Vagas de Globalização XII

3.2 The Next Comers: US, Germany, Japan and the Rest

Which are the two diffusion channels of industrialization that Professor Sachs presents?

Were countries subdued to European imperialism able to industrialize rather quickly or did imperialism itself create a barrier for those countries to catch up?

We’re discussing the fifth wave of globalization, the industrial era, roughly from 1800 to our time right now, roughly two centuries. And my point of view is that this is the Anglo-American-led age. The Industrial Revolution begins in England, actually it begins in Scotland to be more precise, in Glasgow University, with James Watt’s improvement of Newcomen’s steam engine.

But it is an English and a British development, and of course, Britain becomes the primary power of the world because it becomes the first modern industrial economy. It becomes overwhelmingly urban, already in the 19th Century. It becomes a powerhouse militarily. Its navy dominates the world’s oceans. And because of the British navy, there is also trade throughout sea lanes of global supply chains reaching around the world.

We can use Angus Maddison’s estimates of output in different parts of the world to get a sense of how dominant the British Empire, and more generally, what I’ll call the Anglo-American world, became because industrialization started within Britain and spread to the British Empire, at least important parts of it, and also to other areas that were either part of the British Empire or closely associated with it.

So for our purposes, I’ll define the British Empire to mean Britain and its colonial possessions, Ireland, India, Egypt and others that were part of the British Empire. And in the broader Anglo-American world, I want to include the United States, Canada, Australia, New Zealand, areas that at some point were part of the British Empire, later on, independent countries, part of the Commonwealth, but what Angus Maddison calls the western offshoots, but what really could be called the British offshoots. If one uses Maddison’s estimates, the British Empire itself as of 1820 had as a share of the world economy around 5% of world output.

Of course, the empire itself was still very limited and Britain as a part of the world economy was still mostly in its pre-industrial era. By 1870, the British Empire is the world leader. By then, India has become part of the British Empire, after 1857. That’s about a quarter of the world’s population. And Britain itself has become the great industrial power.

By 1870 the British Empire is around one-fourth of the whole world output. And if one adds in the growing economies of the United States, Canada, Australia, and New Zealand, one adds about 10% more of world output. So the Anglo-American world as of 1870 is roughly a third of the total world output. Almost 35% of the total. This share will continue to rise.

The Anglo-American world, especially now powered by a surging North American economy and especially U.S. industrialization after the U.S. Civil War and in the final decades of the 19th Century, means that by 1913, there’s no doubt that the world is an Anglo-American world with about 40% of world output emanating either from the British Empire or from the British offshoots of North America and Oceania, especially the United States.-

As of 1913, Britain was undoubtedly the conductor of this whole Anglo-American orchestra, if you will. I say that because Britain itself was an industrial powerhouse, because the city of London, meaning the financial center, was also the indisputable financial center of the world, because insurance and banking, finance, flows of currency, the central role of the pound sterling were all indisputable.

And one could probably hardly imagine a world in which Britain was not the dominant power. Of course, France had its empire and Germany had a new empire. And the United States, a late-comer after closing the American frontier as it were, meaning pushing the indigenous populations aside and making a continental-scale economy looked out at the end of the 19th century and said, well where can we create an empire?

And quickly decided, we’ll take some of the Spanish colonies, Puerto Rico, Cuba, the Philippines and we’ll start our own empire, by golly. And so America began its imperial expansion, as well. Well as of 1913, this Anglo-American world was dominant, but huge changes were of course about to happen, because I pick 1913 as the eve of one of the great cataclysms of history, the onset of World War I, 1914.

And not just World War I and the utter shocking, industrial-scale destruction and loss of life of World War I, unprecedented in history, but all of the disasters that continued after that. Let us instead now return to the 19th Century to ask how does this unfolding of the industrial age look from a more global point of view?

Remember the basic idea, innovation and diffusion. Britain becomes an industrial power. Innovation begins as a British innovation and then it begins to diffuse. On the horizontal axis is the distance of the European countries from London. To calculate this I took the capital cities of other countries of Europe and just took the direct, shortest path from London to capital city.

What is shown on the vertical axis is the year in which that country first surpasses an income threshold of $2000 per person as measured in the system of Angus Maddison, which is a unit of international pricing in 1990 prices. What’s important for our purpose here is that the vertical axis measures basically the calendar year in which each country in Europe begins to take off economically.

All the countries are poor at the start of the industrial age. Britain as well. Then this great set of innovations occurs. Income per capita starts to rise in Britain as the first industrial economy. And as it rises, businesses Britain start looking out and saying, we should invest in our neighborhood, or, we should sell steam engines in France or in Belgium. We should help open up coal mines in other countries. And of course, entrepreneurs in those countries and government officials looking at Britain, say, we’re falling far behind, we need to promote industrialization in our own countries lest we become so weak militarily that we can no longer defend ourselves.

The innovation lifts Britain to unprecedented levels of output per capita and other countries relatively speaking, and so what ensues throughout Europe in the 19th century is a catching-up process. Countries begin to industrialize. They industrialize by attracting investment, by entrepreneurs saying, we’ll develop or take on the factory technology, we’ll buy Watt steam engines. We’ll buy the industrial machinery that is propelling Britain’s industrial revolution. We will innovate because France and Germany and other countries through their own university systems and their commercial enterprises become innovators, realizing that there are now new rounds of technological advance that are possible.

The closer you are to London, the faster is your industrialization. Industrialization proceeds like a spreading wave. Drop a pebble in a still lake and you get a circle, a wave that spreads with a  widening concentric circle. Drop an Industrial Revolution into England and what you get is a spreading wave of industrialization, the first industrializers are the countries closest to Britain. They are Belgium and France and The Netherlands. And then the wave spreads and the next round of countries Germany, for example, northern Italy begin to industrialize.

Then, a generation later, the wave spreads further and the Scandinavian countries begin to industrialize. Spain, which is a laggard, farther away begins to industrialize. Industrialization begins in central Europe, in what is today the Czech Republic and Slovakia. So this fascinating graph shows that proximity, geographical proximity, is a key feature of diffusion of innovation in general; that we’ve known for thousands of years.

And it proved to be a key feature of diffusion of industrialization as well. As that wave spread it spread preferentially to those places with coal, because coal was the energy source for the Industrial Revolution. So Germany, with it’s great coal deposits, became an early industrializer.

Of course, proximity was not the only issue of transformation, there were many other channels by which industrialization could proceed. And many other pathways by which industrialization was blocked.

For example, America, being so close to what was the mother land until very recently, England, sharing a common language, sharing an ancestry, family links, made it possible for many inventors in the United States in the early days of the Republic to take on the industrial innovations of England and begin a very early process of industrialization in the United States. Common language, common cultural, common heritage, shared family, made it possible to have that diffusion. ~

Another way that diffusion worked most rapidly is when the ecological setting of Britain could be found in different areas of the world. Britain is a temperate zone, mid-latitude geography. And it has its wheat farming and barley and other temperate zone crops. Its mixed animal husbandry with a large dairy and beef eating population. So in other places in the world with similar climate and ecology, it was possible to transfer British technological knowhow readily.

And one place that’s notable for that were the countries of Argentina and Uruguay, which though across the Atlantic and in South America, on the other side of the equator are temperate zone economies where it was possible to grow wool, possible to grow cattle, to create a meat industry, and now with the new ocean shipping, possible actually with later technological developments to create refrigerated ocean steamers and create a worldwide meat exporting industry based in the pampas of Argentina with industry financed from London, based in Buenos Aires to create a quite wealthy economy by the end of the 19th Century. One can study the diffusion of the Industrial Revolution worldwide.

