Abstract

Three hundred years ago per capita incomes in China and Japan were about equal and fairly close to the global mean. At the end of the twentieth century Japanese per capita incomes are about as high as Western incomes and about seven times as high as Chinese incomes. How could this happen? Manchu China and Tokugawa Japan did not establish equally safe property rights for merchants and producers as the West did. But political fragmentation and feudalism within Japan provided something like checks and balances against arbitrary government which China lacked. Moreover, a similar lack of respect for merchants in both countries had more favourable consequences for early commercialisation in Japan than in China