Introduction

Understanding the causes of economic development and underdevelopment has been a central concern of social science since its inception. A paradigm case is the contrast between Europe, which has had a growing economy since before the Industrial Revolution, and China and India, seemingly trapped in backwardness until recent decades.

What incomes should be compared? Gross Domestic Product (GDP) per head is the most common measure of living standards. While estimates are being pushed

back into the nineteenth century and even earlier, the difficulties are immense and reliability will always be a concern. Moreover, the early modern states of Europe and Asia were often non-egalitarian, so average income may be a poor guide to the standard of living of the majority of the population. To address both issues, this chapter explores the implications of real wages for the history of living standards.

Wages played two roles that must be distinguished. First, they represented the cost of labour to manufacturers. To compare wages, we need the market exchange rate to convert wages from one currency to another. However, in many cases, we lack those exchange rates. This is particularly true for the intercontinental comparisons that most interest us. There is a solution, however. Silver coins were the principal medium of exchange in most countries in the early modern period. Consequently, the exchange rates can be approximated by the relative amount of silver represented by their units of account. To make these comparisons, we convert English pence and Chinese tael, for instance, into the weight of silver they could buy. Expressed in grams of silver, Indian and Chinese wages were, indeed, much less than European wages, as noted by the commentators cited by Parthasarathi. English observers were well aware of this fact, as it explained the low price of the Indian cloth they shipped to Europe, Africa, and the Americas. Whether low silver wages imply a low standard of living is another matter, however.

Second, wages reveal the standard of living if they are compared to the price of consumer goods. This is the interpretation that matters in assessing the prosperity of Asia vis-a-vis Europe.

The European side of the comparison is reasonably well documented due to the long-standing tradition of writing price histories. These provide time series of prices and wages that extended as far back as the thirteenth century. For many important European cities, one can construct real wage indices back to 1500, and the levels of real wages can be compared across cities as well as over time. The deflators in these indices are based on important consumer goods like food, fuel, and cloth.

The history of prices and wages in Asia remains highly fragmentary since comprehensive price histories have not yet been written. Japan is something of an exception to this generalization, as to so many others, since there have been studies of prices in leading cities running back into the Tokugawa period. These series stop in the 1720s, however, so the seventeenth century, which is of great historical interest, remains a statistical Dark Age.

If they can be executed, real wage comparisons will throw much light on relative living standards in the seventeenth and eighteenth centuries. There is a second

issue they can address as well. The early modern period needs to be brought into rapport with the nineteenth and twentieth centuries. If the revisionists are right and Asia was as prosperous as Europe before the Industrial Revolution, how are we to understand the great difference in incomes in the twentieth century? Did China and India stand still as Europe advanced or was there immiseration in Asia as well? To answer this question, early modern Asian wages must be compared to wages in the same region in the twentieth century.

Definitive conclusions on both questions await the writing of comprehensive price histories for Asia. What can be done at present is to marshal the existing evidence to see what generalizations it suggests. I begin by reviewing the history of real wages in Europe, and then consider the published information for Japan, China, and India. The aim is, first, to compare real wages in Europe and Asia in the seventeenth and eighteenth centuries, and, second, to see whether low Asian living standards in the twentieth century represent a descent from earlier prosperity or whether Asia was simply marking time while Europe progressed.

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