And the summary conclusions are first, industrialization spread first in Europe and in the British offshoots: Canada, the United States, Australia, New Zealand.

Second, advances of income spread most easily where there was a possibility of sharing technology, whether in agriculture or in industry. And so temperate zone settings like Uruguay and Argentina, or New Zealand for massive wool production, were able to become part of the British-made worldwide industrial economy early on.

Most other countries had to wait a long time before they reached the ability to harness the Industrial Revolution. It took ideas, a fertile ground both in the physical, literal sense of adequate agricultural production, often requiring local coal deposits to create local industry because shipping coal until later in the 19th Century was too expensive. And a national leadership that was able and interested in implementing institutional changes to create the groundwork for an Industrial Revolution.

In Asia this happened in precisely one place, in the 19th Century and that is Japan. When Japan was threatened by the military might of the newly industrialized powers of Europe and the United States, when literally the U.S. sent naval vessels into the Tokyo Bay in 1853 to demand concessions from Japan, Japan experienced a rapid political change, really a revolution, where the revolutionary leader said, we will not lose sovereignty, rather we will industrialize.

And Japan invented a kind of catching-up industrialization in a revolutionary manner that goes under the banner of the Meiji Restoration. This is a term for the political change in 1868 which brought to power modernizers of Japan to end the feudal era, open up Japan to the world, but especially, to attract technology and to train Japanese engineers to run Japanese factories, to industrialize Japan. And this succeeded.

Japan became the industrial economy at the end of the 19th Century. So much so that Japan embarked on its own imperial adventures at that point, in winning wars with China and winning wars with Russia in 1905. Becoming the imperial power in what is today’s Taiwan and in Korea, Japan showed its industrial might.

Alas, it seems to go with the territory, get rich and then go out and conquer somebody. But this was the history of so many of the industrial powers in Europe, the United States, Japan during this period. Most of the rest of the world would not industrialize until the 20th Century. Some parts of the world, not even throughout the course of the 20th Century.

One main fact that I want to close with is when regions succumbed to European imperialism so that they were no longer sovereign, no longer masters of their own fate, this almost invariably blocked catching-up growth.

Because when Britain or France or Italy or Portugal or Germany or the United States or Japan became the colonial masters, then the countries that were in the subservient position were not in a position to invest in education, skill-building, or the promotion of industry to compete with the already industrialized powers. So imperial rule which became the rule of the 19th Century for much of the world was itself a fundamental barrier to catching up by the countries that fell under the machinery and the heavy weight of the European imperial powers.

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Vagas de Globalização XI

3: The Anglo-American World: 1800-2000

In the third week of the course, Professor Sachs talks about the fifth wave of globalization: the Industrial Revolution or the Anglo-American Revolution. We learn that global transformation during this period happened faster, deeper and more extensively than ever before.

Professor Sachs highlights the development of the steam engine in 1776 as the invention that sparked economic growth and supported population growth during the following 200 years and more. Professor Sachs lists the factors that contributed to Britain becoming the first industrial society. From Britain, industrialization spread to other parts of the world; in this week we look at the channels by which this occurred and at the pathways by which the industrialization process was blocked. Professor Sachs presents the process by which the European imperial period ended and how Britain went from being the greatest imperial power to being the United Kingdom again. World War I and World War II destabilized Europe and imperialism.

The US came to be the largest economy of the world after World War II and a US- led globalization followed. This period was characterized by the spread of decolonization, the diffusion of industrialization to more countries, the acceleration of global output growth. A period of convergence in which the information revolution transformed the whole world economy.

3.1 James Watt Changes the World

What are Kondratiev waves and how are they related to the term “endogenous economic growth”?

Why, according to what Professor Sachs explains, was the existence of patent rights in Britain key to Britain becoming the first industrial economy?

In this module, we’re going to talk about the fifth wave of globalization, the one that created the world we live in, the Industrial Age. This is a period of transformation. Faster, deeper, more extensive than ever before in history. Everything has changed about how we live. Two hundred years ago almost everybody lived in rural areas. Most people were farmers. Almost everybody was poor. Roughly speaking, we can take as our starting point the beginning of the 19th Century.

But I think accurately we might take another date as our real starting point. One could argue that 1776 is the appropriate date. Now if you’re an American, you’d say oh yes, the war of independence, Declaration of Independence and that’s not what I have in mind. If you’re an economist you say, I know what you mean, that’s The Wealth of Nations, the year that Adam Smith’s great book was published.

Well that, that is a good candidate, but that’s actually not what I have in mind. If you’re an historian you’d say, I know what you have in mind, that’s when Gibbon published The Decline and Fall of the Roman Empire.

That’s actually not what I have in mind either. If you are an engineer or an economic historian, you’ll know that this was the year that Boulton and Watt brought James Watt’s steam engine to the marketplace. Around 1776, James Watt developed his steam engine.

And I will argue that this was really the great invention of the Industrial Age, the one that set off 200 years plus now of rapid economic growth, unprecedented in human history and in many ways made the fifth wave of globalization what it is.

When Isaac Newton was asked how he could accomplish his brilliant mind-boggling insight into nature, he explained, if I see farther, it’s because I stand on the shoulder of giants. And one could say that Watt, who is a giant of technological innovation, also stood on the shoulder of others. And one in particular is Thomas Newcomen.

One could say, really invented the steam engine. Not the one, that really made possible the Industrial Revolution, but certainly the one that made possible James Watt’s steam engine less than a century later. Thomas Newcomen was an inventor and a proto-engineer before that term was used, who observed in the early years of the 18th Century, the problem of coal mining shafts filling with water. And so coal mines needing to be pumped of the water so that they could continue to be mined.

And he put his very creative mind to work to create an engine that could pump the water from coal mines. What were coal mines and coal useful for, for Britain? Coal essentially was used for heating at the time. It was burned in the cold climate in the winter months in England. And it was beginning to be used in metallurgy. But ironically, coal became the input for an engine, first to pump water out of coal mines, and then later for everything.

For transportation in locomotives, for industrial development and that’s what made possible the full Industrial Revolution. But I’m getting ahead of the story. Newcomen developed his engine. It was deployed in coal mines.

It wasn’t very efficient. It used a lot of energy. It was not used for other applications. And James Watt, at the university in Glasgow, put his mind to work thinking about how it might possible to make Newcomen’s steam engine more efficient.

Quite brilliantly, Watt made two great innovations to Newcomen’s engine. One was the nature of the translation of steam energy into motion. Watt introduced a rotary motion into a steam engine rather than an alternating beam that Newcomen had used. So a pump that went up and down. Watt introduced rotary, a motion which was fantastic for turning the machinery in factories.

But Watt did something even more important for the history of the world economy and that was he noticed a way to make Newcomen’s steam engine far more energy efficient. Technically, he took the cylinder in which the water was heated to make steam, which pushed the piston, which moved Newcomen’s pump, and he separated a condenser away from the cylinder, so he added what he called a condenser and technically speaking, rather than heating and cooling the cylinder that contained a piston that moves the machinery, he created a way to keep the cylinder hot whereas the condenser was then used to create the vacuum pressure which moved the piston.

And all of the long and the short of it is that Watt made a major advance in energy efficiency, and therefore in the economic returns and the ability commercially to deploy steam power. And around 1776, voila, you’re looking at the Watt steam engine that changed the course of history.

Why am I putting so much emphasis on one invention?

It is absolutely true that the Industrial Revolution, which gave rise to the Industrial Age has many, many pivotal inventions. During the same century between Newcomen and Watt were great developments in metallurgy and how to make steel.

