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Two Paths to Prosperity: Culture and Institutions in Europe and China, 1000–2000
How the social organization of Europe and China shaped their divergent economic and political trajectories over the past millennium
In the eleventh century, when Europe was still backward and poor, China was a rich and sophisticated civilization. Yet Europe became the birthplace of democracy and the Industrial Revolution, driving the Great Enrichment, while China stagnated until the end of the twentieth century and was always ruled by autocracies. Two Paths to Prosperity traces the emergence of two very different social organizations in premodern China and Europe—the clan and the corporation—showing how they were key factors in the economic and political divergence of these two great civilizations.
In this landmark book, three leading economists offer a bold new account of why Europe and China evolved along such different trajectories. In the early Middle Ages, public goods like risk sharing, religious worship, education, and conflict resolution were provided by nonstate organizations in both societies. China increasingly relied on kin-based cooperation within clans, while weaker kinship ties in Europe gave rise to corporations such as guilds, universities, and self-governing towns. Despite performing similar functions, clans and corporations were built on very different principles—with lasting consequences until today.
Providing a novel answer to a fundamental question in economic and political history, Two Paths to Prosperity shows how extended kinship in Chinese society facilitated the consolidation of autocracy and hindered innovation and economic development, and how corporations in Europe influenced emerging state institutions and set the stage for the Industrial Revolution.
In the eleventh century, when Europe was still backward and poor, China was a rich and sophisticated civilization. Yet Europe became the birthplace of democracy and the Industrial Revolution, driving the Great Enrichment, while China stagnated until the end of the twentieth century and was always ruled by autocracies. Two Paths to Prosperity traces the emergence of two very different social organizations in premodern China and Europe—the clan and the corporation—showing how they were key factors in the economic and political divergence of these two great civilizations.
In this landmark book, three leading economists offer a bold new account of why Europe and China evolved along such different trajectories. In the early Middle Ages, public goods like risk sharing, religious worship, education, and conflict resolution were provided by nonstate organizations in both societies. China increasingly relied on kin-based cooperation within clans, while weaker kinship ties in Europe gave rise to corporations such as guilds, universities, and self-governing towns. Despite performing similar functions, clans and corporations were built on very different principles—with lasting consequences until today.
Providing a novel answer to a fundamental question in economic and political history, Two Paths to Prosperity shows how extended kinship in Chinese society facilitated the consolidation of autocracy and hindered innovation and economic development, and how corporations in Europe influenced emerging state institutions and set the stage for the Industrial Revolution.
544 pages, Hardcover
First published November 4, 2025
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Displaying 1 - 7 of 7 reviews
November 25, 2025
Profound. Would recommend for anyone who is interested in comparative economics, and understanding the divergent economic paths of Europe vs China. Medium paced. Well sourced, taking into account multiple perspectives.
March 16, 2026
Very interesting book with a convincing argument as for the divergence of fortunes between Europe and China which is rooted in the pre-existing and self-reinforcing social organisations.
I learned a lot from this book. However, it was quite repetitive and I had some difficulty going through it. For instance, I was very interested in knowing about the role the church had in the creation of the firsts “corporations”. But this same topic is re-hashed with different additional information in at least 4/5 different chapters.
I learned a lot from this book. However, it was quite repetitive and I had some difficulty going through it. For instance, I was very interested in knowing about the role the church had in the creation of the firsts “corporations”. But this same topic is re-hashed with different additional information in at least 4/5 different chapters.
December 30, 2025
A compelling book about how different institutions evolved in China vs Europe.
Why do the Industrial Revolution happen in Europe? This is one of the many hooks trying to answer this question, and it is pretty good. May of the books (including others by Mokyr! I’m looking at you Culture of Growth) try to answer the question by only looking at Europe. These books fail because without a point comparison, the analysis is meaningless.
This book’s great strength is its comparative analysis. While undoubtably a big picture book, it focuses in on a few questions and answers the in detail for both China and Europe. Why did China and Europe develop different legal, governance, and social institutions between 1000-2000? And how do culture and institutions reinforce each other?
As a non specialist I’m not in a great position to evaluate the strength specific claims as to why Europe did great in the Industrial Revolution. It’s definitely plausible that communitarian values influence societal structure in a way that makes it harder to build inclusive politics and institutional competition needed to provide the groundwork for sustained innovation. We will never get a definitive answer as to why the Industrial Revolution happened in Europe, and even if we got one it’s not clear how valuable it would be. For one thing it would deprive half the historians of their jobs! But the grand theory in this book seems well worth considering (if you’re into that kind of thing) though with many grains of salt.
