Why Europe and China Took Different Paths

The core idea is as simple as it is unsettling: Europe and China did not become different by chance, but because for a thousand years they learned to cooperate in opposite ways. On one side, a society built on guilds, autonomous cities, and perennially competing centers of power; on the other, a civilization organized around clans and a centralized state capable of guaranteeing order and continuity. This divergence in “social infrastructures” determined, in the long run, who innovated, who accumulated knowledge, and who developed inclusive institutions—and who instead privileged stability and control.

In Two Paths to Prosperity (the Italian edition is published by EGEA), Avner Greif, Joel Mokyr, and Guido Tabellini reconstruct a thousand years of compared history to show that the great divide between the West and China did not originate with the Industrial Revolution, but much earlier, when culture, social morality, and everyday forms of cooperation began to diverge. “Political institutions do not emerge in a vacuum: they reflect the way in which a society has learned to cooperate and settle conflicts,” explains Guido Tabellini. It is precisely in these deep differences that institutional evolutions—hard to correct in the short run—are rooted.

The book refers to the present day too. As Joel Mokyr observes, “Modern innovation is not the outcome of a stroke of genius, but of an environment that allows ideas to compete and to survive even when they annoy the powerful.” Hence the image of a Europe that is structurally open but fragile, and of a China capable of administrative efficiency and rapid growth, yet marked by political rigidities with deep historical roots.

This interview with Joel Mokyr and Guido Tabellini aims to clarify the implications of this idea and to reflect on what remains today of those two historical paths so far apart.

The book shows that Europe and China followed very different institutional and cultural trajectories for a thousand years. What was the historical puzzle you really wanted to address when you began writing it, and why was it important to do so now?

Guido Tabellini. The puzzle was to understand why two civilizations that were both sophisticated, rich in human capital, and endowed with a long tradition of statehood ended up producing such different political institutions and opposite long-term outcomes. We wanted to shift the focus away from too-simple explanations—such as geography or isolated historical shocks—and toward less obvious factors: the way societies organize cooperation and settle conflicts. This matters today because we live in a world where the confrontation between institutional models is back to center stage, and without a long-term historical perspective we risk misunderstanding the true roots of that confrontation.

Joel Mokyr. For me, the puzzle was why modern innovation—the cumulative, systematic kind that leads to the Industrial Revolution—emerged in Europe and not in China, which for centuries had been more technologically advanced. The book shows that this was not only about individual geniuses or random events, but about an institutional and cultural environment that makes the production and diffusion of knowledge possible. It is a timely question because today all countries try to “generate ” innovations yet often underestimate how deeply it depends on underlying social conditions.

You argue that divergence did not originate in politics per se, but in social structure: clans in China, guilds in Europe. Why did this basic difference generate two opposite state-building models?

Tabellini. Because political institutions do not emerge in a vacuum: they mirror forms of cooperation already present in society. In China, cooperation took place mainly within clans, based on kinship ties, hierarchy, and ascriptive moral obligations. This reduced the need for impersonal rules and political representation. In Europe, by contrast, cooperation occurred among unrelated individuals, within guilds organized around specific purposes. This created demand for formal rules, rights, shared procedures, and mechanisms to constrain power. The European state developed as an extension and generalization of these practices; the Chinese state was grafted onto social structures that already ensured order without political inclusion.

Many interpret European history as a sequence of wars that strengthened the state. In the book you argue that wars were not enough: a society capable of negotiation was also required. Where do we see today the legacy of that negotiating capacity, and where is it faltering?

Tabellini. Wars strengthened the state only where organized social actors existed with whom rulers could negotiate: autonomous cities, assemblies, intermediate bodies. In Europe, sovereigns had to grant rights and representation in exchange for tax. This legacy is visible in the rule of law, separation of powers, and systems of representation. Today, however, these mechanisms are under pressure: when generalized trust declines and intermediate institutions weaken, the ability to manage complex conflicts through compromise also declines.

If imperial China prospered for centuries with stable autocratic institutions, what makes you say that representative democracy is still a competitive advantage rather than a drag in a fast-moving world?

Tabellini. The book does not claim that there is a universally superior model. Imperial China worked well in a context where stability and control of a vast, relatively homogeneous agrarian society were the priority. But when innovation, economic complexity, and rapid adaptation become central, the limits of a closed system become apparent. Democracies are slow and conflict-prone, but they embed mechanisms of learning and error correction. Over the long run, this capacity for adaptation has been an advantage, not an obstacle.

You argue that the Industrial Revolution was possible because Europe produced and protected elites capable of innovation. If you had to identify the moment or mechanism when this “knowledge infrastructure” truly shifted gear, what would it be?

Mokyr. There is no single moment, but a cumulative process that accelerates between the seventeenth and eighteenth centuries. The key mechanism is the formation of a European knowledge community: universities, scientific academies, scholarly societies and informal networks that shared common norms, recognized merit, and allowed ideas to circulate across political borders. This infrastructure was not state-run—and that is precisely the point. Knowledge could survive even when it came into conflict with political power.

One of the sharpest contrasts in the book is between European intellectual competition and Chinese state control over education. Today China invests massively in research: can a hierarchical system generate radical innovation, or does this remain a structural limit?

Mokyr. Hierarchical systems can generate incremental innovation and mobilize resources on a large scale, but they struggle to produce radical, unforeseen innovation. Frontier innovation requires tolerance for error, dissent, and competition among ideas. Over the long run, state control over knowledge tends to favor what is useful to authorities in power, not what challenges them. This was a historical limit of imperial China and could re-emerge today as well.

You argue that Europe innovated because it was not afraid to challenge authority. Looking at today’s regulated science and political pressure on research, can we be sure that Europe still enjoys that freedom?

Mokyr. It is not guaranteed. Intellectual freedom is not an irreversible achievement. The book shows that innovation thrives only when there is genuine competition among ideas and when knowledge producers do not depend on a single center of power. If research becomes excessively regulated or politically steered, European societies too risk losing one of their fundamental historical advantages.

The book suggests that elite incentives mattered more than many structural variables. Who are today’s elites shaping the next cycle of global divergence?

Tabellini. Today the decisive elites are those who control access to knowledge, technology, and global markets. Institutions function when they manage to align the incentives of these elites with collective interest. When that alignment breaks down, even formally inclusive systems can produce stagnation.

Mokyr. I would add that cognitive elites matter most: scientists, engineers, innovative entrepreneurs. The issue is not only who they are, but whether they operate in an environment that rewards discovery rather than conformity.

Looking at your findings, what risk do you see as most pressing today: that Europe loses its ability to cooperate among strangers, or that China reproduces a growth model it can no longer sustain?

Tabellini. Europe’s main risk is that its political fragmentation—once a strength—now leaves it vulnerable to larger and more aggressive powers.

Mokyr. China’s risk is the opposite: extraordinary organizational capacity that struggles to renew its institutional foundations. In the long run, both risks are serious.