Great advances in the machinery in the textile industry, in spinning yarn and in mechanical weaving, creating machinery for looms and many, many other advances. Until the steam engine could be used to mobilize coal for motion, where did our energy for industry and for transport come from?

For transport, if you were lucky, you rode on a horse or in a carriage pulled by animals. The steam engine broke free of the constraint of animal or human power for transport. It made possible locomotion. It made possible the steam locomotive. It made possible the ocean steamer. It made possible automobiles, even though they subsequently were edge out by the internal combustion engine which was to come about a century after Watt’s invention.

Watt made possible something else. All the clever machinery in the early factories, many of which were turned by waterwheels, or by windmills for grinding, mobilizing energy in the form of wind or falling water somehow now could be mobilized anywhere, even if there wasn’t a river nearby or there wasn’t sufficient wind power nearby by having a steam engine.

And that steam engine could run as long as there was a supply of coal available. Now we had an economical, efficient, round-the-clock source of vast, vast energy potential. And this is what made possible the Industrial Age.

The historians, such as the great British historian Wrigley, says that it’s breaking free of the organic economy to the mineral or fossil fuel-based economy which made industrialization possible. One can see it in the numbers. What we are looking at here is a graph that shows the estimates by macro-historian, Angus Maddison, of the output per person on average worldwide from the beginning of the common era, 1 A.D. up until today, and what you see in the graph is essentially output per person hardly changed century after century after century after century for the 1800 years depicted here.

And then the output per capita almost rises vertically when looked at at this scale. In other words, we start becoming rich. Humanity starts escaping from poverty. And what is the reason why the output per capita starts to soar?

That is the ability to mobilize vast energy to be used in industrial processes and for transportation, and then for an increasing number of purposes throughout the economy over the course of the succeeding two centuries.

Well, it’s not just the output per person that rose, but you have the same kind of inflection, where the world population which was very, very gradually increasing, suddenly soaring after the middle of the 18th Century, but especially in the 19th Century.

Why did population soar?

One overwhelming reason and that is that humanity in the aggregate could produce vastly more food. And the main reason for that is that there were not only advances in agricultural know-how, but there could be mechanization and there could be long-distance trade in agricultural inputs, as well as the shipment of food itself.

Suddenly, you could grow food in one place and feed populations in another because of ocean steamers or because of locomotion. So the rise of output per capita and the rise of global population are part and parcel of the Industrial Revolution.

Historians talk about long technology waves during this 200-year period. A great economic historian named Kondratieff gave the name to these waves of technological change every forty or fifty years.

They became known as Kondratiev waves. They’re depicted here as several different waves of technological change. Sometimes they’re dated as the first Industrial Revolution, the next Industrial Revolution and so forth.

In wave after wave of technological change that we now call endogenous economic growth, which expands the market which leads to inventors creating yet new technologies and you have a self-feeding, positive feedback process which has now lasted for 200 years.

Up until the Industrial Revolution, we had had a long period where technological change, though evident, came at the space of centuries, whereas now, breakthrough technology started coming year by year, feeding on each other and producing this remarkable breakthrough in economic growth. What made these inventions possible?

Britain certainly was not the only home of scientists. Italy has to have pride of place I would say with Leonardo and with Galileo as really prime movers of the scientific revolution. One would cite Poland and Copernicus as providing one of the greatest insights, the heliocentric universe in the early years of the 16th Century.

But Britain offered a combination of conditions that, one could say, combined with the wonderful accident of Watt’s genius, made possible this confluence that enabled the steam engine and Watt’s insights and the cascade of technologies really to make the first industrial society in England, Britain more generally, in the first years of the 19th Century.

So why? Well intellectual milieu is certainly part of it. It was in Britain that Francis Bacon, way back in the beginning of the 17th Century had the incredible piercing insight to say, we can harness natural forces for human betterment. The idea that natural law could be identified, turned into technology through experimentation, and then used for human improvement was itself an idea of progress that needed an invention.

And I think it’s notable that Francis Bacon is perhaps the clearest and first progenitor of that idea of science-based, evidence-based experimentalist based human progress. Isaac Newton by himself is a, not only an identifier of natural law, but a force of nature, because the breakthroughs that Isaac Newton perceived through a kind of genius that is once in many, many centuries, has to be regarded as part of the story.

What Newton showed, following Galileo, was that mathematics was the language of natural law and not only that, but he developed the language of the calculus and the Newtonian laws of physics to open up an explanation not only of the cosmos, but of dynamics on earth as well. Of course, it was the fact of universities and the relative openness of society that made it possible for there to be a University of Glasgow, to be developing scientific instruments in the Newtonian and Baconian tradition and to hire a great craftsman like James Watt, who had the instruments that he needed, the freedom of action, the intellectual environment to work on his great idea of putting that condenser and rotary motion into Newcomen’s steam engine and give him an environment in which that could be done.

But that wasn’t all. Watt wanted to develop his technology not as a concept but as a business. He lived in an environment where market institutions were developed and where a great invention of the market economy, the ownership of intellectual property in the form of a patent right existed so that he knew and his future business partner, Boulton knew, if we invest in your steam engine, we will get rich.

In other words, we will own the intellectual property so that another engineer can’t come along, take it apart, put it back together and say, I’m going to make the same thing. So does that explain the full story?

Not quite, because there had to be coal. It’s not that they could have taken anything from the countryside, coal was the brilliant breakthrough because coal is very concentrated energy. It is essentially carbon with some impurities. And carbon burns. It emits carbon dioxide into the atmosphere which will be part of our story a little bit later.

But when it oxidizes, it releases a vast amount of energy which is why the steam engine does what it does. And so the idea of burning coal for energy is a wonderful idea and Britain was burning coal for a long time, but it had to have coal to be in a position to exploit this vast reservoir of high quality free energy that was waiting to be developed once the insight into how it could be effectively utilized was at hand.

Not every country had coal. Not every country had coal near the surface that was mineable at an affordable price, but was close to population centers so that you could actually transport the coal through canals or over flat land, not in some high mountains with phenomenally high transport costs.

So Britain geographically was well placed. Britain had another advantage. All that history of the imperial competition from 1500 up to Newcomen and Watt had led Britain to become the great naval power of Europe, indeed of the world. With that great navy it was possible to have global supply chains.

It was possible to bring cotton from the Americas, cotton from Asia and to bring it reliably into the new steam powered factories of England. All of those factors played their role. The scientific revolution, the market economy, the intellectual property, the existence of excellent universities in which the experimental work could be done, the availability of low-cost coal, indeed the use of coal over many centuries and the Royal Navy which made it possible to envision a global supply chain, reliable enough to invest heavily in British based factories and to bring the primary commodities from around the world.

Took a lot of things to make this happen. It’s probably not surprising that the Industrial Revolution happened just once and it didn’t arise suddenly out of nothing, it was the process of long history and many different components of this integral whole finally coming together to produce a breakthrough, a breakthrough in world economy, a breakthrough out of poverty, a breakthrough into modern economic growth, the likes of which the world had never seen before.

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Vagas da Globalização X

2.5 The Beginning of Divergence of the West and Asia

  • In Professor Sachs’ analysis, which are the main dynamics that seek to explain why history turned decisively in favor of Europe?
  • What does Professor Sachs say about the role of the development of capitalist institutions in regards to divergence?

We’ve been discussing the fourth wave of globalization, the age of ocean-based navigation and the emergence of global scale capitalism with all its remarkable energy and its brutality.

