Love affairs with Chinese and Japanese numbers

Harry Wu

28 July 2010

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On 24 April 2010, the economics profession lost one of the world’s most gifted scholars ever to quantitatively document economic performance over long periods of time and across major countries in every continent of the world.

Angus Maddison (1926 – 2010)

Much has been written about Angus Maddison’s life and work, including a recent article by Derek Blades, Bart van Ark and myself (forthcoming). Here, I would like to refresh some of our memories about Angus Maddison’s research activities with special emphasis on his work concerning Japanese and Chinese economic performance.

Angus’s passion for Japan and China was no accident. It was aroused by his interest in the role of institutions in the economic development of the two Asian giants. During the first half of his time in Groningen (from 1978 to the late 1980s), Angus continued his broadly-based research on growth and development. He published two major monographs in 1982 and 1991 and a seminal article on growth accounting in 1987 in the Journal of Economic Literature. These explained his understanding of the dynamics and sources of growth and development.

A quantitative challenge

In his own words, Maddison’s characterisation of development as a series of secular phases rather than long waves or cycles led to a more gradualist interpretation of the diffusion of technology and innovation, and a greater emphasis on “system shocks” (Maddison 2002). These shocks were in part historical accidents, but their impact was reinforced by changes in expectations and fashions in economic policy.

These views, based on strong quantitative support, challenged scholars who had advanced the notion of a more abrupt “industrial revolution” in the late 18th century, or traditional development economists who supported the Rostovian “take-off” perspective.

Angus was also an early advocate of the need to take economic institutions seriously when distinguishing between proximate sources of growth (directly measurable economic inputs, such as labour, physical and human capital and land) and ultimate sources (institutional, political, social, and cultural).

Angus believed that the complex interaction of these proximate and ultimate sources allowed a multi-polar development in Europe in the Middle Ages (van Ark 2010), a conviction that would later inspire his fascination with the historical development of the Chinese economy. I remember his last trip to China to celebrate the publication in Chinese of The World Economy: A Millennial Perspective. Together we visited Hangzhou, the capital of China’s Southern Song (1127–1279), then the richest country in the world according to his estimates. Filled with excitement at stepping on the land of Hangzhou, Angus soon realised that it was hard to find any trace of its past prosperity. He remarked that ill-advised policies or mistakes by the ruling elite could easily wipe out a country’s accumulated wealth for centuries. It was an observation that had motivated his career-long pursuit for the underlying explanations of economic growth.

Work on the preconditions of growth

In the early 1980s he criticised Paul Bairoch’s view that the industrialisation of the Western European countries took place at an average standard of living below that of contemporary less developed countries, which was very different from the arguments of David Landes and Simon Kuznets who believed that by that time Western Europe was already much richer than the rest of the world.

To Angus these remarkably different quantitative conclusions had significant analytical implications: “If Bairoch is right, then much of the backwardness of the third world presumably has to be explained by colonial exploitation, and much less of Europe’s advantage can be due to scientific precocity, centuries of slow accumulation, and organisational and financial prosperity" (Maddison, 1983).

Although he used the existing evidence at the time to show that Bairoch probably overstated the contemporary income gap and understated per capita income growth in the developing world, it motivated him to pursue the topic of international comparisons more intensively.

Following his later work on China, he returned to the topic of comparative performance between East and West at the time of the industrial revolution. This was at a time when other scholars, notably Kenneth Pomeranz, argued that China stayed at a much higher level of development until the end of the 18th century than Europe – a viewpoint which Maddison strongly criticised on the basis of his reconstruction of China’s macroeconomic accounts back to the year 960.

Time at the OECD Development Centre

From the early 1960s to the early 1970s, Maddison worked mainly on problems of economic development at the OECD Development Centre and as an economic advisor for the Twentieth Century Fund and the Harvard Advisory Service.

The major aim of his work in this field was to understand why the rest of the world is much poorer than Western countries and to distinguish different types of non-Western experience. He realised that “differences in the level of development in the non-Western countries are very wide and there is great heterogeneity in their institutional heritage.” In interpreting the reasons for “backwardness,” he began to explore the role of colonialism, indigenous social forces, institutions, property rights, religion, and ideology by studying in depth some major country cases.

At this point his research agenda began to focus on Japan as the first of the seven such countries of “the third world”. Although China was the last case of his series of country studies and his work on China was published almost thirty years later (1998) than his work on Japan (1969), it too was never far from the focus of his research life. To Angus, a comparison between post-Meiji Restoration Japan’s positive response to, and quick catch-up with, the West and China’s catastrophic experience during the same period was a striking example for understanding the role of institutions and government policy in economic development.

Angus made his first trip to Japan in 1961 when he met Kazushi Ohkawa and several other scholars at the Institute of Economic Research (IER) of Hitotsubashi University. This was the time when Ohkawa was starting to publish 13 volumes on Japanese quantitative economic history. Throughout the rest of his life, Angus continued to think highly of the quantitative research under the leadership of Ohkawa and the research environment at the IER. During that trip, Angus was also impressed by what he observed in Japanese society. Later, recounting his experience of his 1965 trip to Japan, he wrote: “I was struck by the strong discipline and an organisation that operated like clockwork…[and] when I visited the Sony radio factory, I found the foremen had PhDs and all the operatives had high school education" (Maddison 1994).

