Nick Szabo explores transportation, divergence, and the Industrial Revolution:
After about 1000 AD northwestern Europe started a gradual switch from using oxen to using horses for farm traction and transportation. This trend culminated in an eighteenth-century explosion in roads carrying horse-drawn carriages and wagons, as well as in canals, and works greatly extending the navigability of rivers, both carrying horse-drawn barges. This reflected a great rise in the use of cultivated fodder, a hallmark of the novel agricultural system that was evolving in northwestern Europe from the start of the second millennium: stationary pastoralism. During the same period, and especially in the seventeenth through nineteenth centuries, most of civilized East Asia, and in particular Chinese civilization along its coast, navigable rivers, and canals, faced increasing Malthusian pressures and evolved in the opposite direction: from oxen towards far more costly and limited human porters. Through the early middle ages China had been far ahead, in terms of division of labor and technology, of the roving bandits of northern Europe, but after the latter region’s transition to stationary pastoralism that gap closed and Europe surged ahead, a growth divergence that culminated in the industrial revolution. In the eighteenth century Europe, and thus in the early industrial revolution, muscle power was the engine of land transportation, and hay was its gasoline.
Metcalfe’s Law states that a value of a network is proportional to the square of the number of its nodes. In an area where good soils, mines, and forests are randomly distributed, the number of nodes valuable to an industrial economy is proportional to the area encompassed. The number of such nodes that can be economically accessed is an inverse square of the cost per mile of transportation. Combine this with Metcalfe’s Law and we reach a dramatic but solid mathematical conclusion: the potential value of a land transportation network is the inverse fourth power of the cost of that transportation. A reduction in transportation costs in a trade network by a factor of two increases the potential value of that network by a factor of sixteen. While a power of exactly 4.0 will usually be too high, due to redundancies, this does show how the cost of transportation can have a radical nonlinear impact on the value of the trade networks it enables. This formalizes Adam Smith’s observations: the division of labor (and thus value of an economy) increases with the extent of the market, and the extent of the market is heavily influenced by transportation costs (as he extensively discussed in his Wealth of Nations).
This is probably why Russia, with all its resources, is perennially impoverished.
Reminds me of my college course Western Civilization circa 1959-60. The professor let this Pearl out at some point and I have never forgotten his words on why the West broke out to dominate the world:
During the so called Dark ages there were three developments embraced by the Western Europeans:
1) Horse Collar,
2) Crop Rotation, and
3) Cost Accounting.
All followed from those developments.
I could elaborate, but he was quite convincing.
Europe already had a lot of bulk trade on rivers — not as much as China’s, no Grand Canal, but lots. From 1000 they were eating the fish out of the Baltic and heading farther and farther across the North Atlantic. Bulk trade that could handle the North Atlantic was capable of travelling around the world — there’s a comment in John McPhee’s Looking for a Ship.
According to Dorothy Dunnett’s sources, the Saracens managed a big slave raid on Iceland in the early 1300s, so North Africa wasn’t all that far behind.