It is the age when Europe takes the lead in the world. Why did this happen, fundamentally? This remains one of the most important topics of human history and one of the most debated and contentious topics.

For us to step back and try to understand how this evolved during this fourth wave of globalization, it’s good to put some numbers to the page, or at least to put some graphs to the page.

And what you’re looking at here is an estimate by the late and great macro-historian, Angus Maddison, of the share of the world’s population in five different places that I’ve identified, in Europe, in what will become the United States, China, India and Africa.

What one can see is that in the period starting with Columbus and da Gama, 1500, and coming up to 1820, just essentially at the end of the Napoleonic Wars, China and India dominate. They are the two huge populous countries, each with about a quarter of the world’s population.

And China’s population actually rising between 1700 and 1820 from around a quarter of the world’s population estimated by Maddison in 1700, to around a third of the world’s population, even a little bit higher than that as of 1820.

During this whole period Europe is about one-seventh of the population, something around 14% of the world’s population. The population living in what is today’s geographic boundaries of the United States, 1% of the world’s population. And Africa consistently around 10% of the world population and then declining after 1700, perhaps through the pressures of the slave trade and the pressures of increasing European colonization of coastal Africa.

If we look at estimates of the economy, which track to an important extent, these patterns of population, we see that Maddison estimates that as a share of world output, the situation for India and for China is roughly the same as their share of the world population.

For each, perhaps, 25% of total world output in the 16th Century, 17th Century, 18th Century, within those two behemoths. In other words, this was still an Asia-centered world economy, up to 1800. China and India were not only populous but they were relatively productive in per capita terms, perhaps not so different from the per capita income levels of Europe at the time.

AIt’s not till the 19th Century that Europe’s huge predominance of technological advantage, military advantage, industrial power really definitively shows itself. So what are the main issues that are posed by this period of history? When did the divergence between western ascendancy and at least relative, if not, absolute Asian decline take hold? Why is that Europe colonized Asia rather than Asia colonizing Europe?

Among the European powers, why is it that England, which has not played any decisive role in our story till now, turned out to be the decisive power of the 19th Century? How decisive was war for Europe’s advantage?

Was war the real key to understanding Europe’s ascendancy or was war a reflection of a deeper set of forces, such as technological dynamism?

We should go back to that hinge moment of history when China, the great technological power, decides unilaterally to put an end to its ocean-going exploration and demonstration of state power, the end of the great voyages of Admiral Zheng He in 1433.

That was a hinge of history. It was a decision not forced on China, so I wouldn’t say it was intrinsic to China’s physical geography. It wasn’t intrinsic to its resource base, it was not compelled by fiscal crisis, as far as we know, certainly not as a long-term decision. One could say that it was a decision of state craft. One could even call it one of the worst public policy decisions in human history, because it was almost voluntarily forfeiting China’s lead.

And by the next moment when China and the west directly confront each other, that would in the 19th Century, maybe you could date it to 1839, to the first opium war between Britain and China, in which Britain as the now dominant force is able decisively to defeat China.

So statecraft played a role. But looking more deeply beneath the question of China’s choice at that moment is an observation that many, many historians have made, famously E.L. Jones among them, which is that China by dint of creating a continental scale statecraft with relative peace in China prevailing over centuries, what we would regard as a fundamental triumph of statecraft compared to Europe which was at war and squabbling among the dukes and the princes and the kings and bloodshed for centuries, in the end created an environment in which Europe became the specialists of warfare.

And so Jones and many, many other historians emphasized the fact that China made the decision to close because it was a unitary state. Whereas such a decision was literally impossible in Europe, because no single political entity dominated Europe.

The countries competed with each other for know-how, for technology, for military advantage, for colonies, for economic advantage, as well. There are other dynamics that we should take into account. We know that many of the concepts, much of the mathematics, many of the astronomical capacities and observations came from the east to the west. But we also know that from the Renaissance forward, the notion of a scientific enterprise based on close observation, systematic knowledge and increasingly, where possible, experimentation led to a scientific revolution in the west.

And one can fairly say that da Vinci, Galileo and Isaac Newton epitomize that revolution. And that revolution played its role both directly and indirectly in the technological revolutions that would follow.

One could also argue, and many historians do, that the competition of different powers in Europe allowed for a more openness of ideas in general. If one state was repressive, another might invite the free thinkers, the scientists, the explorers into their domain as part of their competition with their neighbors. It’s argued by many economists that it was the development of capitalist institutions, the joint stock company, limited liability, insurance that funded and provided risk protection of ocean navigation that provided crucial advantage and ultimately was the source of divergence.

As I noted in an earlier chapter, the Song Dynasty was also a period of great institutional fluorescence in the economic and financial sphere. So one shouldn’t necessarily read too much uniqueness into the advances of capitalist institutions per se, though they definitely played a role in advancing economic power, which also provided a base for increased investments and in the divergence of military power, as well.

Geography no doubt played some role, as well. We’re jumping ahead of the story a little bit, but with the Industrial Revolution the presence of low cost, easily available coal was definitely a part of the success of certain parts of Europe in 19th Century industrialization. And the advantages of having those resources or being able to bring the resources from the Americas, which was just a short skip across the Atlantic Ocean, was definitely an advantage for Europe.

We should also remember the many great historians that have argued that the play of ideas fundamentally were part of the emergence of the dynamism of Europe. And one of the great theses in this regard is by the early 20th Century brilliant sociologist Max Weber, who said that it was actually the religious spirit of Protestant Christianity, specifically Calvinism that was one of the great spurs to money-making, profit-making and rationality of enterprise that enabled this astounding creation of global-scale industry.

And so the ideas of that kind of prudential, rational investment for wealth creation, claims Max Weber, with many critics as well saying, not quite so, but Weber’s thesis that it is the overall intellectual milieu that says that money-making is not only sound, but actually a proof of God’s favor no less that was one of the spurs to the remarkable energy that went to building the modern world economy.

So the divergence took place. Statecraft, resources, happenstance, the irony of interstate warfare leading to learning by doing in military prowess. As late as 1800, one wouldn’t have noted a remarkable, and much less noted, a decisive gap of income and power between Europe and Asia.

But in the 19th Century, that gap was massively on display and massively increased. Europe conquered large parts of Asia, proved its military prowess, proved its economic and technological advantage. And that’s the story that we’re going to turn to next.

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Vagas da Globalização IX

2.4 Imperial Competition

  • There had been wars before the fourth wave of globalization, but what was the major difference between those wars and the ones described in this chapter?
  • Which European countries, does Professor Sachs say, played major roles in the competition for empires and colonial territory?

Globalization created global capitalism. Globalization created conditions of impunity. Globalization created conditions of biological exchange, including the spread of pathogens with devastating effects.

And globalization created conditions of war, as well. One of the features of the new age of ocean-based globalization that began in the early years of the 1500s was the competition of European empires. China, remember, had pulled itself out of…out of the action, back in the 1430s when it had scraped its great naval fleets.

Europe, through its navigational advances and its military advances came to find the sea routes to the Americas and the sea routes to Asia and quickly began to try to conquer and dominate those regions, at least to establish trading centers and colonies, to establish plantations, to exploit natural resources, whether the mineral resources of the gold and silver mines of the Americas or the biological resources of the new crop varieties and the plantations that would be made possible with slave labor from Africa.

