1 in the world again till Indians realise that they have to play with the new rules.

That means, among other things, discarding caste, stopping the constant religious babble that destroys peace and harms relationships, and the economy. That means building systems that are incentive-compatible.

That India should be doing AT LEAST TEN  TIMES better than today is obvious. But achieving that requires a significant change in policies and governance – which have to be radically different to what we have had over the past 60 years. 

Unfortunately, none of the existing political parties in India have the remotest clue how to get this to happen.

And so, once again, if you are serious about a very prosperous and successful India, read BFN; join FTI. There is NO other policy known to mankind that can help India achieve its potential; or rather, its natural right.

 

Why did India not accelerate?

India has lagged badly since about 1750, as the following graph shows:

[Source: Gregory Clark, A Farewell to Alms: a brief economic history of the world, p.321

"the acceleration of advances in productivity came from the supply side. People responded differently to incentives that had been in place for generations. That difference in response was a dynamic inherent in the institutionally stable private property regime of preindustrial England. The characteristics of the population were changing through Darwinian selection. England found itself in the vanguard because of its long, peaceful history stretching back to at least 1200 and probably long before. Middle-class culture spread throughout the society through biological mechanisms." [Source: Gregory Clark, A Farewell to Alms: a brief economic history of the world, p.259.]

 
"Japan, China, and India, lagged behind it in establishing bourgeois society through all ranks of the population." [Source: Gregory Clark, A Farewell to Alms: a brief economic history of the world, p.266.]
 
The Brilliant Indians

 

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18 thoughts on “For 12 out of the past 20 centuries, India was the world’s RICHEST “country”
  1. Harsh Vora

    Sad that you lost the original longish post. Would have loved to read your analysis in-depth.

     
  2. Harsh Vora

    Sad that you lost the original longish post. Would have loved to read your analysis in-depth.

     
  3. RC

    The region of India had high GDP as a percentage of total world GDP in past because the population of the region reflected the output in those times. Since industrial revolution, productivity of each individual went up by orders of magnitude, in the west, the sparsely populated place of the world. 
    With the advent of these new technologies the production did not directly depend on population size. India was absent in this important development.
    Thats why per capita GDP is a better representation of a countries economic health. India even today lags in technology adaptation which is going to hamstring it from leapfrogging to a much higher productivity, which ultimately leads to wealth creation.

     
  4. RC

    The region of India had high GDP as a percentage of total world GDP in past because the population of the region reflected the output in those times. Since industrial revolution, productivity of each individual went up by orders of magnitude, in the west, the sparsely populated place of the world. 
    With the advent of these new technologies the production did not directly depend on population size. India was absent in this important development.
    Thats why per capita GDP is a better representation of a countries economic health. India even today lags in technology adaptation which is going to hamstring it from leapfrogging to a much higher productivity, which ultimately leads to wealth creation.

     
  5. Sanjeev Sabhlok

    Thanks Raj

    That’s a valid point. Indeed, the rules of the game have changed. I’ll shortly put out a broad perspective on this issue which I call the obstacle theory of development. The real purpose of development (and government policy) should be to remove obstacles to reaching the technical frontier.

    Theoretically nothing stops India from recovering its erstwhile status. Practically, there are hundreds of issues.

    Regards
    Sanjeev

     
  6. Sanjeev Sabhlok

    Thanks Raj

    That’s a valid point. Indeed, the rules of the game have changed. I’ll shortly put out a broad perspective on this issue which I call the obstacle theory of development. The real purpose of development (and government policy) should be to remove obstacles to reaching the technical frontier.

    Theoretically nothing stops India from recovering its erstwhile status. Practically, there are hundreds of issues.

    Regards
    Sanjeev

     
  7. The Mindset

    India is run by politicians and businessmen who run it by their own rules.
    Until 1990 India was closed economy, only after government decide to open our economy opened for outside world.
    So nothing will happen because  the politicians are not doing anything.
    India will NEVER become a superpower or a developed state.

     
  8. Vikram Goyal

    I’ll comment on only a portion of your article.

    “India almost entirely lost its capacity to innovate by around 1750…..
    India continued to lives in its dreamworld, as confused as Islamic cultures are about their precipitous downfall.”

    You are right, It lost its edge by around 1750. Remember it was under a foreign rule for 8 centuries straight, who were numbskull plunderers & nothing more. The cradle of human civilization was now besieged by pirates.

    Yes it lives in a dreamworld that it is being ruled by a democracy because the Hindu population is very naive & cannot understand the farce, that this democrazy is. It is still being ruled by islamic families which are hell bent on destroying its culture & religion & in the process the economy is suffering.

     
  9. Sanjeev Sabhlok

    Vikram, I’d normally reject comments such as yours, outright, but I’m curious: which “Islamic” families are “ruling” India today? Have I missed something?

    s

     
  10. Bhanu Shukla

    I have gone through the whole article and its hyperlinks what i think we had and even have option at every moment to open our economy but due to the socialist mindset of our politicians we could not do well. Capitalism might have some flaws but the best thing is that it awards the hard work and thats the article and graph shows us south korea has done extreme hard work and produced policies for economic growth at the same time we were involved in making subsidy models and navratnas

     
  11. Navnit Narayanan

    I do have RSI. Just overcoming. Claiming India was richest in most centuries is the conventional over claims the Indians make traditionally. We are proud of 14 days and 18 days wars that took place 4000 years ago, 3000 years ago or 20 years ago. Whereas countries in the world had gone on century old wars and more..
    Stop feeling proud. We are underdogs… Only when we admit that we can grow further…

     
  12. Yara Chaarawy

    According to historic datas Mali was the richest country during 12th and 13th century. It was the main source to salt and gold. But certainly India was a rich country as well, it was the mainly route to the asian exporters trade their products with the west. Marco Polo isn’t a trustworthy data, it was a literary book reflecting the magical view of europeans about the east, not a documentary. If you add the narration of trades and explorers it will sound better =)

     
  13. Sanjeev Sabhlok

    This assertion is not based on Marco Polo’s account which is no evidence for anything. Economists like Angus Madison have studied thousands of corroborative documents/ data.