Essays in Economic and Business History (Feb 2023)
George Gunton’s Divergent View on the Origin of the Great Divergence: The Dynamics of Social Wants in England and India
Abstract
Most contemporary historians have proposed a multitude of supply-side factors that arguably propelled the Great Divergence between the West and the East. A late nineteenth-century economist, George Gunton, instead proposed a demand-centric theory to explain the root cause for the divergence between countries. Gunton claimed that effectual demand arises from social wants that become the precondition for capital investment and growth in real wages. While social wants in the West and East were almost on par until the thirteenth century, the advent of free towns and cities in Europe, and particularly, England, set into motion a transformation of social wants. Meanwhile, without a similar revolution, social wants remained static in the East, particularly India, so that standards of living and consequently real wages too did not increase. This stark observation and the possible reasons for its timelessness have so far received scant attention in the contemporary debate. This article seeks to both address this inadequacy and draw attention to Gunton’s overlooked contribution to the Great Divergence debate.