This was lucrative business. This was also a matter of power. This was an ability to grow foodstuffs, to collect timber, to raise living standards, it was thought, and to create a basis for added national glory. AIt was immediate, when the European powers began to compete with each other, right from the very start with Columbus’ discoveries, Portugal and Spain in rivalry asked the Pope to intervene to demarcate the lines of what should be Spanish colonies and what should be Portuguese colonies. And in the famous or infamous Treaty of Tordesillas of 1494, a line was drawn in the Indian Ocean and in principle, around the world, which ended up in essence giving the papal blessing to Portugal’s control over Brazil because Brazil fell to the east of this line of demarcation and giving Spain the colonial rights to the west which meant the Spanish empires of North and South America and of the Caribbean Basin.

The other powers of Europe, France and Britain as a start, were certainly not going to stand still and take the Pope’s word for it. The Dutch who were becoming a rising power in the 16th and then especially the 17th century looked for their own empires. Of course, these countries were already at war with each other over the demarcation of kingdoms and empires within Europe, but now as they sought colonies and possessions abroad, these became the new causes of war within Europe, as well. And the advent of global scale war took place, really beginning Iin the 18th Century where you had global scale conflict taking place in the Americas, in Asia, and in Europe, truly world war for the first time, with the fight for colonial possessions being a very important part of that.

This map just helps us to get some orientation. Henry the Navigator had put Portugal, a tiny country, on a path of imperial possessions by dint of its Atlantic facing coastline and its navigational prowess and its ability to take on the military advances of the gunpowder age, including the cannon power on the Portuguese vessels. And Portugal established, thereby, colonies in Brazil, the Atlantic islands of the Azores, Madeira and Cape Verde, across and down the west African coast in Portuguese Guinea, in Sao Tomé, Angola, Mozambique and the beginnings of imperial possessions in the East Indies, as well, in the Moluccas and other islands of the Indonesian Archipelago and in south Asia.

Spain quickly followed and became the leading empire of the 16th century with its claims to a growing part of South America, especially the Caribbean Basin, Mexico and the Andean region, as well as colonial possessions in the Philippines and in the archipelagos of southeast Asia. And with the lines drawn by the Pope, being able to claim imperial possessions on both sides of the world from Spain. Soon enough, the Dutch, the British, the French, got into the competition and as of 1700, the map of colonial powers became more and more crowded, more and more complex. Of course, by this time Britain had its colonies on the eastern seaboard of North America, the colonies that eventually would declare their independence and become the United States of America.

France had its empire in both parts of what is today the U.S. Midwest and up into what is today Canada and Quebec Province and along the St. Lawrence seaway. Both Britain and France began ever so slightly their colonial presence in Africa and in Asia, trying to get footholds into India.

But still, this was the age of the Mughal Empire of India and at this early stage of Europe’s economic development, these countries certainly did not have the military power and advantage with their small numbers and their limited technologies to be able to do more than to colonize small parts of the coasts in Asia and more in the Americas where they faced a drastically outnumbered and weakened Amerindian population.

The 18th Century was marked by these global wars. Wars that both took hold within the colonies and simultaneously, were fought on the European continent itself. One might say that the first of these world wars was the Seven Years War between 1756 and 1763, a competition between Britain and France, that in North America is called the French and Indian Wars, but really was a kind of world war because it was the battle both in the Americas and Europe simultaneously of these two rising powers.

In the event, Britain was able to win control of much of France’s territory in Canada and thereby gain an advantage in North America. Ironically, advantages like this turn out to be very deceptive often as this one did, because as Britain pushed away the French the colonists of the 13 original colonial states asked themselves why should we continue to obey British dictates when we now have a clear way in to settle the Midwest of the United States?

So ironically, Britain’s victory turned out also in a way to be its downfall soon afterwards in North America, because the colonists took the opportunity a few years after the end of the war, precisely in a dozen years later, to begin their effort at winning independence, which they indeed would do.

Well that independence war which was from the early skirmishes in 1775, the Declaration of Independence by the thirteen American colonies in 1776, and the end of the war in 1783 in a way flipped the accounts because in that war, which was a continuation of the great competition between the French Empire and the British Empire, the French sided with the breakaway colonists and it was the French military power and financing that enabled these weak colonies actually to defeat a much more powerful home empire.

And so it was with France’s help that Britain was defeated in the American War of Independence. Well, you might say thereby France gained a great advantage. Well again, you would be mistaken. Looks are deceiving because the French Empire actually spent a lot of resources to help defeat the British. The French government took on a lot of debt. And by the 1780s, found itself in a fiscal crisis, in no small part because of its financing of the American Revolution. Well lo and behold, starting around 1787, the French finance minister tried to raise taxes. This is never a popular moment. Significant backlash occurred in 1789. We now call that the French Revolution. It was started as an anti-tax revolt. It ended up overthrowing the French monarchy and laid France low.

Well you might say, that was to the British advantage. But you would be wrong. This war continued, because who rose to power in the midst of this upheaval of the French Revolution, but a military officer who came to be known as one of the most bloody and greatest generals of history, Napoleon. What followed the French Revolution, of course, were the Napoleonic wars. Europe was thrust into war again. These became global.

The U.S. calls it the War of 1812, between the U.S. and Britain, but from Britain’s point of view this was the, what turned out to be the final years of the Napoleonic Wars, which ended finally with Napoleon’s defeat in Waterloo, in the battle of Waterloo in 1815.

The point that I’m making is that globalization also is accompanied by profound changes and competition in geopolitics. In this event in the period of history that I’m discussing, what I’ve called the fourth wave of globalization from the great ocean discoveries until essentially the end of the Napoleonic Wars, the competition of European empires was brutal.

War, one wouldn’t say was nonstop, but it was absolutely continual. It gained in ferocity in the number of deaths because of continuing advances of military technology. And it became global. The fighting embraced the world. Just as globalization had knit the world together in a world of economics, a world of population movements, a world of pathogen movements, and now a world of true global-scale geopolitics.

As of 1800, the world empires looked something like this. Spain still held onto its empires in the southwest of the United States, Central America, and the western part of South America. Portugal held its empire in Brazil. The European powers had coastal possessions around the coasts of Africa, both on the west and the east coasts. And coastal possessions in south Asia and southeast Asia. Russia was expanding as a great land-based empire. That familiar east-west pattern because Russia was spreading across a shared ecological zone of the cold north and the continental climate of mid-latitude Russia from Europe, all the way to the Pacific Ocean.

This world would continue to be roiled by geopolitical change and in fact, we’re now just at the verge of a new wave of globalization, and that is the age of industrial globalization. And that is an age that would be dominated by Britain and by the United States. The beginning of the Anglo-American world.

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Vagas da Globalização XVIII

2.3 Conquest, Slavery and Genocide in the Americas

  • What does Professor Sachs mean by the “hidden” Columbian Exchange?
  • This chapter describes the so-called triangular trade; what is it and why is it relevant in this context?

Adam Smith emphasized that globalization brought impunity. That when the Europeans discovered how to navigate to the Americas and to Asia, that what should have been mutual benefits of trade turned out to be plunder and misery for the native inhabitants, both of what he called the East and the West Indies. I want to elaborate in this chapter on that misery. It’s important, because we need to remember if we’re looking for a humane, a decent, a sustainable globalization that impunity has often accompanies vast imbalances of wealth and of military power.

And we have to be on guard, even in our own times. There’s another lesson, one that Smith could not really have fully understood and as far as I know, did not mention, and that is that along with the Columbian Exchange of sugar and tobacco and cacao and potatoes and maize was another kind of hidden Columbian Exchange and that was especially of the pathogens.

When the Europeans came to the New World, and they brought their she eps and their goats and their horses, and the diseases that they themselves carried, they were bringing disease to a virgin population that had no experience with those diseases.

