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Political Competition, Innovation and Growth in the History of Asian Civilizations

Edited by Peter Bernholz and Roland Vaubel

Do political decentralisation and inter state competition favour innovation and growth? There has long been a lively debate surrounding this question, going back to David Hume and Immanuel Kant. This book is a new attempt to test its veracity. The existing literature tends to assume that the beneficial effects of inter state competition have been confined to European history. By contrast, China, India and the Islamic Middle East are regarded as inherently imperial and overcentralised. However, these civilisations have not always been unified politically. In their history, there have been long spells of decentralised rule or inter state competition. The same is true for Japan. If the Hume–Kant hypothesis is correct, it should also apply to those periods. This volume analyses the qualitative and quantitative evidence.
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Chapter 6: India

Deepak Lal, Dietmar Rothermund and Erich Weede


Deepak Lal A major materialist hypothesis that political and military competition among states and decentralization promotes institutions which lead to economic freedom, innovation and development is belied by the case of India. I had used this counter-example to argue in my recent book Unintended Consequences (1998) that purely materialist explanations were insufficient to explain the differing economic outcomes in Eurasia over the last millennium. In this chapter I first set out the similarities between India and ‘Europe’ in terms of being areas of Eurasia with cultural unity but political disunity. I then outline the reasons, based on my earlier book The Hindu Equilibrium (1988), why these similar initial conditions did not lead to the same institutional developments in India as in ‘Europe’. In the final section I argue that, to understand the divergence in institutional developments, one has to bring in the role of what I have labelled ‘cosmological beliefs’, and show that even in this respect there were initially greater similarities between the cosmological beliefs of these two Eurasian civilizations, and that they only diverged because of two great Papal revolutions in the sixth to eleventh centuries initiated by the two Popes Gregory (the Great and the VII). In this context it is worth noting that, the reason I have written ‘Europe’ is because as Michael Mann (1986) has rightly noted: ‘Why is Europe to be regarded as a continent in the first place? This is not an ecological but social fact. It has not been a continent hitherto...

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