Chapter 12 follows on from chapter 11, focussing on the ‘second great divergence’ in iron/steel production. The first comparison focuses on the key differences between Britain and China, the first of which, following Pomeranz, is that Britain had access to cheap coal and invented the steam engine that enabled the mass production of iron and steel. Second, Britain benefited significantly from the economic exploitation of its Atlantic colonies whereas China’s land-based empire yielded no economic benefits. Third, although both Britain and China were embedded in multi-state systems, nevertheless the East/Southeast Asian was largely cooperative thereby keeping China’s military spending to super-low levels. The competitive European state system, by contrast, led to frequent and highly expensive wars between imperial great power rivals. Britain’s super-high military spending, paradoxically, had major economic benefits for industrialization. Finally, the nature of Chinese warfare did not require the industrialization of her iron/steel sectors whereas Britain’s did. The second half compares Mysore in India (South Asia) with Britain, arguing that the former spent much lower amounts on warfare, that Mysore was unable to use coal, that Mysorean state intervention undermined the prospects for industrialization and that, overall, unlike Britain’s, Mysore’s developmental architecture was primed for historical capitalism.