A population that was therefore, extraordinarily vulnerable to epidemics without the immunity that was acquired through repeated childhood exposure, or that may have co-evolved by living together with these pathogens over the course of centuries and millennia.

The result was that there was vast disease and death within the native populations. Some of the diseases that caused the mass deaths included small pox, measles, the introduction, we believe, of malaria, from the sub-tropics of Europe, and we know that in hinge moments of history, for instance, when Hernán Cortés marched his conquistadors into the Aztec Kingdom and was vastly outnumbered, one of the reasons that a small number of conquistadores lead by Cortés was able to overthrow the Aztec Empire, was that they brought a small pox epidemic with them that raged throughout the Aztec community and enabled Cortés to not only survive what otherwise, probably would have not be possible, but actually to conquer the Aztecs.

And that repeated phenomenon of Europeans inadvertently, in most cases, or almost all cases, spreading disease and leading to the mass loss of the native populations is a repeated phenomenon in the history of the Americas.

Smith could not really have known this, and so he looked at the episodes through the lens of force, subjugation, slavery, direct murder and genocide of populations, and without question, that was part of the visitation of the Europeans, but the germ theory of disease itself would only be understood 100 years after Smith wrote those famous lines, only with the discoveries of Koch and Pasteur in Europe in the 1870s onward.

And so, the role of pathogens in making the way for European conquest could not be fully appreciated until modern times. If one combines the brutality which was undoubted, the enslavement of native populations, the direct slavery that was brought by Europeans from Africa to now work the plantations of the New World, the result was nothing less than a human catastrophe for the Amerindian populations of the Caribbean Basin first, and then of North and South America and of the massive numbers of Africans who were enslaved and transported brutally and forcibly to the Americas, many of whom died in passage and those who survived the passage faced lives of brutality and opened up generations of enslavement to come.

The results of all of this are absolutely shocking. I’m showing you here an estimate of the Native American population in Mexico for example following the conquests of Cortés. And what you see here is of course only an estimate. But the estimate is that in the year before Cortés’ conquest, there may have been on the order of 25 million Native Americans in Mexico, but by the end of the century, the number was less than one-tenth of that.

So almost a complete elimination of the Amerindian population in this case. And this kind of massive destruction of the population is something that would be experienced in many parts of the Americas. It’s mainly in the highland and the landlocked regions, in Paraguay, in Bolivia, in the highlands of Peru, in the highlands of Central America, where you did not have the plantation labor, where the Europeans were far fewer in number, where indigenous populations could thereby survive.

But it was more in the coastal areas, in the more favored areas from an agricultural point of view, in the areas where Amerindian populations would come into contact more frequently with European populations as carriers of disease and as carriers of brutality where the shocking declines and almost complete loss of populations occurred.

One famous orientation of this new global industry is summarized as the so-called triangular trade that took place. Europe in the 16th Century onward became a manufacturing center, a processing center for agricultural goods.

A increasing creator of textiles, apparel, metal goods that were desired by chieftains and those in Africa who would trade slaves for those manufactured goods from Europe. So the first leg of the triangle is the export of manufactured products, increasingly from western Europe to West Africa, to today’s Senegal, or today’s Ghana, or the coastal countries which became the major sources of slave labor.

Those slaves were then carried to the Americas where they worked the tropical plantations, whether it was the growing cotton plantations or especially the sugar cane plantations of the Caribbean which became the richest part of Europe’s colonies in the Americas in the 16th and 17th centuries and where the slave labor was murderous, because the conditions were horrendous and the diseases that the slave populations incurred were devastating to them.

Those slaves in turn produced commodities that then could be exported to Europe and that completed the third side of this so-called triangular trade. African slaves provided labor that fueled this early stage of European capitalism that came to dominate the period from 1500 to 1800.

This graphic illustrates the massive movement of slaves from Africa, almost  all in the direction of the Americas. A few from East Africa to enslavement in the Middle East. The overwhelming numbers came from the Gulf of Guinea and from…from the Atlantic coast of Africa, heavily to Brazil, massively to the Caribbean and some to the Americas, where slave labor would take hold and become the basis of the cotton empire in the U.S. colonies of the south and then of the southern United States after the War of Independence.

In total, it’s estimated that 14 million Africans were carried as slaves during this period. This is truly a grim and horrific stage of global capitalism. And the cruelty that accompanied the development of the modern world economy must not be forgotten, because that cruelty shows up in other ways until today in human trafficking which continues, in bonded labor, in child labor, which still become part of global supply chains. We’re not done with this horrific abuse of humanity by others in pursuit of greed and profit.

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Vagas da Globalização VII

2.2 Global Trade in Commodities

What is the Columbian Exchange?

What does history tell us about the relationship between private enterprises and governments, according to Professor Sachs?

In this chapter, I want to talk about the rise of global industry and global production chains. And you might think I’m talking about Apple products or Microsoft or something of our current age, but I want to talk about the globalization of the 16th Century, of the 1500s, because almost as soon as Columbus had made his voyages and Vasco da Gama had circled the Cape of Good Hope, entrepreneurs went to work to construct, remarkably, often with a lot of violence and cruelty attached, often mobilized by a greed that is almost hard to imagine, because the dangers and the obstacles were very high, truly global scale industry, global scale production chains.

Of course, we had had international trade for millennia. But the idea of buying raw materials in one part of the world, partially transforming them, shipping them to another, processing them in another, exporting them to another part of the world and not just within Eurasia or Eurasia and Africa, but now the entire world, this is real globalization as we know it.

And this is in many ways a 16th Century invention. Astounding when one looks at it. And it’s the reason why absolutely wonderful books have been written taking world history from the perspective of cotton, or world history from the perspective of tobacco, or world history from the perspective of coffee, or world history from the perspective of cacao and cocoa and chocolate.

Not only are these among our most favorite and addictive products, but these are really the first global scale industries. And the ingenuity and the rapaciousness, the greed, and yes, the violence that are all packaged together in the birth of the modern world economy are absolutely stunning.

Now it has been a theme of mine that technologies and know-how, including agricultural knowhow diffuse within ecological zones. And especially for the diffusion of agricultural know-how, one has to recognize that crops and animal herds have their ecological niches and therefore diffusion typically has been within latitudes on relatively contiguous areas.

Now we’re going to leap whole oceans, still within ecological zones, but technologies, for example, sugar cane, which originated in south and southeast Asia and then was carried by the Islamic empires into the areas of the Middle East, the Tigris and Euphrates River valleys, into the Nile Valley and the Nile farming region, and then across the islands of the Mediterranean and into Madeira and the islands of the Canary Islands in the Atlantic.

With global scale trade made possible now by ocean-going navigation, crops like sugar suddenly leap whole ocean regions to become true global scale industries.

Now crops like sugar cane could suddenly leap the oceans. And a remarkable process began very quickly that is known to us today as the Columbian Exchange. A great term championed by the wonderful historian Alfred Crosby, who talked about the biological exchange between the Old World and the New World that was quickly occasioned by Columbus’s voyages and by the ocean navigation links now established between Europe and the Americas.

And what ensued was a massive biological exchange of crops and also of pathogens. Crops flowed in both directions. One of the most important crops that flowed from Europeans to planting in the Americas was sugar.

Europe quickly developed an addiction for sugar, as its price fell, as it became more plentiful, as it was possible to grow sugar cane now massively in the Caribbean region and then later both in South and North America in coastal, subtropical regions, sugar production and demand exploded and sugar became one of the truly global industries. Another massive exchange took place when a wonderful bean, absolutely one of my favorites, went from its original home in the highlands of Ethiopia and was carried for planting to the Americas and that was the expansion of coffee growing.

