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Walking through the thirteenth century, one would be surprised by how similar lifestyles were in Mesoamerica, continental Europe, Africa, and Asia The key bio-social markers of progress life expectancy, daily caloric intake, infant mortality rates, literacy were fairly similar in ancient Mexico City, London, Istanbul, and Beijing Most people farmed, went to market, lived, and died close to where they were born Family size was roughly similar in each location (that s to say large), and no civilization looked much better off than another Certainly no country back then could be considered rich by today s rubric Compared to our modern existence, Hobbes was right: Life was nasty, brutish, and short With the advent of the Renaissance, a renewed interest in learning helped Europe break free from the Dark Ages This led to the watershed late eighteenth-century invention of steam power in Great Britain Adam Smith s 1776 Wealth of Nations provided the philosophical framework for organized capitalism, and the Industrial Revolution was born Machine-driven capacities dwarfed animal and human labor, output soared, and costs declined Trade accelerated as improved canals and railways and the invention of the internal combustion engine allowed more goods to move farther, faster Great Britain s mass education system generated skilled workers capable of operating the new mechanical inventions After millennia of struggling with scarcity, Homo sapiens had found a formula for producing abundantly while working less Great Britain was the rst industrial economy, but its lead did not last for long Goods, ideas, and formal education spread throughout Europe and North America in the late nineteenth and early twentieth centuries leading to the convergence of living standards (or attening as Tom Friedman might say) By the late 1800s, poor countries around the southern European periphery the emerging markets of their day were growing fast, catching up to the rich industrial leaders at the European core Asia did not join the action until late in the nineteenth century, when the establishment of the Suez Canal, innovations in marine transport, and penetration of the continent s massive interior by railroad liberated it from the tyranny of geographic isolation Thereafter,
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se eing the e le phant
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the West rapidly engaged Asia in exchange China opened its ports in 1842 and Thailand in 1855, both with small tariff barriers India followed Britain s free trade model in 1846, and Indonesia mimicked Holland in 1870 The most dramatic change, even by the standards of the recent Asian Miracle, occurred in Japan, which went from being an isolated feudal country to an open economy in the mid-1850s Some 15 years after the arrival of Commodore Perry, Japan s foreign trade rose from 0 to 7 percent of national income, which itself grew an estimated 50 percent!1 Outside of Japan, Asian nations living standards continued to lag These countries huge populations, with education and literacy trailing the West, left them unable to switch from manual labor to machinery-based economies From the dawn of Industrial Revolution through the late twentieth century, per capita income in India relative to Britain dropped from assumed parity to 15 percent, a fall of 85 percentage points2 India and China had already lost ground to the UK, United States, and Russia that they would not start to regain until the 1990s (See Table 11) In the late nineteenth century, after a half-century of open trade and relatively peaceful relations throughout the continent, shortsighted politicians across Europe began erecting commercial barriers A lack of forums for cross-border economic coordination led to distrust and misperception Trade competitiveness and protectionist policies resulted, countries started forming alliances and blocs and markets ended culminating in military con ict, commercial stagnation, and 30 years of destruction In World War I, 28 million people were injured
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Table 11 Historic Power Shifts, 1820 2050 (Percentage of Global Economic Output)
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1820 1870 1950 2000 2050
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China 33% India 16% France 55% Russia 54% UK 52%
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China 172% India 122% UK 91% US 89% Russia 76%
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US 273% USSR 96% UK 67% China 50%
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US 222% China 146% Japan 66%
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China 281% US 219% India 172% Japan 48%
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Germany 65% India 59%
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Germany 41% Brazil 44%
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