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First of all, I would argue that it is incorrect to say that Diamond is addressing objections to his theory at this point in the book. On p. 408 in the paperback edition of the book, Diamond says
Naturally, a host of issues raised by Yali’s question remain unresolved.
The issues that you cite in this question, such as the reasons why China lost its lead over Western Europe and the degree to which “great men” affect history are some of these unresolved questions. They are not objections to Diamond’s theory. Instead, they are directions in which Diamond’s theory might be extended in the future.
As for how convincing Diamond’s arguments are, he really does not have much of an argument with respect to the issue of “great men.” He says (on p. 420) that great men are “scarcely relevant” in terms of this book because they do not affect the broad scope of history.
Diamond’s argument about China is much more provocative. He suggests that China failed because its geography made it too stable and easy to unify. This is a very interesting idea, though it is ultimately unprovable because there are no natural experiments of history against which to compare China. I tend to doubt, however, that Diamond’s theory will be able to explain anything so short term as China’s fall from power in the last few hundred years. I think that Diamond’s theory is really only good for explaining the broadest trends in human history.
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