There are also many details of interest. For example:
- The administration of taxation was decentralized until the 1700s in Europe
- Social organization based on communitarian values means less need for institutions allowing impersonal trade. Eg no need for contract law, because contracts enforced by families.
- Lords were engaged in political process much more in Europe, by necessity because the state was fragmented. Europe had a tradition of councils that comes from Germanic councils and church synods
- Qing county courts were only active a few months ago year. Generally law in China had less reliance on courts of law
- less too was the reliance on a lawyerly class that has its devotion to the law as an abstract concept. Bailiffs held in higher esteem than their equivalent - the yamen (or runners) in China.
- European law is essentially a synthesis of Roman law, Catholic law, and German law.
Why do the Industrial Revolution happen in Europe? This is one of the many hooks trying to answer this question, and it is pretty good. May of the books (including others by Mokyr! I’m looking at you Culture of Growth) try to answer the question by only looking at Europe. These books fail because without a point comparison, the analysis is meaningless.
This book’s great strength is its comparative analysis. While undoubtably a big picture book, it focuses in on a few questions and answers the in detail for both China and Europe. Why did China and Europe develop different legal, governance, and social institutions between 1000-2000? And how do culture and institutions reinforce each other?
As a non specialist I’m not in a great position to evaluate the strength specific claims as to why Europe did great in the Industrial Revolution. It’s definitely plausible that communitarian values influence societal structure in a way that makes it harder to build inclusive politics and institutional competition needed to provide the groundwork for sustained innovation. We will never get a definitive answer as to why the Industrial Revolution happened in Europe, and even if we got one it’s not clear how valuable it would be. For one thing it would deprive half the historians of their jobs! But the grand theory in this book seems well worth considering (if you’re into that kind of thing) though with many grains of salt.
There are also many details of interest. For example:
- The administration of taxation was decentralized until the 1700s in Europe
- Social organization based on communitarian values means less need for institutions allowing impersonal trade. Eg no need for contract law, because contracts enforced by families.
- Lords were engaged in political process much more in Europe, by necessity because the state was fragmented. Europe had a tradition of councils that comes from Germanic councils and church synods
- Qing county courts were only active a few months ago year. Generally law in China had less reliance on courts of law
- less too was the reliance on a lawyerly class that has its devotion to the law as an abstract concept. Bailiffs held in higher esteem than their equivalent - the yamen (or runners) in China.
- European law is essentially a synthesis of Roman law, Catholic law, and German law.
January 1, 2026
Despite numerous books written by the Western scholars touching the origins of the Industrial Revolution, Joel Mokyr’s book is the 1st one digging into the diverse social structures between China and the Europe with the Northern Song Dynasty as the water threshold . I agree with Mokyr’s points to certain extent that an united empire, of which the supposedly haven mandated emperor needed not to share his power in exchange for the landed aristocracy’s support; the intellectuals could only get headway through civil examinations whose only focus was Confucianism, and innovation and diversity were not encouraged, if not restricted. The Northern Song Dynasty, despite being famed for its joint governing of the emperor and the intellectuals, Confucianism remained the mainstream. The reason for the emperors of Northern Song Dynast took more tolerant policies towards innovations could be the fact that did not virtually achieve the full unification of China, it co existed with two minority regimes for a hundred more years, talent mobility could be more fluid . China was ruled by Mongolia and Manchuria later on consequently, these two regimes concerned more their grips of power, security of their minority control became their top priority. This monolith governing ideology led to the closeup of China from outside world.
After China’s open up policy in late 1980, CCP realized the economic prosperity is to authenticate the long lasting CCP rule, and technological innovations became their top priority way to sustain economic prosperity under the not so friendly international environment . It is interesting to see Mokyr’s narrative on kin group being maintained and substituted by CCP cadre and high tech technocrats. It is up to the West to figure out how to deal with nowadays China metabolic from its empire past and become powerful
After China’s open up policy in late 1980, CCP realized the economic prosperity is to authenticate the long lasting CCP rule, and technological innovations became their top priority way to sustain economic prosperity under the not so friendly international environment . It is interesting to see Mokyr’s narrative on kin group being maintained and substituted by CCP cadre and high tech technocrats. It is up to the West to figure out how to deal with nowadays China metabolic from its empire past and become powerful
December 28, 2025
The thesis was certainly interesting, but it went into too much unnecessary detail that it lost the plot for me. The first 3 chapters would have sufficed, while the last chapter’s comparisons to India and the Middle East were underdeveloped and poorly synthesized in my opinion.
Want to Read
November 18, 2025Substack
January 14, 2026
The writing feels intentional and measured. Even when covering familiar territory, the author brings a fresh angle that made me pay attention.
Displaying 1 - 7 of 7 reviews