That’s another addiction that quickly swept Europe and sweeps the world till today with a massive expansion of coffee growing. Well the Americas had their own gifts to the world, many of them. Staple crops and other products that established global industries, of staple crops, too, have been a profound global significance, like Adam Smith said, having one region of the world able to help meet the needs and the wants of other regions, one of those crops is maize or what in the United States we call corn.

And that was the staple crop of the Aztec Empire, grown by Amerindian populations in the southwest of the United States and carried back to Europe and from Europe into Africa where Africa became a major maize growing region of the world.

Another crop of world changing significance is the potato, which was developed in Neolithic Revolution of the high Andean region and in the Columbian Exchange carried back to Europe where it became a staple crop across Europe, of course famously in Ireland, but also those wonderful addictive crops crossed the Atlantic from the west to the east, cacao, establishing itself and spread by the Europeans into cocoa growing, cacao growing and cocoa production in many parts of what would become the colonies in Africa.

And of course I would say now, notoriously but one of the most addictive and favoured crops in modern human history, tobacco, which was learned from the Amerindian populations and taken and cultivated around the world.

Industries from sugar cane, chocolate growing, coffee, tobacco became the great global industries of the modern world. They became the great industries of the first early phase of modern capitalism. They established a kind of structure and pattern of global scale finance, insurance, overseas production, global value chains, primary production in certain regions and processing in other regions.

And thus became the real era of global-scale, early capitalism occasioned by these absolutely powerful new industries driven by the intense desires of literally, addictive crops, which remain addictive to us today. And this map is a depiction of the rapidly multiplying sea routes from Europe to the Americas, both north and south, from Europe to Asia, both north and south and from the eastern Pacific in the coasts of North and South America to the western Pacific, right across the Pacific Ocean to the Philippines and what would become colonies of the western imperial powers.

It’s a remarkable story how fast these new global value chains developed. Many of the institutions of modern capitalism were born here. One of the persistent realities of modern capitalism, and that is that private enterprise was always developed in a kind of partnership and symbiotic relationship with powerful patrons of the state.

If nothing more than to be protectors of the sea routes through naval power, but also to provide the military backing for the establishment of plantations, of mining sites, of colonies overseas.

And to my mind, the close relationship of these nascent, global capitalists, not only in the agricultural crops, but of course in the mining sites of the Americas, the gold and the silver mines which fed the bullion to Spain and to the rest of Europe and which was then used to purchase the fine silks and the porcelains from Asia. That close relationship of these giant businessmen of their time to the great financiers who developed to fund these voyages and to insure the fleets as they went on their way, to the government power of the monarchs who both created royal charters for plantations and created new joint stock companies that would be the ones to carry out the exploitation of these new sectors shows hand in hand, state power and private power as a core feature of capitalism from its earliest days.

Often the story is told that capitalism is about the private economy and the government is just there if anything to protect private property rights and adjudicate commercial disputes or at least that’s what it quote, “should” do.

But we can see from the history from the 16th Century onward, that capitalism is investing massive capital, often backed by the state, almost always in some kind of symbiotic relationship with state power to develop global scale activity. Impressive, without question. Exploitative, without doubt. Brutal, yes. And that is the topic of the next chapter.

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Vagas da Globalização VI

2: Ocean-Based Globalization: 1500-1800

In the second week of the course, Professor Sachs expands on the Ocean-Based Globalization Period, or fourth-wave of globalization, as he calls it. He describes this period as being a time of “true” globalization, because, for the first time since the dispersal of humanity out of Africa, all continents of the world found themselves connected to each other. Christopher Columbus’ and Vasco da Gama’s voyages gave way to global scale industry, production chains and trade. Professor Sachs points out that these exchanges, which also included the exchanges of pathogens, were often marked with cruelty and violence. During this period, not only global scale, early capitalism, but also world-scale wars, based on the competition between European empires, shaped the modern world. To conclude, Professor Sachs introduces the concept of the period of the great divergence and presents existing arguments that try to explain the reasons behind it.

2.1 Sea-Based Globalization

What was different between the ocean-based globalization and the land-based globalization described in the previous module?

  • Why does he call the ocean-based globalization the “true” globalization?
  • According to Professor Sachs’ interpretation of Adam Smith, what does Adam Smith think will enable the eventual rebalancing of power?

In this module, I want to talk about an absolutely pivotal era for human history and that is the period between Christopher Columbus and essentially James Watt, the inventor of the steam engine.

It’s the period in which modern globalization first takes hold and in which many of the characteristics of our world today are developed. I’ve talked about waves of globalization and I have, somewhat arbitrarily perhaps, described six waves.

And now we’re at the fourth of these six globalizations and that is the era of ocean- based globalization.

This is a very distinctive period. In fact one could say that unlike the preceding era of the great land-based empires this one is true globalization for the first time since the dispersal of humanity out of Africa, because this globalization that begins in 1492 is a globalization that brings together Europe and Asia, which have long been connected by land, together with Africa, but now together with the Americas and with Oceania, with Australia and New Zealand and eventually the Pacific islands as well.

This is a true globalization for all parts of the world. It is a momentous change of human history in all regards. It begins with the great advances of ocean based navigation, which were taking place both in China and in fact China was the leader in world technology and the leader in ocean based navigation, and increasingly, on the other western, far side of Eurasia, indeed in the Iberian peninsula where the Atlantic Ocean countries, first Portugal and Spain and then later, Britain and other of the ocean bordered countries of western Europe become navigational leaders in their own right.

In the early 15th Century, China’s navigational capacity was second to none in the world. The famed seven voyages of the Admiral Zheng He in the first three decades of the 15th Century are justly remembered hundreds of years later as remarkable accomplishments of China of the time, as this map shows for the fourth of the voyages, from China throughout southeast Asia, the South China Sea, through the Malacca Pass, around Java and Sumatra, into the Indian Ocean, all the way to east Africa, to Arabia, the coast of India and then back to China.

This great navigational leader with this unbelievable capacity shown by the vast grand fleet that he sailed throughout the Indian Ocean region was a triumph of technology, a triumph of China’s grandeur and also of course an act of Chinese statecraft, because one of the goals of Admiral Zheng He was to make sure that the rest of the countries of the Indian Ocean understood who was who in the geopolitical ordering of the time, with China viewing itself, understandably, as the kingdom to which all of the others needed to pay tribute and obeisance.

On the other side of Eurasia, to a vastly smaller extent, a very pioneering Henry the Navigator of Portugal was encouraging naval exploration and navigational technological advances with an exploration down the coast of west Africa.

Eventually, that would culminate with the Portuguese navigators reaching the southern tip of Africa, the Cape of Good Hope, and with the help of Arab knowhow in the Indian Ocean, sailing from the southern tip of Africa to the coast of India, that is Vasco da Gama’s famed voyage of 1498.

One of the reasons why the Europeans and Henry the Navigator in this case was increasingly interested in ocean-based navigation is that with the fall of the eastern Roman Empire, Byzantium, the fall of Constantinople to the Ottoman Empire in 1453, the Mediterranean as a sea route to the Indian Ocean and to trade with Asia was now blocked, controlled by Turkish forces, by the Islamic world.

And so Europe gained interest and the kings of Europe gained special interest in trying to find an ocean-based pathway to Asia that could circumvent an eastern Mediterranean, now controlled by the Turks.

