|Prepared for inclusion as a chapter in
THE DISCOURSE OF APPLIED SOCIOLOGY
Samir Das Gupta, Jay Weinstein.
New Delhi, forthcoming
ReOrient World History, Social Theory, and the 19th
Andre Gunder Frank
This essay examines how Western social theory from Marx and Weber to Wallerstein and Frank
has been based on a Eurocentric version of history. The latter not only denies real world
history so much as to not only neglect most of human reality especially in Asia even
during early modern history. In so doing, this Eurocentric history and historiography as
well as the social theory derived from the same also subtantially distort the experience
of the West as well. Therefore, as Asia is now REemerging to the center of the world
historical stage, it is high time also to ReOrient our historiography and social theory
and of the 19th Century as well during which the West and Asia traded places in the world.
I. HOW WESTERN PERCEPTIONS OF THE EAST CHANGED
Until about 1800, the predominant Western perception of the East was favorable. Europeans
were attracted to and sought to learn from many parts of the Orient that were seen as
civilizationally, culturally, politically, socially, economically, and technologically
more advanced than any or all of Europe. Indeed, "Orient" , as still recorded in
The Concise Oxford Dictionary of Current English whose first edition dates from 1911,
meant the following: ORIENT: The East; lustrous, sparkling, precious; radiant, rising,
nascent; place or exactly determine position, settle or find bearings; bring into clearly
understood relations; direct towards; determine how one stands in relation to one's
surroundings. Turn eastward.
What happened to make all those nice meanings disappear and have the American Oxford
Dictionary  now say instead: ORIENT: The East, Countries East of the Mediterranean,
Especially East Asia. Before 1880, Europeans and Arabs at least had a much more global/ist
perspective that was then suppressed and replaced by the rise of Eurocentric
historiography and social theory in the nineteenth century. For instance, the Tunisian
statesman and historian, Ibn Kaldhoun [1332-1406] evaluated and compared the "wealth
of nations" before and at his time: This may be exemplified by the eastern regions,
such as Egypt, Syria, India, China, and the whole northern regions, beyond the
Mediterranean. When their civilization increased, the property of the inhabitants
increased, and their dynasties became great.... Their prosperity and affluence cannot be
fully described because it is so great. The same applies to the merchants from the East
... and even more so to the far Eastern merchants from the countries of the non-Arab Iraq,
India, and China. (Ibn Khaldun 1967:279). Even in the eighteenth century Father Du Halde,
the most learned French publicist of matters Chinese [who never left Paris and used Jesuit
and other travellers and translators as sources] still wrote that in China the particular
riches of every province, and the ability of transporting merchandise by means of rivers
and canals, have rendered the empire always very flourishing.... The trade carried on
within China is so great, that of all of Europe is not to be compared therewith (quoted by
Chaudhuri 1991:430 [for a longer version also see Ho 1959:199]). N1 Lach and Kley (1965--)
have written volumes [7 so far with others promised] about Asia in the Making of Europe.
They observe for instance "sixteenth- century Europeans had considered Japan and
China to be the great hopes of the future" (ibid: 1890). By the end of the
seventeenth century "few literate Europeans could have been completely untouched [by
the image of Asia], and it would have been surprising indeed if its effects could not be
seen in contemporary European literature, art, learning, and culture" (ibid: 1890]).
For in the meantime, hundreds of books about Asia had been written, reprinted and
translated in all major European languages. Adam Smith also recognized Asia as being
economically far more advanced and richer than Europe in still in 1776. "The
improvements in agriculture and manufactures seem likewise to have been of very great
antiquity in the provinces of Bengal in the East Indies, and in some of the eastern
provinces of China.... Even those three countries [China, Egypt and Indostan], the
wealthiest, according to all accounts, that ever were in the world, are chiefly renowned
for their superiority in agriculture and manufactures.... China is a much richer country
than any part of Europe" (Smith 1937: 20,348,169). Already by the mid-nineteenth
century, European views of Asia and China in particular had drastically changed. Dawson
(1967) documents and analyzes this change under the revealing title The Chinese Chameleon:
An Analysis of European Conceptions of Chinese Civilization. Europeans changed from
regarding China as "an example and model" to calling the Chinese "a people
of eternal standstill." Why this rather abrupt change? The coming of the industrial
revolution and the beginnings of European colonialism in Asia had intervened to re-shape
European minds, if not to "invent" all history, then at least to invent a false
universalism under European initiation and guidance. Then in the second half of the
nineteenth century, not only was world history re-written wholesale, but
"universal" social "science" was [new] born, not only as a European,
but as a Eurocentric invention. In so doing, "classical" historians and social
theorists of the nineteenth and twentieth centuries took a huge step backward even from
European, not to mention Islamic, perspectives that had been much more realistically world
embracing up through the eighteenth century. Among those who saw things from this narrower
[European] new perspective were Marx and Weber. According to them and all of their many
disciples to this day, the essentials of the "capitalist mode of production"
that allegedly developed in and out of Europe were missing in "The Rest" of the
world and could be and were supplied only through European help and diffusion. That is
where the "Orientalist" assumptions by Marx, and many more studies by Weber, and
the [fallacious] assertions of both and all their many disciples to this day about the
rest of the world come in. Marx seems to have been selective in the sources he drew on to
characterize "Asia" not to mention Africa. Marx followed Montesquieu and the
Philosophes like Rousseau and also James Mill, who had instead "discovered"
"despotism" as the "natural" condition and "model of
government" in Asia and of "The Orient." Marx also remarked on "the
cruelest form of state, Oriental despotism, from India to Russia." He also attributed
to them and to the Ottomans, Persia and China, indeed to the whole "Orient." In
all of these, Marx alleged the existence of an age-old "Asiatic Mode of
Production" which kept all of Asia "divided into villages, each of which
possessed a completely separate organization and formed a little world to itself." He
alleged that in all of Asia the forces of production remained stagnant and stationary
until the incursion of "The West" and "capitalism" woke it of its
otherwise eternal slumber. Alas however, so is its obverse "capitalist mode of
production," which was allegedly invented by Europeans and has ever since been held
to be responsible for European, Western, and then global development. For as this book
intends to show, all these were much more a function of world economic, including
especially Asian development, than of any alleged European or "capitalist"
exceptionalism, which have been the central themes of all social theory about "the
Rise of the West" ever since. We will see below that all of this Marxian
characterization was no more than a figment of his and other Eurocentric imagination,
which had no foundation in historical reality whatsoever. Other social
"scientists" may have risen to dispute Marx [and supposedly to agree with
Smith], but they all agreed with each other and with Marx that 1492 and 1498 were the two
greatest events in the history of mankind, because that is when Europe discovered the
world. History and social theory have been marked ever since not only by the alleged
uniqueness of [West] Europeans, which supposedly generated "The Rise of the
West." What is worse, they allegedly also had to assume the civilizing mission of the
white man's burden which bestowed "the development and spread of capitalism" on
the world as Europe's and the West's gift to mankind. [Lately, some feminists have at
least denied that this process has been a gift also to womankind]. For Max Weber of course
agreed with Marx about all these European origins and characteristics of
"capitalism," and with Sombart too. Weber only wanted to go them one better.
Sombart had already singled out European rationality, and its alleged roots in Judaism, as
the sine qua non of "capitalism" and its "birth" in Europe. Weber
accepted that too. The additional acquaintance of Weber with Asian realities also
complicated his argument and made it more sophisticated than the crude Marxian version.
For instance, Weber recognized that Asia had big cities. And bureaucracies that worked. So
they had to be somehow "fundamentally different" from European ones, both in
structure and in function. So what was the essential difference, the missing ingredient
that "The West" allegedly has and "The Rest" does not have if Weber
himself did not find all these factors missing in the Oriental societies he studied? For
Marx it was "the capitalist mode of production;" and Weber added also the proper
religion and how it interfaces with the other factors to generate that "capitalist
mode." Weber went to the trouble to study various major world religions and concluded
that all of them had an essential mythical, mystic, magical, in a word anti-rational
component, which "necessarily" handicapped all their true believers in coming to
grasps with reality rationally, unlike the Europeans. This rational spirit is supposedly
the missing secret ingredient that, when combined with all the others, distinguishes
"The West" from "The Rest." Without it, the Asians could not possibly
develop capitalism and therefore really "develop" at all, or even use their
cities, production and commerce. Never mind that historical evidence belied that, from
Catholics in Venice and other Italian cities to those gifted with the Protestant ethic in
Eastern Europe and the European colonies early on in the South of the United States and
still in the Caribbean, and elsewhere [as I already argued in Frank (1978b)]. This
Eurocentric idea consists of several strands, some of which are privileged more by
political economists like Marx and Sombart, and others by sociologists like Durkheim,
Simmel, and Weber. All are summarized in the telling title The European Miracle by Eric L.
Jones (1981). In a more recent book, the same Jones (1988) himself expresses doubts about
his former book: He quotes another author to the effect that 'possibly the most exiting
thing to do next would be to prove the theory wrong,' and goes on himself to say that
"as a title The European Miracle was just a little too seductive.... I no longer see
it as miraculous.... The trap seemed to lie in assuming that because Europe is different,
the difference must tell us about the inception of growth... Formulated this way, Japanese
and European histories seem to be matters of accidentally contrived balances of forces.
Indeed, why not?" (Jones 1988: 5,6). However, these books are only a particularly
visible tip of the iceberg of almost all western social science and history from Marx and
Weber, through Spengler and Toynbee, to the spate of defenses of supposed Western
"exceptionalism" since World War II, particularly in the United States. Norbert
Elias' (1978) Civilizing Process is a more recent influential version. This Eurocentrism
also had nineteenth century sociological great-grandfathers in the "father of
sociology" Auguste Compte and in Sir Henry Maine who distinguished between supposedly
new forms of thinking and of social organization based on "science" and
contract," which allegedly replaced age old "traditional" ones. One
grandfather was Emile Durkheim who idealized "organic" vs.
"mechanical" forms of social organization and another was Ferdinand Toennis, who
alleged a transition from traditional "Gemeinschaft" to modern
"Gesellschaft." In a later generation, Talcott Parsons idealized
"universalist" vs. "particularist" social forms, and Robert Redfield
claimed to have found a contrast and transition or at least a continuum" between
traditional "folk" and modern "urban" society and a certain symbiosis
between "low" and "high civilization." The Marxist and contemporary
neo-Marxist version is the alleged fundamental difference between "Asiatic,"
"feudal" or other forms of "tributary" modes of production on the one
hand and the Western "capitalist" one on the other (Wolf 1982, Amin 1991,1993,
1996). Now we are all - knowingly or not - disciples of this completely Eurocentric social
science and history. Talcott Parsons enshrined Weberianism and this Eurocentric
historiography in sociology and political science when the United States became
economically and culturally dominant in the world after World War II. His mistitled
Structure of Social Action and The Social System as well as the derived
"modernization theory," and the economist W.W. Rostow's (1959) Stages of
Economic Growth were all cut from the same Eurocentric cloth and followed the same
theoretical pattern. Alas we may ask, what was the point? Rostow's "stages" were
little more than a "bourgeois" version of Marx's stage-by-stage development from
feudalism to capitalism to socialism -- all starting in Europe! Like Marx, Rostow claimed
that now the United States, following England, would show the rest of the world the mirror
of its future. Rostow (1975), also explains How it All Began: Origins of the Modern
Economy through the scientific revolution that allegedly distinguished modern Europe.
David Landes (1969) finds the cultural conditions for The Unbound Prometheus:
Technological Change and Industrial Development in Western Europe only in Europe itself.
Thirty yearsa later, Landes repeats the same lithurgy in his very successful The Wealth
and Poverty of Nantions (19980. Cipolla (1976:276) summarizes: "that the Industrial
Revolution was essentially and primarily a socio-cultural phenomenon and not a purely
technical one, becomes patently obvious when one notices that the first countries to
industrialize were those which had the greatest cultural and social similarities to
England." Other authors also offer only "internal" explanations to account
for the alleged superiority and ascendance of the West over the rest of the world. For
these writers, the rise of Europe was also a "miracle," which was due to
allegedly unique qualities that Europeans had and all others lacked. Thus, White Jr.
