Culture and Social Organizations in the Great Reversal: Europe and China, 1000-2000

Why did the industrial revolution occur in Europe and not in China, despite China being well ahead of Europe in terms of economic and technological achievements several centuries earlier? We revisit this long-standing question from a new perspective. We emphasize the importance of the different social organizations that diffused in these two parts of the world in the centuries that preceded the industrial revolution: kin-based organizations in China, vs corporations in Europe. We explain their cultural origins, and discuss how these different organizations shaped the evolution of legal systems, political institutions and human capital accumulation in these two parts of the world. Our main argument is that European corporations played a crucial role in the scientific and technological innovations that ultimately led to the industrial revolution.