More on the Stagnation of 15th Century China
In How the West Grew Rich, Nathan Rosenberg and L.E. Birdzell write:
In technology, the Chinese had a tendency to reach and hold plateaus. Once a good way of doing something was discovered and established, it seemed to harden into a custom immune to change. It is not correct to think of Chinese technology as limited to inventions designed to give pleasure or to satisfy the curiosity of the imperial court. Chinese junks, waterwheels, and the compass were practical tools widely applied. And in both China and the West, there were always those whose economic interests were adversely affected by technological innovation, and who from time to time bitterly resisted its intrusions. In China, however, they had the implicit support of a mandarinate satisfied with the status quo, unwilling for technological change to disturb anyone and with nothing to gain itself from troublesome innovations. Despite this conservatism, Chinese technology and the Chinese economy reached a level more advanced than the West of, say, the fifteenth century. But a policy of making only such changes as do not appreciably disturb anyone is a formula for glacially slow advance, both in technology and economic growth.
In the West, the inividual centers of competing political power had a great deal to gain from introducing technological changes that promised commercial and industrial advantage and, hence, greater government revenues, and much to lose from allowing others to introduce them first. Once it was clear that one or another of these competing centers would always let the genie out of the bottle, the possibility of aligning political power with the economic status quo and against technological change more or less disappeared from the Western mind.
This competitive threat acts as an incentive to encourage more creative risk-taking. It operates at the level of the firm as well. Today’s market leaders would rather exploit the known certainties of current products than to spend extravagant sums exploring wholly new product spaces for the next disruptive technology. But the mere threat of other firms creating that disruptive product forces them to. An innovative economy requires an invisible kick to the ass: firms have to be forced to innovate by the threat of new competing firms entering the market. The same principle holds for nations as well.