(1962), Hall (1985) or Baechler, Hall and Mann (1988) find the rest of the world deficient
or defective in some crucial historical, economic, social, political, ideological, or
cultural respect in comparison to the West. The claim is that presence in "The
West" of what was allegedly lacking in "The Rest" gave "us" an
initial internal developmental advantage, which "we" then diffused outward over
the rest of the world as the "civilizing mission" of "the white man's
burden." Among the worst offenders of all Eurocentrists are western economic
historians, Marxists, and a fortiori Marxist economic historians. The vast majority of
self styled "economic historians" totally neglect the history of most the world,
and the remaining minority distort it altogether. The Study of Economic History: Collected
Inaugural Lectures 1893-1970 (Edited by N.B Harte 1971) collects 21 such lectures by the
most eminent English speaking economic historians. They in turn review and comment on the
'economic history' written by their colleagues in the profession over most of the
preceding century: Almost every word is about Europe and the United States and their
"Atlantic economy," which hardly even includes Africa. The rest of the world
does not exist for them. Also in more recent decades, the International Congress of
Economic History has met periodically and then published its conference proceedings. Going
through their tables of contents reveals that some ninety percent of the
"international" contributions are about the West. Lately, a couple of the
congresses and/or volumes of proceedings have had titles like The Emergence of the World
Economy 1500-1914 (Fisher, McInnis & Schneider, Eds. 1986). Yet the preponderance of
the contributions are still about the West. Another current example of the same is the
innovative publisher Variorum. Its newest series of books is published under the umbrella
title "An Expanding World: The European Impact on World History, 1450-1800." The
title of one of the edited volumes in this series is The European Opportunity. Yet the
books in that series also concentrate on what Europe did, rather than on the opportunities
in the world economy and especially in Asia, of which Europe only took advantage. Take for
instance a recent review article on "Maritime Asia, 1500-1800" written by Willis
(1993) for the American Historical Review. Willis revealingly subtitles it "The
Interactive Emergence of European Domination." He reviews over a dozen books and
cites perhaps one hundred others that deal with some "interaction" between East
and West. However, most of the action reviewed remains directed from Europe toward Asia,
and almost none the other way around. Moreover, the claim in the reviewer's title that
European "domination emerged" already from 1500 onwards to 1800 is not at all
substantiated. Indeed, it is disconfirmed even by the evidence supplied by the authors
that Willis himself reviews and cites. So the very title of his article still reflects
Eurocentric prejudice far more than it describes reality. A special Eurocentric charge is
that the evidence does not support any contention that Europeans did anything other than
by their own good efforts. Years ago, Bairoch (1969,1976), O'Brien (1982) and others
already explicitly countered the earlier theses of Frank (1967, 1978) and/or Wallerstein
(1974) that colonial and neo- colonial trade contributed to European investment and
development. Bairoch (1969) denied that commercial capital made any significant
contribution thereto. Patrick O'Brien (1982,1990) has on several occasions dismissed
overseas trade and colonial exploitation as contributors to capital accumulation and
industrialization in Europe, since by his calculations this trade, not to mention profits
therefrom, amounted to no more than 2 percent of European GNP in the late eighteenth
century. O'Brien (1982:18) contends that "for the economic growth of the core, the
periphery was peripheral." O"Brien (1997: 76-77) goes even further and
categorically contends under the sub-title "The Formation of a Global Economy,
1846-1914" that economic "interconnections across continents and countries down
to the middle of the nineteenth century seem limited."
Marxist economic history, against whom Rostow, Bairoch, O'Brien and others also rail, may
seem different; but it is equally, indeed even more, Eurocentric. Thus, Marxist economic
historians also look for the sources of "The Rise of the West" and "the
development of capitalism" within Europe. Examples are the famous debate in the 1950s
on "the transition from feudalism to capitalism" among Maurice Dobb, Paul
Sweezy, Kohachiro Takahashi, Rodney Hilton and others (reprinted in Hilton 1976) and the
Brenner Debate on "European feudalism" (Aston and Philpin, Eds. 1985). The very
existence of a world economic system was explicitly denied by Marx and only belatedly
acknowledged by Lenin. However, his "imperialism" also was of recent European
origin. In Rosa Luxemburg's version, the "world" capitalist economy had to rely
on "external non-capitalist" space and markets outside of the capitalist system
into which to expand. As Teshale Tibebu (1990: 83-85) aptly put it, all this Marxist
economic history and theory is no more than 'Orientalism painted red." All of these
"ideal type" West Yes/East diads [or triads in the case of the alleged Great
Transformation of Karl Polanyi (1952,1957)] are idealizations of the West that have
several things in common. The most important ones are that first they posit essentialist
socio-cultural features and differences that are far more imaginary than real, and then
they allege that the differences distinguish "us" from "them," or in
the latter day terminology of Samuel Huntington (1993,1996) separate "The West"
from "The Rest." Indeed, allegedly these features also distinguish modern
[Western] society from its own past as well as from other societies' often still lingering
present. Moreover, these "ideal" types attribute some kind of pristine
self-development to some peoples - mostly to "us" - but not to others, and their
subsequent diffusion [when positive] or imposition [if negative] from here to there.
" The quintessential culmination of this "tradition" was Lerner's (1958)
The Passing of Traditional Society. In the real world, the only practical holistic choice
has been "none of the above."
II. SOME NECESSARY BUT STILL INSUFFICIENT CRITICAL BEGINNINGS
We may group our review of the new - and necessary but not sufficient - historiographic
and theoretical departures as those that really do examine the East, those that re-examine
the West, those that compare East and West, and those that propose a step toward more
holism by looking at both from the perspective of a 'world-economy" and
'world-system,' which nonetheless remain European and western centered.
A. The East Never Was as the West Made It Out To Be
Historians and social scientists from Asia, Africa, and Latin America began [or better
continued!] to re- examine these areas and their peoples. But there have also been some
Western ones, among which Wim Wertheim himself and other Dutch scholars have been
pioneers. J.C. van Leur's Indonesian Trade and Society: Essays in Asian Social and
Economic History was written already in the 1930s and republished in 1955. It was followed
with a similar position by Van Schrieke (1955) in his Indonesian Sociological Studies and
in 1956 by Wertheim's own Indonesian Society in Transition: A Study of Social Change.
Other Dutch scholars like M.A.P. Meilink-Roelofsz (1962) continued this work on Indonesia
in the world. Elsewhere, other important precurseos have been are Islam et Capitalisme by
Maxime Rodinson (1972), The Venture of Islam by Marshall Hodgson (1974) and most globally
Before European Hegemony by Janet Abu-Lughod (1989) and Asia Before Europe by K.N.
Chaudhuri (1990), as well as his and others' earlier more documentary works. Special
mention is merited by the multi-volume works on science and technology by Joseph Needham's
(1954-) on China, Kuppuram and Kumusamani (1990) on India, and Nasr (1976) and al-Hassan
and Hill (1986) on Islamic Science. Indeed conceptually, if not always chronologically,
the first critique of the received wisdom is to recognize that Kipling's famous rendition
that "the East is East, and the West is West" is no more than Western mythology
to begin with. The very idea of and distinction between 'East' and 'West' is no more than
a Western invention to 'distinguish' itself. An important opening gun was the scathing
critique of the very idea of Orientalism itself by Edward Said (1978]. Coming from another
direction, another critique was my own "The Sociology of Development and the
Underdevelopment of Sociology" (Frank 1967a, 1969) and Susanne Jonas Bodenheimer's
(1971) "Dependency and Imperialism: The Roots of Latin American
Underdevelopment." We denied that the Third World South, then including the
"Oriental" East, ever was 'traditional' as received theory had painted it to be.
We and the theory of 'dependence' sought to distinguish between 'undevelopment' and 'the
underdevelopment of development,' however successful, this challenge was nonetheless
insufficiently holistic. Another, more recent, variant are 'post-colonialism' and other
variants of 'post-modernism,' which also deny the colonially imposed 'reality,' but often
at the cost of denying that there is any reality at all to speak of, except that which is
mostly man-made by the speaker or writer himself.
B. But the West Itself Never Was or Did What its Advocates Claimed Either.
The second conceptual leg to collapse has been "The Myth of Western
Exceptionalism." That is the telling sub-title of James Blaut (1993) in what he calls
The Colonizer's Model of the World: Geographical Diffusionism and Eurocentric History.
Blaut microscopically examines, exposes and demolishes the myth of "The European
Miracle" in its myriad forms of biology [racial superiority and demographic
continence]; environment [nasty-tropical Africa; arid, despotic Asia; temperate Europe];
exceptional rationality and freedom [as against "Oriental despotism", the
centerpiece of the Weberian doctrine, and part of the Marxian one]; alleged European
historical superiority in technology, despite its borrowings from and dependence on
earlier Chinese, Indian and Islamic advances; and society [development of the state,
significance of the Church and "the Protestant ethic," the role of the
bourgeoisie in class formation, the nuclear family, etc]. Thus, Blaut effectively
demonstrates that each of these alleged European "exceptionalisms" and the whole
"European miracle" is no more than a myth that is firmly based only in
Eurocentric ideology. Therefore, its derived social "science" is empirically and
theoretically untenable as well. Therefore, Blaut correctly argues, that it is wrong to
attribute the subsequent development of Europe and the West to any of these supposedly
internal European exceptionalisms. Jack Goody (1996) goes over some of the same ground
again for the West, and comparatively finds similar or functionally analogous attributes
also in studies like those mentioned in section A above about West, South, and East Asia.
Goody again effectively refutes especially the Weberian allegations of the alleged
"uniqueness [of] specific and peculiar achievements of Western rationalism."
Yet, "the framework of such ideas has been the bread and butter of sociologists,
historians, demographers, economists and , from a somewhat different angle,
anthropologists" (Goody 1996:5). Many monographic and analytic studies on particular
apsects of Western economic history, of course, do also show that it departed more than
considerably from its Weberian 'ideal types'.
C. Comparing East and West Illuminates Both Another attempt to break down this
Eurocentrism is to compare 'East" and 'West' to show that they were never so
different after all, or at least to find what differences there really were. Indeed, this
approach already has a long history and venerable tradition. Weber deliberately adopted it
in his comparative study of world religions, even if it was to end up with the European
exceptionalism of "the Protestant Ethic and the Spirit of Capitalism." Since
then, more and more comparisons have pulled the historical rug out from under Weberian,
Marxist, Polanyian and other Eurocentrism. Notable among these have been the American
Marshall Hodgson (1974, 1993), the European Fernand Braudel (1992) and especially the
Asian N.K. Chaudhuri (1990). Of course, the same has been an element also in the arguments
of Blaut (1993) and Goody (1996) already cited in section B above. Rutten (1994) also
favorably compares European and Asian capitalists. My own ReOrient: Global Economy in the
Asian Age (1998) also makes numerous East-West comparisons of patterns and changes in
population, production, trade, science, technology, institutions, etc.
The book China Transformed: Historical Change and the Limits of European Experience by Bin
Wong (1998), because it not only pushes such comparisons much further but also offers them
as a theoretically sufficient alternative to the received wisdom, which Wong rightly
rejects like I do. Wong begins by observing that since the nineteenth century most studies
on China have been guided by the search for what China did not have or do by European
standards. Instead, he proposes to examine Chinese reality itself and then proceed to ask
how it can shed new light not only on China but comparatively also on the European
experience. Wong writes:
One can find with little effort any number of differences between China and Europe, but
assessing which of these differences mattered is difficult....A foundation of
commonalities would locate more sharply the arena within which important initial
differences could be located.... Without first identifying a set of commonalities,
however, all differences compete for primary attention. The economic similarities to be
considered here begin with Adam Smith. That is, the "Smithian dynamic" of the
relation between the division of labor and the extent of the market was operative in China
just as much as in Europe. So were the Ricardian ones of comparative advantage and the
Malthusian demographic ones.
Wong, like Pomeranz (1997) and alas only much more superficially Frank (1998), also shows
that per capita incomes, standards of living and death rates were quite comparable.
Moreover, Wong observes as we also did in Sections A and B above, that most of the alleged
cultural, social, and political differences either did not exist in reality or that their
supposed differential effects on the observed differences in European and Chinese
developments after 1800 are very dubious. Therefore he suggests that "other
differences can then be introduced to explore further the distinctive paths followed by
different parts of Eurasia" (Wong 1998:xx).