Angus’s contacts with a later generation of scholars at the IER began in the late 1980s when he was offered a visiting scholarship by the Japan Society for the Promotion of Science in 1989 and was hosted by Konosuke Odaka and Osamu Saito. As recalled by Odaka, Angus, from his first impression, was very much like Ohkawa in that he was very enthusiastic about any topic related to economic development and economic history, and could be easily engaged in an interesting and seemingly never-ending discussion. During his stay at the IER (about six weeks), Angus spent most of his time reading almost everything available in western languages on Japanese economic history as well as talking to the people at the IER, including young researchers. A later visit to the IER in 1998 proved hugely beneficial for his research on Japan’s development as part of his then new book, The World Economy: A Millennial Perspective, published in 2001.

The debate with Bairoch and his followers points to the importance of quantitative assessment of China’s long-run economic performance – a topic not only vital for China but also for positioning other economies in the world. In the debate Maddison compared Japan’s Tokugawa period with China rather than with Western Europe as other studies did. While Angus was like many researchers in that he tried to explain the divergences between countries, Angus paid more attention to understanding convergences of the past. China served as an valuable reference point in many of these, such as Europe’s rise from its nadir to overtake China, the Japanese catch-up with China in Tokugawa times, and the post-war resurgence of the so-called tigers.

Angus’s early work on China relied mainly on quantitative research by Dwight Perkins (1975), Ta-chung Liu and Kung-chia Yeh (1965), and studies commissioned by the US Congress Joint Economic Committee (1978), some of which appeared in his discussion of the debate between Bairoch and Landes-Kuznets.

In later research Angus substantially extended his investigation of Chinese economic history, exploring the literature on quantitative assessments of China. New research in collaboration with others eventually led to his book, Chinese Economic Performance in the Long Run (1998). During this time he began to collaborate increasingly with Chinese economists. Angus and I worked closely together on the reconstruction of China’s national accounts, on the development of an alternative industrial output index for China, and on the Chinese translation of his three books, including a revised and updated version of his China book in 2007.

Meanwhile Angus also conducted major data work on China in three areas: the reconstruction of China’s agricultural output accounts for 1975, 1987, and 1994 using output quantities, the estimation of China’s agricultural production PPP using the US as the benchmark for 1987, and the reconstruction of the output of China’s “non-material” services. Together with my results on manufacturing, mining and utilities, Angus eventually obtained a new set of sector-level GDP estimates for China.

After conducting such serious work on China’s economic history, he wrote: “My judgement on the contours and chronology of dynastic China’s development (i.e. the rise in per capita income in the Sung and its stagnation from the fourteenth to the mid nineteenth century) is not unlike that of Mark Elvin, R. M. Hartwell, Eric Jones and Justin Lin. However, they do not attempt macro-quantification, and their qualitative judgement probably implies a bigger leap in the Sung than I find. Some of them suggest that Sung China was trembling on the verge of an industrial revolution, which seems exaggerated. Some tend to overstate the degree of stagnation and the decline in “creativity" from 1300 to 1850. In this period, China managed (with some interruptions) to sustain per capita income levels, whilst increasing its population more than fourfold (compared with less than threefold in Europe). “Extensive” growth on this scale is not the same as stagnation.”

Angus’s passion for China continued until very late in his life. In 2007, while suffering ill health, he completely revised his China book Chinese Economic Performance in the Long Run, his last but most comprehensive country case study. Following its initial publishing in 1998, he continued working with me on at least three major revisions of my industrial index and discussing data issues for updating his estimates of the performance of other sectors. Angus maintained a good friendship with several Chinese scholars, including Angang Hu, Bozhong Li, Justin Lin, Debin Ma, Xin Meng, and Xiaolu Wang. At different stages of his research on China he also engaged in extensive discussions with Chinese economists such as Ruoen Ren, Xianchun Xu and Ximing Yue on the problems of measuring price changes, service output, and employment in China.

Angus was my mentor who played a central role in my scholarly pursuits. He was a co-researcher and a friend. I fondly recall the great moments with him at his home with his family in the French countryside, at conferences, or wherever else in the world we would meet. Angus was exceptionally gifted in combining work and pleasure, mixing debate with wine in a totally natural way. Angus Maddison’s legacy will remain and more and more will continue the work in his spirit.

 

See Blades et al. (forthcoming) for full references

Selected references

Blades, Derek, Bart van Ark, and Harry Wu (forthcoming), “In Memory of Angus Maddison (1926-2010)”, The Review of Income and Wealth

Maddison, Angus (1983), “A Comparison of Levels of GDP Per Capita in Developed and Developing Countries 1700-1980”, Journal of Economic History, 41(1):27-41.

Maddison, Angus (1987), “Growth and Slowdown in Advanced Capitalist Economies: Techniques of Quantitative Assessment”, Journal of Economic Literature, Vol. XXV:649-698.

Maddison, Angus (1994), “Confessions of a Chiffrephile”, Banca Nazionale del Lavoro Quarterly Review, 189:123-165

Maddison, Angus (1998), Chinese Economic Performance in the Long Run, OECD, Paris.

Maddison, Angus (2002), “Research Objectives and Results, 1952-2002,” mimeo

Maddison, Angus and Harry X Wu (2008), “Measuring China’s Economic Performance”, World Economics, 9(2):13-44.

Van Ark, Bart (2010) “Angus Maddison: Memories of the Life of a Chiffrephile”, Memorial article on Angus Maddison at the Groningen Growth and Development Center website.

 

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Topics:  Frontiers of economic research Institutions and economics

Tags:  China, Japan, data

Professor of Economics at the Institute of Economic Research at Hitotsubashi University

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