Two kinds of centralization: Divergences between China and Europe

Abstract

This paper develops a dynamic model of culture–politics–technology coevolution to explain the historical divergences between China and Europe. In China, rice cultivation and the monsoon climate generated high returns to large-scale infrastructure, encouraging collectivism and sustaining a steady trajectory of growing state centralization, which we call “cultural centralization”. In contrast, Europe’s wheat-based agriculture and oceanic or Mediterranean climate produced lower returns to infrastructure, preserving individualism and political fragmentation. Yet individualism also stimulated innovation and productivity growth, creating a non-monotonic path of centralization: an initial phase of decentralization followed by renewed centralization driven by technological advances, a process of “technological centralization”. Overall, our analysis shows how environmental conditions, cultural norms, and infrastructure productivity together shaped the contrasting long-run paths of political centralization and technological progress in China and Europe.