So far, so good. This kind of more careful discrimination between real commonalities and
alleged and real differences in 'causes' may indeed be necessary to account for
differences in 'effects.' But is or indeed can that scientific procedure be theoretically
and empirically sufficient to account for the differential effects that we observe. My
answer is that NO, it can NOT. For even more important however, what emerges from our
review of early modern world economic history is that many of the specific
"differences" are themselves generated by structured interaction in a common
world economy/system. Far from being appropriate or necessary to understand this or that
specificity here or there, differentiation then becomes an obstacle to accounting for and
comprehending it. All attempts to account for features and factors of
"development" on the basis only or even primarily of local antecedents and in
the absence of their world economic "function" can result only in the neglect of
factors that are essential to any satisfactory explanation. Only a holistic perspective on
and from the global whole that is more than the sum of its parts can offer any adequate
comprehension of any part and how and why it differs from any other! Therefore, all
studies that compare "Western" and "Oriental" societies are already
vitiated by their choice of the features or factors to be compared, which is itself
derived from focusing on a part, be that Britain, Europe, the West or wherever. Indeed,
van Leur (1955: 19) already wrote in his Indonesian Trade and Society that "justice
cannot be done to the economic history of other periods and areas when one uses the
categories of Western European economic history as the point of departure." But that
is the the very design of the studies from Marx and Weber to Braudel and Wallerstein et
al. They all suffer from the misplaced concreteness of looking for the explanandum with a
magnifying glass or even a microscope, but only under the European streetlight. The real
task is first to take up a telescope to gain a holistic view of the global whole and its
world economy/system. As Frank Perlin rightly insists, we need to move beyond comparison
in an attempt to draw broader structural conclusions....We need to ask questions about the
possible existence, at the same particular moment in 'world' history, of similar, even
identical [larger structural] forces operating on these different types of local political
economy .... In short, commercial manufactures in Europe and in Asia formed dependent
parts of wider international developments (Perlin 1990:50,89-90).
D. "Europeans Built a World Around Europe, as Historians Know."
That is what Fernand Braudel wrote on the dustjacket of Wallerstein's (1974) The Modern
World-System. Both sought to extend the critiques summarized in Section B above by looking
for other sources to account for "The Rise of the West.' An important early attempt
to do the same was The Rise of the West by William McNeill (1963) with which he can be
said to have fathered contemporary world history as a field of study. He criticized
Toynbee for treating world history in terms of twenty- one different civilizations, when
McNeill suggested that there were only three major contributory "civilizational"
streams to world history and to the rise of the West. So far so good. However looking back
twenty-five years after the publication of his book, McNeill (1990:9) recognized that
"the central methodological weakness of my book is that while it emphasizes
interactions across civilizational boundaries, it pays inadequate attention to the
emergence of the ecumenical world system within which we live today... [and that the]
three regions and their people remained in close and uninterrupted contact throughout the
classical era" since 1500 BC, and therefore a fortiori since 1500 AD! Nontheless in
this modern period, McNeill still sees the driving motor force of world history in the
West and its development. Despite his important contributions to world history McNeill
still testifies to the difficulties in overcoming a Eurocentric perspective and adopting a
truly global world perspective of or on the world. The afore cited Jack Goody does seek to
transcend this lingering Eurocentrism by going farther and farther back through world
history and writes
A neglect of this common history over the long term lies behind a large body of research
in sociology, in history, in economics and in anthropology that has dominated Europe over
the last two hundred years and takes as its problematic the Rise and Uniqueness of the
West.... I am arguing for the reverse, for the necessity of looking at Developments in
Europe from a wider perspective, of taking a global point of departure (Goody 1996:
Nonetheless, also Goody does not attempt a global history, neither since the Bronze Age
nor even for early modern times. These same difficulties were also insuperable for Braudel
and still are so for Wallerstein and their many disciples. Braudel's "Perspective of
the World" since 1500 is broader than most. He divided the world into a
"European world-economy" and several other and separate external
"world-economies" outside the same. Braudel did, of course, also study and
describe at least parts of these "other" world economies, especially in Volume
III of his trilogy on Civilization & Capitalism. Indeed, so did Marx in his own Volume
III of Capital! Yet both neglected to incorporate the findings of their third volumes into
the model and theory of their first volumes. Moreover, their neglect was quite conscious,
intentional and deliberate: Their Eurocentrism convinced both that any and all historical
model and social theory, be it universal or not, must be based on the experience of Europe
alone. Their only concession was that Europe and its model did have consequences for the
rest of the world.
It was Immanuel Wallerstein's (1974) The Modern World- System [and if I may say so also my
own simultaneously written World Accumulation and the companion Dependent Accumulation
(Frank 1978a,b)] that sought to systematize these consequences of European expansion and
"capitalist" development for both Europe and the rest of the world. Both of us
emphasized the negative "underdeveloping" impact of European expansion in many
other parts of the world and their contribution in turn to capital accumulation and
development in Europe and then also in North America. However, both of us still limited
our modelling and theoretical analysis to a modern "world" economy/system, which
we saw and Wallerstein still sees as centered in Europe and expanding from there to
incorporate more and more of the rest of the world in its own European based
"world" economy. In his perspective, Europe's expansion did incorporate parts of
Africa, the Caribbean and the Americas into the world-economy/ system.
However as Wallerstein explicitly explains, this economy was only world-like, and not at
all world-encompassing. For in his view, West-, South-, and East- Asia, and indeed Russia,
were only incorporated into this European world-economy/ system after 1750. So
Wallerstein's "world-system" perspective, theory and analysis not only do not
encompass most of the world before that. He even claims explicitly that most of the world,
including all of Eurasia east of the Mediterranean and Eastern Europe played no
significant part in his "world-economic/system" history. Eric Wolf (1982) is
rightly critical of others' neglect of the impact of Europe [on] the People Without
History. He shows that people outside Europe did have histories of their own and how the
expansion of Europe impacted on them. However, he still underestimates their mutual impact
on each other; and he does not ask how the one world in which all participate together
impacts on each of them. Moreover he retains, indeed even resurrects, the primacy of
"modes of production," from kinship, to tributary, to capitalist based ones.
Thus Eric Wolf (1982) and Samir Amin (1991) refer to a so-called "tributary mode of
production," which supposedly characterised the whole world before 1500 according to
the former and much of it still until 1800 according to the latter. Little is gained in my
view, and much better opportunities at global reformulation are needlessly squandered, by
inventing new latter day variations of these old European derived categories with fuzzy
and euphemistic prefixes that characterize particular 'societies' as pre, proto, semi,
quasi, commercial, petty, ersatz, or even post 'capitalist' and 'feudal' or 'socialist'
for that matter.
The same must be said about the recent Dutch discussion about 'merchant capitalism.' The
same original Eurocentric sin is still latent if not manifest even in the most recent
conscious efforts to transcend Eurocentrism from Janet Abu-Lughod's (1989) Before European
Hegemony [which ends in 1350 and previews a new beginning in Europe] and Chaudhuri's
(1990) Asia Before Europe [whose subtitle established Indian Ocean limits, and does not
attempt an economic history even of that], to Blaut's (1993) The Colonizers Model of the
World [who criticizes Eurocentrism but offers no replacement and attempts no world
economic history]. Indeed, the alleged European origin of the 'modern capitalist world
system' is still fuetured even in Arrighi's (1994) The Long Twentieth Century, Snooks'
(1994) Was the Industrial Revolution Necessary? and The Dynamic Society (1996),
Sanderson's (1995) Social Transformation, Modelski & Thompson's (1996) Leading Sectors
and World Powers, Adams' (1996) Paths of Fire, and Chase-Dunn & Hall's (1997) Rise and
Demise. As noted in footnote 6 above, the Gulbenkian Commission Report on Open the Social
Sciences for the twenty-first century, written mostly by Wallerstein (1996), also stops
short of challenging the sacrosanct cage of the European origin and center of capitalism
and all that allegedly follows.
Yet, as Marshall Hodgson (1993) already wrote before his untimely death in 1968
a Westernist image of world history, if not disciplined by a more adequate perspective,
can do untold harm; in fact it is now doing untold harm.... We must force ourselves to
realize what it means to say that the West is not the modern world, gradually assimilating
backward areas to itself; .... At least as important was the very existence of the vast
world market, constituted by the Afro- Eurasian commercial network (Hodgson 1993:290, 68,
That is, most received economic and other history not only neglect and/or distort
especially the Asian parts of real world [economic] history. Perhaps even more significant
is that thereby Eurocentric history and social theory cannot even account for or explain
the fundamentals of European and Western [economic] history itself. Therefore, it is
useless to look for the "causes" of this rise only or even primarily under the
III. A HOLISTIC GLOBAL ALTERNATIVE
How then did the West "rise," if there was nothing exceptional about it or its
mode of production and it did not even entertain any hopes of hegemony before 1800?
Instead, the entire question of "The Rise of the West" then and of the East now
must be re- conceptualized and re-phrased in terms of the whole world economy/system
itself and not just to any British, European, Western, and/or now East Asian part/s of the
same. The only solution is to cut the Eurocentric gordian knot and approach the whole
question from a different paradigmatic perspective. The "Rise of the West" in
Europe, therefore was not a case of pulling itself up by its own bootstraps nor even with
the exploitation of its colonies. More properly, the "Rise of the West" must be
seen as occurring at that time in the world economy/system by engaging in NIE import
substitution and export promotion strategies to climb up on the shoulders of the Asian
economies. The [cyclical?] decline of Asian economies and regional hegemonies facilitated
this European climb up, then as the subsequent renewed decline of the west facilitates the
also renewed rise of the east now. East Asia's rise to world economic prominence makes it
all the more urgent to focus on the long historical continuity of which both processes are
THE EARLY MODERN WORLD ECONOMY 1400-1800 A WORLD ECONOMIC SUMMARY
Despite all the allegations to the contrary, on the evidence there can be no reasonable
doubt that there was a globe encircling world-wide trading system and division of labor
long before "Europeans built a world around themselves, as historians know."
Janet Abu- Lughod (1989) outlined a "thirteenth century world system" with some
"regional" patterns, which persist in the world economy through the eighteenth
century. She identified three major - and within each of these some minor - regions, in
eight mutually overlapping regional ellipses that covered Afro-Eurasia in her account of
the world economy. These included regions centered - going from west to east - on Europe,
the Mediterranean, the Red Sea, the Persian Gulf, the Arabian Sea, the Bay of Bengal, the
South China Sea, as well as Inner Asia. All of these regions continued to play more or
less major, but not equal, roles in the world economic division of labor and system of
"international" trade, despite the addition of an Atlantic ellipse in the
sixteenth century. This global economy and multilateral trade, also in Asia, was expanded
through the infusion of American money by the Europeans. Indeed, that is what permitted
Europeans to increase their participation in the global economy, which until and even
through the eighteenth century remained dominated by Asian and particularly Chonese and
Indian production, competitiveness, and trade. A number of works by mostly Asian
historians are helping to put the Indian Ocean economy on the map, as its important place
and role in history well merits. China was the focus of a Sino-centric sub-system in East
Asia, whose economic weight in the world has been grossly underestimated, even when it has
been recognized at all, which itself has been all too rare.
The work of Hamashita (1988,1994) and the proposed research by him and Arrighi and Selden
(1996) are designed to help remedy this serious deficiency. There were also longstanding
bilateral relations of China with Central Asia and the trilateral ones with Korea and
Japan, and the significant roles of the coastal regions of China, of emporia and other
ports on the South China Sea and in Southeast Asia and the Ryukus, and of the trading
diasporas especially of "Overseas Chinese," which not incidentally continue to
play their vital roles today. None of this global pattern of inter-regional division of
labor and trade corresponds to the received image of a "modern capitalist
world-economy" that began in Europe and only then expanded to "incorporate"
one region after another elsewhere in the world until the West dominated them all.
Instead, the international division of labor and relative sectoral productivity and
regional competitiveness in the world economy were reflected the pattern of trade balances
and money flows on a global scale. In the structure of the world economy, four major
regions maintained built-in deficits of commodity trade: The Americas, Japan, Africa and
Europe. The first two balanced their deficit by producing silver money for export. Africa
exported gold money and slaves. Southeast Asia and West Asia also produced some silver and
gold money, which contributed to balance their trade. Unlike Europe however, they were
able also to produce some other commodities for which there also was an export demand.
Both Southeast and West Asia also realized "export" earnings from their
respective locations at the south eastern and south western trade turntables of the
central Asian economies. To some extent, so did Central Asia.
That is in economic terms, all of these deficitary regions nonetheless also produced some
"commodities" for which there was a demand elsewhere in the world economy. The
fourth deficitary region, Europe, was hardly able to produce anything of its own for
export with which to balance its perpetual trade deficit. Europe managed to do so
primarily by "managing" the exports of the three other deficitary regions, from
Africa to the Americas, from the Americas to Asia, and from Asia to Africa and the
Americas. The Europeans also participated to some extent in trade within Asia, especially
between Japan and elsewhere. This intra- Asian "country" trade was marginal for
Asia but nonetheless vital for Europe, which earned more from it than from its own trade
with Asia. However, none of this European participation in world trade and the global
division of labor would have been possible without European colonial access to American
silver, of which more below.
The two major regions that generated and export surplus and were most "central"
to the world economy were India and China. That centrality rested primarily on their
outstanding absolute and relative productivity in manufactures. In India, these were
primarily its cotton textiles that dominated the world market, and to a lesser extent its
silk textiles, especially in India's most productive Bengali region. Of course, this
competitiveness in manufacturing also rested on productivity on the land and in transport
and commerce. They supplied the inputs necessary to supply raw materials to industry, food
to workers, and transport and trade for both, as well as for export and import.