And indeed, this is precisely what was accomplished by the end of the 15th Century with da Gama’s voyage. Now history took a shocking turn one could say, because while China was dominant, preeminent in technology, preeminent in statecraft, preeminent in geopolitics, preeminent in population, that preeminence exactly began to end just in this period.

One fundamental reason, one of the hinge moments of history, was the decision by the imperial court of China, the Ming Dynasty, to end the naval voyages of Admiral Zheng He and any similar voyages afterwards, indeed, for hundreds of years. That great fleet was scrapped. Attention turned from the Indian Ocean to the north of China. The prevailing theories are that this was partly ideological, China feeling, we’re at the center, we are the center of the world, not only at it, but we don’t really need the rest of the world, why should we be engaging in this expensive ocean-based activity?

And probably at a far more pragmatic and perhaps far more important reason, nomadic invaders from the north were threatening China security. And China always faced the challenge of the peoples from the steppes, though they did not have the population numbers, they did not have the Chinese great civilization and technology, they had the military means of cavalry and of a horse-based militaristic society to threaten and to conquer China.

Hence, the Great Wall of China to try to stop the nomadic invaders, and hence perhaps the fundamental reason why this ocean-going, outward-looking China suddenly scrapped its navigational advantages, stopped exploring the Indian Ocean, decided to scrap the fleet, in essence, close the borders, limit trade and to a significant, though not complete extent, to turn inward.

In the end, it was not China circling the Cape of Good Hope on the way to Europe, but the Europeans circling the Cape of Good Hope on the way to India and China that turned out to change history.

And change history they did. The last decade of the 15th Century, thereby became one of the pivot points of all of modern history, where within eight years, Christopher Columbus trying to find a sea route by going west to find a route to Asia, and Vasco da Gama by going south and eventually trying to round Africa and then going east to find the same route, within a period of six years, had their respective successes.

Of course, Columbus thought that he had discovered a sea route to the East Indies, but in fact he had discovered two new continents that Europe had not been aware of, North America and South America.

And Vasco da Gama did succeed in what his purpose was and that was to link Europe and Asia with ocean based navigation. When they did so, they did more than create the sea links. They knit together the entire world for the first time in more than 10,000 years.

They brought the New World and the Old World together. They brought Europe and Asia together in a more intensive way than could ever have been possible by overland trade itself since sea-based navigation, unit by unit was far less costly and therefore far more supportive of large-scale trade than overland navigation could ever have been.

And the Europeans brought back to Asia something that they had received from China, originally, and that was gunpowder and artillery and new weaponry that came with the advances and that came to be carried on European ships that sailed into the Indian Ocean.

It was the Song Dynasty where gunpowder was first invented and developed and where the early cannon and the beginning of guns and all of the technologies that would follow were first developed by the Chinese.

But it was in Europe where that technology was advanced. One theory is that because China was a mostly peaceful and continental scale empire, whereas Europe was an endlessly squabbling and endlessly fighting set of kingdoms and principalities, the learning by doing of warfare in Europe was accelerated relative to that of China.

One could say that Europe leapfrogged in this ironic way and became the masters of the gunpowder age. And certainly when those European vessels started to enter the Indian Ocean, they entered with cannon fire, and they entered with a military power that despite the small numbers of Europeans that came, proved to be able to conquer territory, to set up new colonies, to set up bases for what became subsequently an expansion of European imperial rule throughout Asia.

This certainly marked a pivotal change of human history. And we can see that it meant the rise of western power for hundreds of years to come. And I always find it poignant and powerful to look at what Adam Smith wrote about these events 275 years after they took place.

Adam Smith, the great inventor of modern economic thought, living in Scotland, publishing his magnum opus, The Wealth of Nations, in 1776 gives a panoramic view of the world economy. He was a piercingly perceptive observer, a genius and a humanist. And this is what he had to say about this period of human history. And I’m going to quote at length, because I think it’s wonderful to listen to a great mind like Adam Smith reflecting on these pivotal events. It inspires us to think hard about our own times and about the possibility of reflecting meaningfully on great events such as this.

Smith writes, “The discovery of America and that of a passage to the East Indies by the Cape of Good Hope are the two greatest and most important events recorded in the history of mankind.” Wow, think about that statement, “the two greatest and most important events recorded in the history of mankind.

Their consequences have been very great. But in the short period of between two and three centuries, which has elapsed since these discoveries were made, it is impossible that the whole extent of their consequences can have been seen.

“What benefits or what misfortunes to mankind may hereafter result from those great events, no human wisdom can foresee.” And here is Smith coming about their meaning. “By uniting in some measure the most distant parts of the world, by enabling them to relieve one another’s wants, to increase one another’s enjoyments and to encourage one another’s industry, their general tendency would seem to be beneficial.”

What Smith is saying is, we now have globalization. We now have global trade. All parts of the world connected. That would seem to be good.

Each part of the world could help others in what they want through mutually beneficial specialization and trade. But Smith being a great humanist goes on. He writes, “To the natives however, both of the East and West Indies, all the commercial benefits which can have resulted from those events have been sunk and lost in the dreadful misfortunes which they have occasioned.”

In other words, the native inhabitants in the Caribbean, the Carib Indians for example, or the native inhabitants of Java and Sumatra or the Calicut or the Malabar coast of India, they suffered from this. They didn’t gain commercially. “These misfortunes however seem to have arisen rather from accident than from anything in the nature of those events themselves.

At the particular time when these discoveries were made the superiority of force happened to be so great on the side of the Europeans that they were enabled to commit with impunity every sort of injustice in those remote countries.”

What is Smith saying? He’s saying, the Europeans arrived, they plundered, they dominated, they enslaved, they murdered the native inhabitants.

And it was this advantage of power that meant that what should have been mutually beneficial trade proved to be not mutually beneficial at all. Then Smith goes on.

“Hereafter perhaps the natives of those countries may grow stronger, or those of Europe may grow weaker and the inhabitants of all of the different quarters of the world may arrive at that equality of courage and force, which by inspiring mutual fear can alone overawe the injustice of independent nations into some sort of respect for the rights of one another.”

What is Smith saying? He’s saying, the Europeans were so dominant they did not respect the human rights of the inhabitants of the East and West Indies. They were able to act with impunity, with brutality, in fact.

But Smith is looking at benefits for all of humanity and he’s saying that some day those distant quarters may gain in power sufficiently that they will be treated with respect, because there will be an equality of courage and force, which by inspiring fear will stop the injustice, stop the plundering.

And then Smith gives the added twist of the great economist that he was, “Nothing seems more likely to establish that equality of force than the mutual communication of knowledge and of all sorts of improvements which an extensive commerce from all countries to all countries naturally or rather necessarily, carries along with it.”

What is Smith saying? What will lead to a rebalancing of power? Well, nothing less than international trade and globalization itself, because globalization will lead to an exchange of knowledge. It will lead to a communication of technological knowhow, what Smith calls “all sorts of the improvements.” Meaning, technological advances. And commerce will make that possible.

Globalization will rebalance, allow a catching up by the laggard regions of the world so that they can catch up, they can gain in force, in power, in mutual respect.

And then from Smith’s point of view, and I hope from our point of view, thereby have the mutual benefits of globalization, not the one-sided globalization that comes from conquest by the powerful of the weak.

This is a wonderful statement filled with meaning for us. But what Smith is saying is, these events of what I’ve called the fourth wave of globalization, the ocean-based navigation are the most significant events of human history because they united all of humanity.

But they didn’t bring benefits for all of humanity. They brought benefits for one part of humanity, western Europe, but they did bring a lot of misery for those who incurred the wrath and the dominant power of the Europeans who came not only to trade, but also to plunder and to conquer.

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