The other, and even more "central" economy was China. Its even greater
centrality was based on its even greater absolute and relative productivity in industry,
agriculture, [water] transport, and trade. China's even greater, indeed the world
economy's greatest, productivity, competitiveness and centrality was reflected in its most
favorable balance of trade. That was based primarily on its world economic export
leadership in silks and ceramics and its exports also of gold and copper coin and later of
tea. These exports in turn made China the "ultimate sink" of the world's silver,
which flowed there to balance China's almost perpetual export surplus. Of course, China
was only able to satisfy its insatiable "demand" for silver; because it also had
an inexhaustible supply of exports, which were in perpetual demand elsewhere in the world
Thus another "regionalization" of the world economy could be visualized in the
form of concentric circles. Among these, China [and within that the Yangtze Valley and/or
South China] would form the innermost circle. The "East Asian Tribute Trade
System" studied by Hamashita (1988,1994) would form the next circle, which beyond
China included at the very least parts of Central Asia, Korea, Japan, and Southeast Asia.
However, the boundaries of this circle were porous and uncertain, and Hamashita himself
recognizes its extension to South Asia. That in turn of course had millenarian old close
relations with West Asia and East Africa, as well as with Central Asia, which in turn
became increasingly enmeshed with Russia and that with China. These regions could be said
to form a next outer band, which we can then perhaps identify as an Asian, or Afro-Asian,
regional circle. Europe and across the Atlantic the Americas would then occupy their
rightful places in the outer band of the concentric circles, since Asia also had economic
relations with Europe and through its mediation with the Americas. Apart from focusing on
China, East Asia, and Asia respectively as major world economic regions, such a concentric
circle mapping of the global economy also puts Europe and even the Atlantic economy in
their marginal place.
This Asian economic predominance also means that European the supposed technological
'advance' and especially its 'seventeenth century scientific revolution' and the latter's
alleged contribution to technological innovation are pure Eurocentric myths (Adams 1996,
Shapin 1996, Frank 1997). At least four different but related kinds of evidence and
argument must lead us to reject the received wisdom's mythology about the alleged
technological and institutional superiority of Europe over Asia before 1800. They are the
evidence of technological advance and institutional sophistication in various parts of
Asia and their comparison with European ones, the fact that in response to world economic
relations and competition these technologies and institutions were widely diffused in all
directions whenever it was profitable to do so, and the myth of the alleged contribution
of the 'seventeenth century scientific revolution' in Europe to the development of
technology itself. Another still more important reason that casts even more than doubt on
the thesis of European technological superiority is derivative from the above
observations: There was no European technology! The development of technology, like all
economic development, was a world economic process, which took place in and because of the
structure of the world economy/system itself.
A SHORT HISTORY OF GLOBAL 'EAST'- 'WEST' RELATIONS
The present millennium began with a period of Afro Eurasian-wide political economic
expansion around AD 1000, which was centered at its far "eastern" end in Song
China, but it also accelerated an accentuated re- insertion of its "western" end
in Europe, which responded by going on several Crusades to plug its marginal economy more
effectively into the new Afro- Eurasian dynamic. A period of pan-Afro Eurasian political
economic decline and even crisis followed in the late thirteenth and especially in the
Another long period of expansion began in the early fifteenth century, again in East and
Southeast Asia. It soon included Central, South and West Asia, and after the mid fifteenth
century also Africa and Europe. The "discovery" and then conquest of the
Americas and the subsequent "Columbian exchange" and then European
"Ecological Imperialism" were a direct result, and part and parcel, of this
world economy/system wide expansion (Crosby 1972, 1986). So if there was a "new
departure," it was the incorporation of the Americas and then also of Australasia
into this already ongoing world historical process and then global system. However, not
only the initiative but also the very causes and then forms of execution of this
incorporation had been generated by the structure and dynamic of the Afro Eurasian
historical process itself. It was the renewed economic expansion that started in East,
Southeast and South Asia in 1400 and reached Europe by 1450, which attracted Columbus and
Vasco da Gama in 1492 and 1498.
For the "long sixteenth century" expansion in fact began in Asia in the early
fifteenth century; and it continued in Asia through the seventeenth and into much of the
eighteenth centuries. Indeed, this economic expansion was primarily Asian based, although
it was also fuelled by the new supplies of silver and golden money now brought by the
Europeans from the Americas. In Asia, this expansion took the form of rapid growth of
population, production, trade including imports and exports, and presumably income and
consumption in China, Japan, Southeast Asia, Central Asia, India, Persia, and the Ottoman
lands. Politically, the expansion was manifested and/or managed by the flourishing Chinese
Ming/Qing, Japanese Tokugawa, Indian Mughal, Persian Safavid, and Turkish Ottoman regimes.
The European populations and economies grew more slowly than all but the last of the
above, and they did so rather differentially among each other. So did some
"national" and other quite multi-ethnic European states, all of which were
however much smaller than the large ones in Asia. The differentiation in productivity and
competitiveness that underlay the division of labor and exchange were manifest in
im-balances of trade and "compensated" by flows over long distances of mostly
silver specie money. Reflecting the macroeconomic imbalances and also responding to
corresponding microeconomic opportunities to make and take profit, the silver moved around
the world in a predominantly eastward direction across the Atlantic and - via Europe -
across the Indian Ocean, and westward across the Pacific from the Americas and Japan.
Ultimately, the largest silver "sink" was in China, whose relatively greatest
productivity and competitiveness acted like a magnet for the largest quantity of silver.
However there as elsewhere, the incoming money generated increased effective demand and
stimulated increased production and consumption and thereby supported population growth.
The new supply of money failed to do so where the political economy was insufficiently
flexible and expandable to permit growth of production to keep pace with the increase in
the supply of money. In that case rising effective demand drove up prices in inflation,
which is what happened in Europe.
As a result, population grew much more and faster in Asia than in Europe before inflecting
after 1750. Indeed in the centuries before that, European population grew at only 0.3 to
0.4 percent per year and maintained a stable 20 percent of the world population total. At
the same time, Asian population grew at 0.6 per cent a year, and even faster in China and
India, so that the Asian share of the world total rose from 60 to 66 percent. However, the
Asian population was not only much larger and faster growing. To support its faster
growing population, Asia also was able to produce more and more productively. Indeed, in
1750 Asia's 66 percent share of the world's population produced 80 percent of the world's
GNP, while Europe's 20 percent of population produced less than the remaining 20 percent
of world output, since Africa and the Americas also contributed to the same -- and to
European GNP itself. Per capita income in Asia and especially in China was also higher
than in Europe (Bairoch 1981, Frank 1998).
Europe's disadvantaged position in the world economy was partly compensated by its
privileged access to American money. On the demand side, the use of their American money -
and only that - permitted the Europeans to enter into and then increase their market share
in the world market, all of whose dynamic centers were in Asia. On the supply side, access
to and use of cheap - to the Europeans virtually free - money in the Americas afforded the
wherewithal to acquire the supplies of real consumption and investment goods world-wide:
servile labor and materials in the Americas to dig up the silver in the first place; slave
labor from Africa; and from a European perspective virgin soil and climate also in the
Americas. These resources were used to produce sugar, tobacco, timber for ships and other
export crops later including especially cotton at low cost for European consumption. West
European imports via the Baltic Sea of grain, timber, and iron from eastern and northern
Europe was also paid for with American money and some textiles. And of course their
American supplied money was the only means of payment that permitted Europeans to import
all those famed Asian spices, silks, cotton textiles and other real goods for their own
consumption and also for re- export to the Americas and Africa. Asians produced these
goods and sold them to Europeans only for their American supplied silver. That is, all
these real goods that were produced by non-Europeans became cheaply, indeed nearly freely,
available to Europeans; because they had and were able to pay for them with their American
supplied money. Indeed, this silver - also produced by non-Europeans - was the only export
good that the Europeans were able to bring to the world market. Additionally moreover,
this supply of goods produced by labor and raw materials outside of Europe also replaced
and freed alternative resources for other uses within Europe: American sugar and Atlantic
cod fish supplied calories for consumption for which Europe did not have to use their own
farmland; Asian cotton textiles supplied clothes for which to European consumers and
producers did not have to use wool from European sheep that would have eaten European
grass. Otherwise, that grass would in turn have had to be produced on still more
enclosures of land for even more 'sheep to eat [some] men' so as to produce still more
wool to clothe others. Thus, the import of Asian textiles with American money indirectly
also permitted Europeans to produce more food and timber in Western Europe itself. Thus,
Europeans were able to use their position in the world economy both to supplement its own
supplies and resources by drawing directly on those from the Americas to the west and
Eastern Europe and Asia to the east. The supply of these additional resources to Europe
from the outside also freed European resources for use in its own development. So the turn
of the eighteenth century was not marked by Europe's alleged absolute or relative
development nor by any Asian 'traditional' backwardness or stagnation. On the contrary and
perhaps paradoxically, it was Asia's economic development and Europe's backwardness that
set the stage for the simultaneous cyclical "Decline of the East" and "Rise
of the West." Europe's still productive backwardness may have offered some of the
"advantages" to catch up, discussed by Gerschenkron (1962). Europe's
backwardness incentivated and its supply of American money permitted Europeans to pursue
micro- and macro-economic advantages, which were to be had from increased European
participation in the expanding Asian economies from 1500 to 1800. The roots of the post
1800 "Rise of the West" and "Decline of the East" can and must be
accounted for in WORLD-wide economic and demographic terms, in which the economies of Asia
played a major role.
A WORLD DEMOGRAPHIC/ ECONOMIC/ ECOLOGICAL EXPLANATION OF THE DECLINE OF THE EAST AND THE
RISE OF THE WEST
My explanation has three related parts. A combination of demographic and
micro-/macro-economic analysis identifies an inflection of population and economic
productivity growth rates that led to an "exchange" of places between Asia and
Europe in the world economy/system between 1750 and 1850. Microeconomic analysis of
world-wide supply-and-demand relations and relative economic and ecological factor prices
can show how they generated incentives for labor and capital saving and energy producing
invention, investment and innovation, which took place in Europe. On the other hand,
macroeconomic analysis of cyclical distribution of income and derivative effective demand
and supply in Asia illuminate the opportunity to do so profitably in world economic terms.
This summary explanation of the related "Decline of the East" and "Rise of
the West" may be briefly elaborated as follows: The simple hypothesis is that
technological innovations were a function of demand and supply and of relative factor
prices of inputs like labor, capital, and land. Therefore it was primarily the higher
wages and relatively abundant capital in Europe that eventually generated labor saving and
energy producing technology. This argument may be challenged by the observation [e.g. by
Pomeranz 1997] that the "industrial revolution" was less labor
"saving" than labor "extending" and that it increased the productivity
of both labor and capital. Direct wage rates or costs may also have been as high [or even
higher] in some parts of China, e.g. in the Yangtze Valley and the South, though probably
not anywhere in India, than in some parts of Europe, especially England.
An unequal distribution of income generates luxury and import demand at the top and a
large supply of cheap labor at the bottom. I contended that this was the case moreoso, and
Pomeranz (1997) that it was not so, in China than in Europe, although we agree that it
probably was more unequal than either in India. N9 But the problem of absolute, relative
and world wide comparative wage costs - in entrepreneurial calculation as in our analysis
of the same - is related also to local and regional problems of labor allocation. And
there were some economic differences in labor allocation especially between agriculture
and industry, which were related to some institutional differences. However, it is less
clear to what extent these differences were underlying causes or of the observed
allocation of labor or whether they were only different institutional mechanisms through
which the labor allocation were organized. Particularly important differences were: A.
Bonded labor in India (Pomeranz 1997). B. Women were tied to the village and their labor
was restricted to agriculture and dopmestic industry, eg. spinning, in China (Goldstone
1996). C. Some industrial workers could still draw directly on some subsistence goods
produced by women-village- agriculture in China but less so in England without having to
acquire these through the market (Pomeranz 1997). D. Enclosures [to produce more cheaper
wool for textiles on more land - "sheep ate men"] expulsed male and female labor
from the land into urban un/employment in England [and elsewhere in Europe?].
The industrial "revolution" was initiated with cotton textiles, but these
required both a growing "external" supply of cotton [for Europe - from its
colonies] and a "world" market for all in which everybody had to compete [except
China, which still had a growing and protected domestic and regional market]. The
industrial "revolution" also required and took place in the supply and
production of more and cheaper energy, especially through coal and its use in making and
using machinery to generate steam power, first stationary and then also mobile. The
critical role of coal and its replacement of wood as a source of fuel in Britain is
demonstrated by Wrigley (1994). These sources of power technically and economically first
required [and permitted] concentration of labor and capital in mining, transport, and
production. Then they also permitted faster and cheaper long distance transport via steam
powered railway and shipping. Investment in such "revolutionary" industrial
power, equipment, organization and the labor necessary to make them work was undertaken
wherever, but also only where, it was economically rational and possible to do so, in
terms of A. Labor allocation and cost alternatives; B. Location and comparative costs of
other productive inputs [eg. timber/coal/animal/human sources of power and transport,as
well as raw materials like cotton and iron], which were related to the geographical
location of these resources and to ecological changes in their availability; C. capital
availability and alternative profitable uses; and D. Market penetration and potential.
At the turn of the eighteenth-nineteenth centuries the above-mentioned factors in world
economic competitive and comparative circumstances, changes, and transformation generated
the following results:
- India continued but was threatened in its competitive dominance on the world textile
market on the basis of cheap and also bonded skilled labor. Domestic supplies of cotton,
food and other wage goods continued to be ample and cheap; and productive, trade and
financial organization and transport remained relatively efficient despite suffering from
increasing economic and political difficulties. However, supplies of alternative power and
materials, eg. from coal and iron/steel, were relatively scarce and expensive. Therefore,
Indians had little economically rational incentive to invest in innovations at this time.
They were further impeded from doing so first by economic decline beginning already in the
second quarter of the eighteenth century or earlier; then by the [resulting?] decline in
population growth and British colonialism from the third quarter onwards; and finally from
a combination of both decline and colonialism as well as "Drain" of capital from
India to Britain. India switched from being a net exporter to being a net importer of
cotton textiles in 1816. However India did continue to struggle on the textile market and
began again to increase textile production - by then also in factories - and exports in
the last third of the nineteenth century.
- China still retained its world market dominance in ceramics, partially in silk and
increasingly in tea, and remained substantially self-sufficient in textiles. China's
balance of trade and payments surplus continued into the early nineteenth century.
Therefore China had availability and concentration of capital from both domestic and
foreign sources. However, China's natural deposits of coal were distant from its possible
utilization for the generation and industrial use of power, so that progressive
deforestation still did not make it economical to switch from wood to coal for fuel.
Moreover, transport via inland canals and coastal shipping, as well as by road, remained
efficient and cheap [but not from outlying coal deposits]. This economic efficiency and
competitiveness of the Chinese on both domestic and world markets also rested on
absolutely and comparatively cheap labor costs. Even if per-capita income was higher than
elsewhere, as Bairoch notes, and its distribution was no more unequal than elsewhere [as
Pomeranz and Goldstone claim], the wage good cost of production was low, both absolutely
and relatively. Labor was abundant for agriculture and industry, and agricultural products
were cheaply available also for industrial workers and therefore to their employers, who
could pay their workers low subsistence wages. Goldstone (1996) emphasizes one reason:
Women were tied to the villages and therefore remained available for [cheap] agricultural
production. Pomeranz (1997) emphasizes a related reason: Urban industrial workers were
still able to draw for part of their subsistence on "their" villages, which were
produced cheaply in part by the women to whom Goldstone refers. In other words from an
entrepreneurial industrial employer and market perspective, wage goods were absolutely and
relative cheap; because agriculture produced them efficiently and cheaply also with female
labor. The "institutional" distribution of cheap food to urban and other workers
in industry, transport, trade and other services was functionally equivalent to what it
would also have been if the functional distribution of income had been MORE unequal than
it was. The availability of labor was high, its supply price low, its demand for consumer
goods attenuated; and there was little incentive to invest in labor saving or alternative
energy using production or transport. Elvin (1973) sought to summarize such circumstances
in his "equilibrium trap." Even so, China still remained competitive on the
world market and maintained its export surplus. Emperor Ch'ien Lung said in his 1793
message to King George III of England "I set no value on objects strange and
ingenious and have no use for your country's manufactures" (Schurman and Schell 1967,
- Western Europe and particularly Britain were hard put to compete especially with India
and China. Europe was still dependent on India for cotton textiles and on China for
ceramics and silks that Europe re-exported and from which it profited in its [economic
and/or political] colonies in Africa and the Americas. Moreover, Europe remained dependent
on its colonies for most of the money it needed to pay for these imports, both for
re-export and for its own consumption and other use, e.g., as inputs for its own
production and export. In the late eighteenth and early nineteenth centuries, there was a
decline in the marginal if not also the absolute inflow of precious metals and other
profits through the slave trade and plantations from the European colonies in Africa and
the Americas. To recoup and even to maintain - never mind to increase - its [world and
even domestic] market share Europeans collectively and its entrepreneurs individually had
to attempt to increase their penetration of at least some markets, and to do so either by
eliminating competition politically/militarily or by undercutting it by lowering its own
costs of production, or both. Opportunity to do so knocked when the "Decline"
began in India and West Asia, if not yet in China. Wage and other costs of production and
transport were still uncompetitively high in Britain and elsewhere in Europe. However
especially after 1750, rising incomes and declining mortality rates sharply increased the
rate and amount of population growth. Moreover, the displacement of surplus labor from
agriculture increased its potential supply to industry. At the same time, the imposition
of British colonialism on India reversed the perennial capital outflow to India and turned
it into "The Drain" from India and into Britain. Moreover, a combination of
commercial and colonial measures would permit the import of much more raw cotton to
Britain and Western Europe. Deforestation and ever scarcer supplies of wood and charcoal
and rendered these more expensive. At the same time since the second third of the
eighteenth century, first relative and then absolute declines in the cost of coal made the
replacement of charcoal [and peat] by hard coal increasingly economical and then common in
Britain. The Kondratieff B phase in the last third of the eighteenth century generated
technological inventions and improvements in textile manufacturing and steam engines
[first to pump water out of coal pits and then also to supply motive power to the textile
industry]. At the turn of the eighteenth-nineteenth centuries, the "first" A
phase [identified by Kondratieff] and the Napoleonic wars generated increased investment
in and the expansion of these new productive facilities and then also of transport
equipment. Ever more of the available but still relatively high cost labor force was
incorporated into the "factory system." Production increased rapidly; real wages
and income declined; and "the workshop of the world" conquered ever more foreign
markets through "free trade." Yet even then, British colonialism had to prohibit
free trade to India and recurred to the export of its opium to force an "Open
Door" into China.
- Most other parts of the world still fall through the cracks of our world economic
analysis. Yet in brief, we can observe that most of Africa may have had labor/land ratios
at least as favorable to labor saving investment as Europe. However Africa did not have an
analogous resource base [except the still undeveloped one in Southern Africa], and far
from having a capital inflow, Africa suffered from capital outflow. The same was true of
the Caribbean. Latin America had resources and labor, but also suffered from colonial and
neo- colonial capital outflow as well as specialization in raw materials exports, while
its domestic markets were captured by European exports. West, Central Asia, and Southeast
Asia became increasingly captive markets for if not also colonies of Europe and its
industry, to which they supplied the raw materials that they had previously themselves
processed for domestic consumption and export. In the nineteenth century, only the
European "settler colonies" in North America, Australasia, Argentina, and
Southern Africa were able to find other places in the international division of labor, and
China and Japan were able to continue offering significant resistance.
In short, changing world demographic/ economic/ ecological circumstances suddenly - and
for most people including Adam Smith unexpectedly - made a number of related investments
economically rational and profitable: in machinery and processes that saved labor input
per unit of output, thus increasing the productivity and use of labor and its total
output; increasing productive power generation; and increasingly productive employment and
productivity of capital. This transformation of the productive process was initially
concentrated in selected industrial, agricultural, and service sectors in those parts of
the world economy whose comparative competitive POSITION made -- and then continually
re-made -- such Newly Industrializing Economies [NIE] import substituting and export
promoting measures economically rational and politically possible. Thus, this
transformation was and continues to be only a temporally localized and still shifting
manifestation of a WORLD economic process, even if it is not spread uniformly around the
world -- as historically nothing ever has been and still is not likely. But that is
another - later - story, which will lead to the Re-emergence of East Asia in the world
CONCLUSIONS AND IMPLICATIONS
Received theory attributes the industrial revolution and the "rise" of the West
to its alleged "exceptionality" and "superiority." The source of the
same is sought in turn in the also alleged long-standing or even primeval Western
preparation for take-off. This contention mistakes the place and misplaces the
"concreteness" of the transformation by looking for it in Europe itself. Yet the
"causes" of the transformation can never be understood as long as they are
examined only under the European streetlight and must instead be sought under the
worldwide global illumination in the system as a whole. That turns all received theory on
The argument - and the evidence! - is that world development between 1400 and 1800
reflects not Asia's weakness but its strength, and not Europe's nonexis tent strength but
rather its relative weakness in the global economy. For it was all these regions' joint
participation and place in the single but unequally structured and unevenly changing
global economy that resulted also in changes in their relative positions in the world. The
common global economic expansion since 1400 long benefited the Asian centers earlier and
more than marginal Europe, Africa, and the Americas. However, this very economic benefit
turned into a growing absolute and relative disadvantage for one Asian region after
another in the late eighteenth century. Production and trade began to atrophy as growing
population and income, but also their economic and social polarization, exerted pressure
on resources, constrained effective demand at the bottom, and increased the availability
of cheap labor in Asia more than elsewhere in the world. That world economic change also
opened the door to the "Rise of the West,' which must be re-examined in terms the
more important global historical continuity instead of any and all its dis- continuities.
The perception of a major new departure in 1500, which allegedly spells a dis-continuous
break in world history, is substantially [mis] informed by a Eurocentric vantage point.
Once we abandon this Eurocentrism and adopt a more globally holistic world or even pan
EurAsian perspective, dis-continuity is replaced by far more continuity. Or the other way
around? Once we look upon the whole world more holistically, historical continuity looms
much larger, especially in Asia. Indeed, the very "Rise of the West" itself then
appears derived from this global historical continuity.
East Asia's renewed rise to world economic prominence makes it all the more urgent to
focus on the long historical continuity of which this process is a part. Wertheim
(1967:639) already observed that "around the turn of the mid-century a fresh turnover
ocurred ... [and] symbolized a decisice turnabout in world history." Decolonization
in South Asia with independence in India in 1948, liberation in China in 1949 and then in
Indonesia and elsewhere in Southeast Asia marked a political beginning of this renewed
shift. And only a half century later the 1997 return of Hong Kong to China heralded the
completion of another 360 degree round the world global shift. Economically, it began in
industrialization in China including Taiwan and in Japan and then Korea, but also included
Hong Kong and Singapore among the first set of the East Asian NIEs or "four
tigers." Since then, revived economic growth has been spreading also to other
"tigers" or "little dragons" elsewhere in Southeast Asia and to the
"BIG Dragon" on the China coast. That is the same South [and East] China Sea
region, also with its "overseas Chinese" diaspora, which had been so prominent
in the world economy in the previous long political economic phase of expansion from the
fifteenth through the eighteenth centuries.
The now supposed dis-continuous but really renewed rise of the "East" must be
seen as part and parcel of the fundamental structure and continuity in global development.
Recognizing and analyzing this continuity will reveal much more than myopically focusing
on the alleged dis-continuities, like the newly discovered "globalization" and
"new emergence of the East" of the 1990's, or indeed also like the wholesale
misinterpretation that already sees a renewed "meltdown" in 1997. The widely
mis-interpreted 1998 'meltdown' of East Asia is a largely but not entirely financial
symptom of the renewed reality of the growing importance of East Asian productive
capacity, market demand, and finance in the world economy: It is in part this [over]
productiuve capacity in East Asia that has generated the first world recession again to
begin in East Asia and spread from there to the West, instead of vice versa. That marked
the beginnings of the return back 360 degrees around the world of the world economic
center to Asia where it had always been before the already past period of temporary
Thus, the contemporary economic expansion in East Asia may spell the beginnings of a
return of Asia to a leading role in the world economy in the future as it had in the not
so distant past -- with 'Middle Kingdom' China again at its 'center'. Wertheim (1997:169)
recalls that the Dutch historian Jan Romein (1962) already called ours The Asian Century
and predicted that in two or three decades China would become an industrial nation and
rise to become the greatest power in the East if not the world. These contemporary
developments and future prospects demand new and better historiography and social theory
to comprehend them and to offer at least some modest guide to social policy and action.
ReORIENT THE 19TH CENTURY
DEBUNK MYTHOLOGY, ReORIENT REALITY
This book is a nineteenth century sequel to my ReORIENT, which stopped in 1800. I now join
Kenneth Pomeranz  when he writes I would emphasize an effort to
re-think the 19th century, which as he observes has been
abandoned by a whole generation of scholars. Also Edmund Burke [2000: 1] notes
Why the nineteenth century? Because it seems to me to be the piece that has thus far
been left out of the rethinking of modern world history
. Were still far from
being able to devise a truly world-centered historical framework for the nineteenth
century. John F. Kennedy told us, that, "the great enemy of truth is
very often not the lie - deliberate, contrived, and dishonest - but the myth -persistent,
persuasive and unrealistic [Frank 1998:x]. If that is true, then it has certainly been
persistently, and persuasively, so, to meld the titles of two books, about THE NATURE AND
CAUSES OF THE WEALTH AND POVERTY OF NATIONS [Smith 1776/1937 & Landes 1997]. For the
received and still persistent mythological 'explanations' are altogether wide of the mark
of how THE GREAT DIVERGENCE, as Pomeranz  calls it, emerged out of the structure;
function and transformation of the world economy in the nineteenth century.
Two dozen such still widely prevalent myths are examined in the first chapter of my
forthcoming ReORIENT THE 19TH CENTURY, of which I append some excerpts below.
1. THE GAP WHEN AND HOW MUCH DID THE DIVERGENCE REALLY TAKE PLACE?
- The previously existing world economic landscape, if not already after 1500 as many
claim, including Wallerstein  and Frank , was qualitatively transformed in the
period 1750-1800, and certainly soon after 1800, as asserted among many others still by
[Wolf 1982] and Frank . NOT SO.
ReORIENT had argued that the Decline of Asia came first, and then the Rise of the West.
That thesis and wording , derived from Janet Abu-Lughod  seems still to have
historically and theoretically important validity. I placed the transition and divergence
around 1800 instead. So did the world historically oriented sinologists Bin Wong 
and Kenneth Pomeranz  . Further inquiry of mine and research of theirs then moved
the dating of the transition and divergence closer to the mid-nineteenth century [Wong xx,
Pomeranz 2003]. But further evidence now suggests that its timing needs to be moved up by
a whole century from 1760-70, or at least two thirds of one. My inquiry in this book,
however, now leads me to advance the dating by yet another decade or two to at least 1860
in China and 1870 in the West. So the intervening Western interregnum mostly lasted only
ONE century or LESS! .
2. ECONOMIC GROWTH
- The industrial revolution was a revolution in industrial growth that took off first in
Britain and then elsewhere in Europe mostly on the basis of new industrial technology and
productivity, which was developed there and permitted Europe to outpace the rest of the
world from 1760 or at least from 1800 on. and to do so primarily on or for the domestic
market. NOT SO.
In the home of the industrial revolution, nobody seemed to be aware what they were living
through was one. Certainly not any of the great economists. Not Adam Smith in 1776. Not
Malthus in 1798 when he launched his population/land thesis in the absence of
technological change. Nor Ricardo in 1816 when he emphasized decreasing returns. Not the
renowned French economist Jean Baptise Say who still in 1828 predicted that '' no machine
will ever be able to transport people or goods around like the worst of horses
[quoted in Bairoch 1997: I-270]. Perhaps that was because in reality there was not all
that much to see. The current revisionist economic history of Europe has shown that
previous suppositions of rapid growth were vastly exaggerated.
3. CAPITAL FORMATION
- Britain achieved its definitive 'take-off' in this period through the abrupt
acceleration of capital formation. NOT SO.
The claims to this effect by Walt Whitman Rostow's and others have long since been
altogether disconfirmed by all evidence that the formation of capital in and by Britain,
e.g. investment as a percentage of income, remained as slow and low as before.
4. INCOME DIFFERENTIALS BETWEEN THE WEST AND THE REST
- Differentials of per capita income, including that of the masses, grew rapidly in the
first half the nineteenth century and became substantial already by 1850. NOT SO.
Already reviewing '' the whole body of wage and price material currently available in
print'' on Britain three decades ago, M. W. Flinn [1974: 395] concludes that there were
few indications of real wage movements either up or down before 1810-14, and after that
until mid-century ''the gains in real wages were slight'' at less than 1 percent per year.
In view of research since ten, this estimate must be considered to be among the so-called
5. BRITAIN THE WORKSHOP FOR THE WORLD. NOT SO:
- Britains industrial revolution enabled it to dominate world export markets. NOT
Britain had a structural and permanent merchandise trade deficit in EVERY year from, which
rose from 10 million pound sterling in 1816 to 175 million around 1905-10 to end at 160
million in 1913
6. TEXTILES - THE INDUSTRIAL FORERUNNER.
- Textiles that were the advance guard of British and then Continental European industrial
and technological 'revolution' that transformed the world economy early in the nineteenth
century. NOT SO:
During most of the period to mid-century, handlooms still outnumbered power looms, and
most of these were still driven by water rather than by steam. Moreover, manufacture of
much textile machinery was just that, it was still made by hand.
7. THE INDUSTRIAL REVOLUTION AND INDUSTRIALIZATION
- Rapid industrialization, first in Britain and then elsewhere in Europe and the United
States, is what set off The Great Divergence and the Gap in Income between the West and
the Rest. NOT SO
Revisionist history casts ever more doubt on the very existence and concept of industrial
revolution. But as noted above already contemporaries did not see
themselves as living in or through one.
8. EXPORTS. DID BRITISH EXPORTS CONQUER THE WORLD MARKET?
- British exports particularly of textiles quickly conquered the world market, and
battered down the Great Wall of China, as Marx put it. NOT SO:
In the 1830s also British exports, of which textiles still accounted for the largest
share, were worth 94 million pounds sterling in total. Of these however, 36 million went
to Europe, 15 million to the United States,13 million to the West Indies, 10 million to
Latin America, and only 13 million to all of Asia [Imlah 1958:129].
-Coal was the most important innovation of the industrial revolution in Britain. YES AND
There is indeed consensus that it was the switch from biological above ground sources of
energy from plants, animals and humans to the below ground mineral ones of first coal and
then petroleum that made all the difference. But the switchover was quite late and slow in
coming. But for long the principal use of coal was to generate steam, first primarily to
pump out water to dig ever more and deeper for coal, and only then for other purposes
after a further important delay in technological development. Moreover, Britain came to
rely substantially on the export of coal , which was cause for some concern at the time
that Britain share of world manufacturing export was declining and especially it was
failing to move into exports of technological leadership, into which it was Germany that
was moving instead [ Cains & Hopkins 2002:154].
- The driving force of the new industries was steam from early on. NOT SO:
Steam power made its way rather slowly in and through manufacturing. Steam began to
replace water power In spinning after the 1830s, but not yet in weaving and knitting whose
mechanization was more difficult. By 1835, in about a thousand mills with 30 thousand
horse power [h.p.] were derived from steam , while 10 thousand h.p. were still derived
from water. But at the same time in 1833, of the 350 thousand looms in Britain, 100
thousand were power looms and 250 thousand were still handlooms. Moreover, these figures
are relative, since many looms were only power ASSISTED [Chapman 1972: 19,26]. That may be
because until the 1830s, coal and steam offered little in the way of cost
advantages over windmills, waterwheels, horses, or the hands of women and children to
carry out mill and factory work [Clark
- New means of especially steam-powered railroads quickly transformed the British and
North Atlantic economies. NOT SO:
In that land of their birth in the early-mid 1830s, the yearly number of railway miles
opened was only 40 to 50, rising to an average of about 200 miles in the late 1830s and
early 1840s, before rising to 800 miles in the late 1840s and 1851, after which it
declined again to little more than the level of the 1830s [Rostow 1978:143]. In the United
States there was a short burst of short distance railroad construction in the East before
the Civil War, but the real epoch of railroad construction in North America had to wait
for the 1870s and 1880s.
12. STEAM SHIPS
- Steam ships rapidly conquered the oceans, and with them 'Britannia Ruled the Waves'. NOT
Although steam power was installed in some ships, shipping long continued still to rely on
sail, some now complemented by machines. Of total maritime carrying capacity, steam
accounted for only about 15 percent in 1840, and by 1870 still less than 50 percent
[Hobsbawm 1075:58] was powered by steam Indeed the probably more reliable Ashworth
[1962:68] source says that in 1870, only 12 percent of shipping tonnage was carried by
steam ships and by 1880 still only 25 percent.
13. SCIENCE AND TECHNOLOGY
- It was Western and particularly British science that permitted and accounted for the
industrial and technological revolutions and their impacts in Britain and the world. NOT
There was no 'seventeenth century scientific revolution' [Shapin 1996], and it did not
drive the 'industrial revolution' two centuries later in the nineteenth century. Detailed
research, including industry by industry [Adams 1996] has shown that science had no input
into nor made any other even indirect contribution to technological progress before 1870,
when it began to so primarily in and through the chemical industry, which was not even
born before then [Rosenberg and Birdzell 1986, Frank 1998]. And that was pioneered in
German, not in Britain.
14. THE STATE
The world economy was organized by and through a world market, and imperialism of free
trade operated on its own by laissez-faire without the need for significant state
intervention. NOT SO.
No European state can match the Japanese one in stateliness, much less in being a national
one. Other states in Asia, the big Chinese one, smaller Southeast Asian ones, and West
Asian ones in between performed state functions as well or better than European ones. The
Ottoman imperial state, even as the supposedly sick man of Europe, performed surely as
well or better than the imperial Hapsburg, Russian and British ones with whom it was in
recurrent conflict. Indeed, even more state-like have been the colonial states that they
themselves set up and ran, as well as the neo-colonial ones. In them, their comprador
bourgeoisie, as the Chinese called it or the Lumpenbourgeoisie, its Lumpenstate and the
resulting Lumpendevelopment in Latin America, as I called it [Frank 1972], do the bidding
of their imperial power with which they are in alliance, but as a junior partner.
Moreover, nurturing and using colonial and neo- or semi-colonial states was purposeful
metropolitan policy, especially in the last quarter of the nineteenth century as it
is again today.
15 MILITARY POWER
- If, and insofar as, not British and European industry was the battering ram that force
open the walls and doors of the rest of the world, it was Western availability and
exercise of vastly superior military power over the East and South. NOT SO:
Although there were dozens of colonial wars, they were limited, small and occasional to
protect and sometimes to extend economic or strategic positions under momentary threat,
sometimes by other colonial powers. Major wars were among the colonial powers themselves.
16 BRITISH HEGEMONY
Britain followed the Netherlands and preceded the United States as A or THE hegemonic
power in the world during the nineteenth century. NOTSO
Certainly no one, and also not Britain, was hegemonic during the first half of the
nineteenth century. The period 1850 to 1873 is often said to be the time of maximum
British domination. Yet it certainly did not dominate North America, where in the 1860s
Canada became independent and in the United States Britains southern allies lost the
civil war and the northern winners regularly imposed protectionist anti-free trade
policies. Also in Latin America, British influence was still being combated by national
interests in almost all the states, and/or Britain was challenged by French occupation of
Mexico and by American Monroe trine expansion. Africans still exercised independent and
successful trading positions and the exercise of British political economic power was
limited to small parts of Southern Africa and Egypt. In the Ottoman Empire, it is the case
that Britain eliminated the challenge of Mohammed Ali in Egypt and forced unequal
commercial treaties on the Turks, yet their domestic Tanzimat a sort of analogue to
the Chinese self-strengthening was still quite successful. In Central Asia, Britain
confronted Russia in The Great Game.
17. AMERICAN EXCEPTIONALISM
- American economic development in the nineteenth century, and its move from near the
margin to near the center of the world economy, was indeed a marvel to witness, and had
its roots primarily in the 'distinctive genius' of 'the American Way' to its 'Manifest
Destiny'. NOT SO.
Therefore there has also been virtually no acknowledgment that and how the resulting
beneficial improvements were derived from the position and role of the expanding American
economy in the structure of the also expanding world system of trade and payments
im/balances. Yet it was the latter that gave a largely unmentioned and even less
acknowledged but very important boost to American domestic economic growth, income and
other developments. Immigration, the construction of railroads and other infrastructure by
and for the existing population, new migrants and their offspring, and the production of
export crops of cotton and wheat, later also of meat, and import substitution to supply
the domestic market all expanded.
-Industrialization also means free factory labor and proletarianization. NOT SO
Another Marxist thesis that has passed into general acceptance is that industrialization
was accompanied, indeed accomplished, by a free labor force that works for wages, mostly
in factories. Indeed for much Marxist theory but also in general public opinion that is
the sine qua non essence of capitalism. The historical record belies this theory and
belief for the nineteenth century of industrialization and before and after that as well.
To begin with, wage work already had a history of several millennia in many parts of the
world before it was introduced in nineteenth century Europe. On the other hand, most work,
especially by women, is still not waged even today. So if the expansion and predominance
of wage work is the criterion of the spread of capitalism, then there is still relatively
little capitalism around. Moreover, the industrial revolution used, indeed produced, far
more slave, serf, indentured, and bonded than free labor especially but not only in
agriculture - not to mention that the women and children who labored around the clock in
factories were only ''free'' in a very peculiar sense of that word. Yet it was slavery
that came to be called peculiar at the very time that it was as we will
observe below still expanding by leaps and bounds in the plantations and mines.
- The importance of intercontinental migration can be seen from its vast numbers who left
Europe and from the reasons that pushed emigrants out and pulled immigrants in to where
they contributed to development. NOT SO.
Nineteenth century migration was indeed global; and North and Southeast Asian destinations
were as important, albeit also as neglected, as American ones that have received almost
exclusive attention. Out migration from China was roughly as great as from Europe. Tens of
millions of South Chinese migrants went to Southeast Asia and beyond into the Pacific
islands and some to the Americas. Other tens of millions of Chinese moved into Manchuria
and some beyond that into Siberia and the Russian Far East. There they were joined by
migrants from Japan and Korea moving west and surely undercounted Russians moving eastward
from west of the Urals. Indians and Ceylonese also moved into Southeast Asia and into the
Pacific islands and many fewer as the better known indentured servants into the Caribbean.
20 FREE TRADE
- The nineteenth century was the golden era of free trade. NOT SO.
The policy of free trade was not even born until Britain's abolition of the Corn Laws in
1846. After that, it was practiced at most here and there, and it hardly survived 26 years
until the Great Depression of 1973-1895 buried most of the praxis and of the policy as
well. However, free trade did not go very far even in its heyday. Most significantly,
Britain never allowed any free trade between itself and its most important colony, India,
nor between the latter and other regions. China did not practice free trade, nor did
Japan, even when Western states obliged them to lower tariffs. There was no free trade
between Holland and its Indonesian colony nor between it and any place else. In the United
States, Alexander Hamilton had already promoted high tariffs as part of his 'Manufacturing
21 LAISSEZ FAIRE
- Laissez Faire, or the best government is the least government. Private entrepreneurship
without state interference was responsible for most of the progress through the nineteenth
century. NOT SO
The rebuttal of the fable about free trade also gives the lie to that of laissez faire,
since it was state action that determined how unfree that trade was. It seems curious that
French terminology invaded English and other languages in that respect, since particularly
the highly centralized and colonial French state did and still does not practice what the
saying preaches. However, the 'interference' of states and their promotion and finance of
all kinds of economic projects was legion everywhere.
22. GOLD STANDARD
- Gold reigned, and the Gold Standard was an important weapon in British economic rule of
the world. NOT SO.
Apart from the exaggeration of the extent of British economic rule in the world, the
evidence shows that during the first 1813 to 1848/50, the de facto silver standard that
had been dominant over the previous centuries [see ReORIENT particularly chpt. 3]
continued to reign supreme. The second period from 1848/50 to 1873/80 was marked by a
bi-metallic silver/gold standard, in which silver continued to weigh heavily, both in the
extent of reliance still on silver in the world economy, as well as in the preponderant
number of countries that remained on the silver standard. Thus silver continued first
supreme and then still very significant through three quarters of the nineteenth century.
Gold did not even begin its monetary rule until after 1873 and was only dominant for the
four decades until 1913. Interestingly that is also precisely the period in which the gold
standard's principal supporter, Britain, was losing its previous dominance in the world
Missionaries went out to spread the word of God. NOT SO
An African saying had it first we had the land, and you had the book. Now we have
the book, and you have the land. Indeed, however well intentioned. Many individual
missionaries may have been, de facto they served as the avant garde spear head all around
the world of colonialism and neo-colonialism and still do.
24. IMPERIALISM AND COLONIALISM - DO THEY PAY?
- European colonialism and imperialism, indeed and all political [colonial] and economic [
free trade or other] 'North-South' relations made no significant contribution to the
development of the North. Calculation of the numbers show that the percentages of direct
bilateral foreign trade, payments and possible profits with or from the 'Third World', or
with even all of the world, were too small significantly to affect the development of
Britain, Europe or the United States, as do those of O'Brien [also see his "Balance
Sheet for the Acquisition, Retention and Loss of European Empires Overseas"  ,
Paul Bairoch, and Walt Rostow only to name a few. Bairoch [1997 passim] is repeatedly very
clear that without risking error [II-673] colonialism was bad for the colonized, but for
the colonizers it did no good. - NOT SO:
British Prime Ministers would frankly say what it was all about, and Disraeli explained
that the Indian empire should pay for itself and that Indian resources should be available
for the British imperial cause [Arrighi 19xx: 47 from Tomlinson]. The key words are the
last three, for it was Indias support of the entire system, and not just its
bi-lateral relationship with Britain, that was at issue.
Therefore, all calculations of whether Britain, Europe and/or the United States benefited
or not from their colonies or neo-colonies are already vitiated AB INITIO, because in
almost every case, they take into account only of the bilateral flows of investment, trade
and payments between here and there. The same goes for the assessment of equal or unequal
benefits from voluntarily or involuntarily entering into any bilateral exchange relations,
as much theory and many analyses presume. On the 'left' on the other hand calculations and
often only presumptions on the contrary are that the 'North' or some part thereof did
benefit, substantially or only marginally, from their colonial, imperialist, or
neo-colonial and de facto imperialist relations with some part or the entire 'South'.
However, no matter what the answer to the question 'which side are you on', all these
calculations about bilateral relations are largely altogether irrelevant for their own
purposes of determining the balance sheet of gains and losses. For these can be determined
if at all ONLY by examining the entire system of MULTILATERAL and not simply bilateral or
even trilateral im/balances of trade and payments at any one time and also historically.
As we will see in the following chapter, that was unavoidably [even if mostly neglected]
the case during our last period after 1873.
So, if most of the received wisdom about the nature and causes of the wealth of nations
during the nineteenth century does not stand up under the weight of evidence, then what is
it instead or at least in addition that we must and should we inquire? For more careful
examination of nineteenth century reality belies the now popular beliefs and still most
'scientific' opinion about the supposed Western penetration particularly of the Asian
economy in most of the nineteenth century. Without trying in by any means morally to
justify or politically to support any and all imperialism and colonialism nor any of its
consequences, the time has come to review and where appropriate to revise the
substantially ideological dogma of Western triumphalism over alleged 'traditionalism'
elsewhere and simultaneously of much of the nationalist appeal to and 'defenses' of
'traditional' values and also its exaggeration of the deformation of 'Third World'
economies. To do so in no way negates the critique of ideologically inspired classical,
neo-classical and Keynesian scientific analysis and political propaganda by
dependence and world-system theory and their alternative analyses. The re-examination of
reality and its still other alternative analysis proposed below may also parallel the
denunciation of the received wisdom of both now 'traditional,' and the new dependence as
well as world-system theory by their denunciation by recent post-modernist, post-colonial,
and sub-altern textual 'analysis' as far as the latter go, which is not much. For they
offer no examination and much less analysis of any political economic reality and its
history. Most importantly they have and offer no global perspective, examination, nor
political economic history and analysis of the one world economy and system whose own
whole globe encompassing structure and dynamic is so determinant of the possibilities,
options and therefore successes and failures of its ever changing geographic, political
economic, social and cultural parts.
The at least preliminary answer below is how location, location, location in an expanding
and deepening multilateral world system and its UN-level playing field contributed to if
not determined the absolute and relative wealth and poverty of nations and the
dissipation/ absorption of entropy among, not to mention within, them. Indeed, taking
voluntary of forced position on and playing from it made the field even more uneven.
NINETEENTH CENTURY GLOBAL MULTILATERALITY AND ENTROPY
So if these common explanations cannot account for the development of THE GREAT DIVERGENCE
in the nineteenth century, what can?
This chapter outlines the conceptual framework for the theoretical argument and the
empirical evidence within which this work proceeds. The argument herein as it was in
ReORIENT is that global historical continuity has been far more important than any and all
its discontinuities. The perception of a major new departure in 1500, and even of one in
1800 which allegedly spell a discontinuous break in world history, is substantially [mis]
informed by a Euro-centric vantage point. Once we abandon this Euro-centrism and adopt a
more globally holistic world or even pan Eurasian perspective, discontinuity is replaced
by far more continuity. Or the other way around? Once we look upon the whole world more
holistically, historical continuity looms much larger, especially in Asia. Indeed, the
very "Rise of the West" itself then appears derived from this global historical
continuity. Moreover, as Edmund Burke [1998: 16] writes we must rehistoricize the
[and]colonial history as existing in its own right apart from the
[Western] progress-oriented narratives that have operated until now
intellectual and political stakes for such an undertaking are enormous.
My basic analytic procedure is the one I have recommended and tried to use for several
decades without having persuaded many others of its importance and usefulness. It is
the essential (because it is both the most necessary and the least accomplished)
contribution of the historian to historical understanding is successively to relate
different things and places at the same time in the historical process [and to] examine
and relate the simultaneity of different events in the whole historical process or in the
transformation of the whole system [Frank 1978:21]. Joseph Fletcher  then
called for the same under the title of horizontally integrative macrohistory.
it was this GLOBAL ECONOMY that really gave rise to a " single world-wide system
which also provided the transfer: along, round about routes ... [of wealth, income and
entropy] to particularly, the United Kingdom ... by the much less adequately understood
system of multilateral settlements of all classes of international accounts@ [Hilgerd
My two main analytic guidelines are multilaterality and entropy. In short cut summary, we
may regard position - LOCATION, LOCATION , LOCATION - in the multilateral system as the
prime determinant of how much BENEFIT or disbenefit a person, group, sector, region or
country can derive from its social structural and geographical position in the world
system or global economy in analogy to reaping Ricardian rent from land. ENTROPY may
be regarded as the COST of participation in the system and its economic production and
growth. DISSIPATION of entropy then is the transfer or export of this entropic cost from
me to you or here to there, and in the world from the rich North that generates or causes
the generation of much of it to the poor South, which is obliged to absorb this dissipated
entropy at its own cost. The two processes of deriving benefits and absorbing costs are in
turn related by the same multilaterality, through which not only the benefits are spread
and derived, but also the costs are channeled and absorbed.
Other than that, my basic analytic procedure is the one I have recommended and tried to
use for several decades without having persuaded many others of its importance and
usefulness. It is the essential (because it is both the most necessary and the least
accomplished) contribution of the historian to historical understanding is successively to
relate different things and places at the same time in the historical process [and to]
examine and relate the simultaneity of different events in the whole historical process or
in the transformation of the whole system
. The very attempt to examine and relate
the simultaneity of different events in the whole historical process or in the
transformation of the whole system
is a significant step in the right direction
(particularly at a time when this generation must rewrite history to meet its
need for historical perspective and understanding of the single historical process in the
one world today [Frank 1978a:21].
The late Joe Fletcher  then called for the same under the title of horizontally
integrative macrohistory. His untimely passing prevented him from carrying out his own
The full significance of the historical peculiarities of a given society cannot be seen
[in the absence of horizontally integrative macrohistorys] search for and
description and explanation of such interrelated historical phenomena. Its methodology is
conceptually simple, if not easy to put in practice: first one searches for historical
parallelisms (roughly contemporaneous similar developments in the worlds various
societies), and then one determines whether they were causally interrelated
[Fletcher 1985: 38-29, cited in Frank 1998:226].
To summarise the discussion that follows, the secular excess of the underdeveloped
countries' exports over imports has throughout this period made a fundamental contribution
to the accumulation of capital, technological progress and economic development of the now
developed countries; and the generation of this exports surplus from the now
underdeveloped countries has there developed the mode of production which underdeveloped
Asia, Africa and Latin America.
This multilateral [along the sides] or multiangular [at the angles] structure of the
\ | /
economy, permits those at angular systemic locations of privilege to exact tribute or
rent from the system as a whole and in particular from those in the under-privileged
positions. For the role of the latter it is to produce and transfer wealth and income to
the privileged ones through the structure and operation of this multilateral/angular
system. In the nineteenth century, Great Britain came to occupy this position of
privilege; and THAT is what made it GREAT-- much more so than any qualities or productive
or other capacities of its own. Since then, The United States has replaced Britain in this
position of greatest privilege; and THAT rather than its productive capacity accounts for
most of its wealth and income.
So world economic development is a global game in which the players scuttle around and
some manage to change positions when the cyclical music stops. Moreover, the PLACE that
each player has in the game is probably the most determinant factor in the players =
wealth and income and their opportunities of placement for and in the next round. Any
players location also determines his ability or not to pass his entropy off, not just to
his neighbor in the circle, but to one or many on any of many possible chairs around or
across the circle. And they in turn are more often than not obliged to absorb this entropy
to their own cost. And all that and even more is so, as Hildgerdt explained in the
epigraph above, because we are living in a "world economy which functions through a
system of multilateral trade of a specific pattern that embraces the whole world...[and
its] much less adequately understood system of multilateral settlements of all classes of
international accounts." Moreover, this round world of ours is anything but a 'level
playing field'. The 'specific pattern' and one's all determinant place in the 'less
adequately understood system', translated into understandable plain English, is LOCATION,
Historically and analytically we can view this process as beginning with the Baltic trade
between developing Western and underdeveloping Eastern Europe in the seventeenth century
and then the well known TRIANGULAR TRADE across the Atlantic Ocean in the eighteenth
century. Beginning in the late eighteenth and flourishing in the nineteenth century was
the OPIUM TRIANGLE between China, India and Britain, which financed the latter. It was
soon joined by another triangle between China, America - including Mexican silver- and
Britain. Throughout the nineteenth century, more and more triangles joined the therefore
ever more multi-angular- lateral and complex NETWORK OF WORLD TRADE and its division of
labor and spoils. Britain remained at the apex at which all these triangles joined, until
it began to be joined by the United States as well. The stages of development through the
addition of more and more triangles to what then became a complex system of multi-angular
and multi-lateral trade and payments IMbalances will be e examined chronologically until
World War I, which destroyed it after it had achieved its most developed form.
ENTROPY GENERATION AND DISSIPATION
The third factor is entropy.
Dissipative structures...this term, coined by Ilya Priogine, refers to the ability of
complex systems to transfer their entropic costs to other parts [of the system].... [We]
lose sight of the fact that every system in the social order must be paid for by someone,
somewhere, sometime. This essential reality is hidden from our view because human beings
are very skillful at exporting the costs of their own behavior to others via Dissipative
structures...[through which] dissipation of entropy occurs when one system has the will
and the ability to force others to absorb the costs of its own growth and
prosperity...[which] is one of the defining characteristics of colonial systems, which
suggests that the absorption of entropic costs is one of the functions a colony performs
for its metropole... [but also] through impersonal market mechanisms so the victims on the
periphery are not aware of what is being done to them.
THE GLOBAL IMPERATIVE Robert P. Clark [1997:5,10]
As per the quotation above, much of the order can continue or even be constructed among
those who have it if they can dissipate and transfer the disorder that they generate to
others who are obliged to absorb and thereby themselves become less orderly than they
were. This process of dissipation occurs along lines that are both more and less easily
visible. The more visible ones are unidirectional along a single vector from A to B. A
glaring but illustrative example [and this has happened!] is the export of the nuclear
waste sub products from the nuclear power stations of A in Europe and Japan, which
therefore and otherwise have relatively much power, to B in Africa who have little power
[in more than one sense of the word] and are paid a pittance [for the North but not for
the South] to absorb this entropy from the North.
Other perhaps less obvious but more frequent examples are how the consequences and costs
of global warming and depletion of the ozone layer generated by A's burning of coal and
oil [much of it now imported from B] are in turn [re] exported to B. There they cause
flooding, soon perhaps also to sink low level areas into the rising sea, and massive
destruction of virgin rain forests to maintain industries and consumption in A. These
examples become even more glaring of course if part of the higher income in A is the
result of prior or present transfers of income from B to A.
However, dissipation of entropy and the transfer of income from A to B also occurs along
multilateral paths and networks. These may be less obvious or even invisible, but they are
even more used and important. Regarding world trade [incorrectly often still called
'international' trade], in the second epigraph above Folke Hildgerdt observes that
"cases of triangular or multilateral [not to mention bilateral] settlement within
small groups of countries were relatively unimportant and ... almost all balances belonged
to a single world-wide system which also provided the transfer, along round about
routes." The same can go for the dissipation and transfer of entropy from A to B, but
via C, D, E and so on. As Hildgerdt put it, "the development of the system of
multilateral trade...was similar to the unfolding of a fan: more and more countries became
involved, and their insertion took place in a given order, each country being farther way
from the United Kingdom on the transfer routes to that country from its debtors." I
would add that countries need not have been inserted one by one into the charmed circle
for Britain. They also entered as participants of already previously existing bi- or tri-
or other multi-lateral systems that were incorporated into the world-wide web.
The growth of those in positions of advantage generates entropy or disorder, which
compromises the continuance of such growth - unless that entropy can be and is dissipated
or exported to cities, hinterlands, or other regions who are obliged to absorb this
entropy and generate disorder due to their unfavorable position in the system as a whole.
For instance, no large city could survive nor maintain mutually beneficial relations with
others like it except for its ability to dissipate its own entropy to its immediate
hinterland and/or to somewhere else half way around the globe. The economic and
demographic growth in and of the industrialized cities would not have been possible
without the dissipation of their entropy to other parts of the world who are obliged to
absorb the ecological costs of a world development that did and continues to benefit the
few at the expense of the many. Translated into plain English: on a world-wide
scale, we see technical progress combined with social regress. The intrinsic laws of
technical progress do not explain this paradox; it requires their interaction [xx]
Thus, capital accumulation, technological development, and economic growth here arealso
forms of generation and dissipation of entropy that is organically linked to
underdevelopment and environmental deterioration in others [which are] the flip side of
another countrys growth [Hornborg 2001:33]. Therefore, Hornborg argues, GNP
here is really a measure of its terms of trade with there and reflects a
countrys position in socially negotiated global exchange relations [ ibid.32].
So that is where three major analytical categories and procedures connect in the present
book:  the global economy and market,  its multi-angular and multi-lateral structure
and organization whereby benefits and the lack thereof are unevenly distributed around the
globe, and  the entropy costs that are generated by those most favorably placed in the
center and dissipated out to the periphery that is obliged to bear
the costs of absorbing that entropy.
A TWENTY-FIRST CENTURY EPILOGUE
I here skip over much of the twentieth century other than to observe that economic growth
in East Asia, though starting at a much lower level exceeded that of the West over the
century as a whole. Moreover, the ¨Great Depression that ravaged much of the West
was rapidly overcome in Japan and China and had relatively little impact on India. During
the past half-century since liberation and independence, the rate of economic growth in
East Asia was double that of the West.
Recent decades developments in the world economy, and then especially the post 1997
financial and economic crisis in parts of East Asia, have shaped and re-shaped but also
misled perceptions of this world historical process and the place of this or that region
within it. First, Japan demonstrated its economic, technological and competitive capacity
and in many respects became a to be regarded by many as part of the West, and
Japanese were accorded the status of honorary whites in Apartheid South
Africa. Some Americans tried to explain Japanese success by a Japanese equivalent of what
this centurys most important sociologist, Max Weber, had called the Protestant
Ethic; while Chinese and others in East Asia were regarded as incompetent due to
their age old Confucianism. This alleged explanation was abandoned when the
Four Tigers or Little Dragons of South Korea, Singapore [which is
half Chinese], Taiwan Province, and Hong Kong also made themselves felt on the world
market. Then came the next tigers in Thailand, Malaysia and Indonesia, and looming behind
them the Big Dragon of China itself, which began really to threaten Western confidence and
dominance. So Confucianism or Asian values now ceased to be the insuperable
obstacle to progress and instead became the supposed engine and equally false
ideological explanation of success instead. Books began to appear in the West that refer
to the return of Confucian East Asia onto the world stage, but after a presumed interval
of a whole millennium of alleged Western dominance, and without ever noting that in
reality Asia and China had ceded that place for only about 150 years, or some six
generations. Moreover, two and a half millennia of Confucian values can hardly account for
or explain up and down changes in economic success or failure from one year, or decade or
even century to the next.
The latest notable change is the financial and economic crisis that erupted in East Asia
in 1997 and which brought evident relief to many observers in the West. As a result and
mis-led by day-to-day press media reports and short term business and government analysis
and policy, even informed public opinion in the West changed again. Now the
East Asian Miracle is said to have been no more than a mirage, a dream for
some and a nightmare for others. The previously supposed explanations and
sure-fire strategies of success are being abandoned again as quickly as they had come into
fashion. We hear less about Asian values or guarantees from the magic of
the market, and no more security from state capitalism. So much the better I would
say, since these supposed explanations and correct policies were
never more than ideological shams anyway.
The historical evidence presented in this book shows that no one particular institutional
form or political economic policy offers or accounts for success [nor failure!] in the
competitive and ever changing world market. The contemporary evidence shows the same. In
that respect, Deng Xiaopings famous aphorism is correct. The question is not whether
cats are institutionally, let alone ideologically, black or white; the real world issue is
whether or not they catch economic mice in competition with others in the world market.
And that depends much less on the institutional color of the cat than it does on its
opportune position in the world economy at each particular place and time. And since the
obstacles and opportunities in the competitive world market change over time and in place,
to succeed the economic cat, no matter what its color, must adapt to these changes or fail
to catch any mice at all. Among these different institutional forms including relations
among state-finance- productive and sales organizations, perhaps the most attention and
positive evaluation has been devoted abroad to those of Korea and then of Japan but also
of Greater China including its vast network of overseas Chinese. But the very
fact that they differ, and in Taiwan, Singapore, Malaysia, Indonesia and elsewhere as
well, should already forewarn us against privileging one institutional form over all
others. At best and that is already very much, the evidence is that none of these
institutional forms is necessarily an impediment or unsurmountable obstacle to success on
the domestic, regional and world market. Most noteworthy perhaps in view of the widespread
Western propaganda about its own alleged virtues is the demonstrated fact that no
Western mode need or should be followed by Asians in Asia or even
The significance of position and flexible response in the world economy is particularly
important during periods of economic crisis B that is in Chinese of [negative] danger and
[positive] opportunity. In the present economic crisis so far, the focus has been far too
predominantly on its undoubtedly serious negative consequences. But the opportunities it
poses have received insufficient attention, except perhaps in the United States and China,
both of which are seeking to reap competitive advantages from the political economic
problems and alleged meltdown of Japan, Korea, and Southeast Asia.
But the dismissal of East Asian and particularly Chinese economic strengths and prospects
may be premature and certainly is based on a shortsighted neglect of the historical
evidence as presented in this book and on a serious misreading of the contemporary
evidence. I believe that this latest quick dismissal of Asia is mistaken for the following
reasons among others:
1] Since Asia and especially China was economically powerful in the world until relatively
recently, it is quite possible that it soon be so again. Contrary to the Western mythology
of the past century, Asian dominance in the world has so far been interrupted by an only
relatively short period of only a century or a century and a half.
2] Chinese and other Asian economic success in the past were not based on Western ways;
and much recent Asian economic success was not based on the Western model. Therefore,
there is also no good reason why Japanese or other Asians need or should copy any Western
or other model You can manage your own ways and have no good reason to now
replace them by Western ones as the alleged only way to get out of the present economic
crisis. On the contrary, Korean and other Asian reliance on other ways are strength and
not a weakness.
3] The fact that the present crisis visibly spread from the financial sector to the
productive one does not mean that the latter is fundamentally weak. On the contrary, the
present crisis of overproduction and excess capacity is evidence of the underlying
strength of the productive sector, which can recover. Indeed, it was excess capacity and
productivity leading to over-production for the world market that initiated the financial
crisis to begin with when Asian foreign exchange earnings on commercial account were no
longer able to finance its service of the speculative short run debt.
4] Not that economic recessions will or can be prevented in the future B they never have
been in the past even under state planning in China or the Soviet Union. More
significant is that this is the first time in over a century that a world recession did
not started in the West and then moved eastward but that instead it started in the East
and then moved around the world from there. And that was precisely because as per # 3 East
Asian and particularly Korean productive and export capacity had grown so MUCH. This
recession can therefore be read as evidence not so much of the temporary weakness as of
the growing basic economic strength of East Asia to which the center of gravity of the
world economy is now shifting back to where it had been before the Rise of the West.
5] The recession in the productive sector was short, especially in Korea. But it was also
severe, especially in Indonesia. And the shock-waves from the financial sector to the
productive, consumer and political ones were visibly - and to all but the totally blind,
intentionally - exacerbated by the economic shock policies imposed on Asian governments by
the IMF as usual following the dictates of the U.S. Treasury, which systematically
represents American financial interests at the expense of popular ones elsewhere around
the world. That also permitted Western interests to take advantage of declines in
productive and financial strength in Korea and elsewhere to buy up assets at
bargain-basement fire-sale prices. Even so the underlying strength of the Korean economy
was such that the foreigners were even then unable to alter the financial, productive,
ownership and state structure significantly to their favor. The Korean productive and
financial machine soon recovered again to forge ahead B but now with a costly lesson well
learned. The lesson must have been learned elsewhere as well by comparing how relatively
unscathed China and Malaysia [and as already mentioned for different reasons Korea]
emerged from the financial crisis by maintaining controls over capital exports, compared
to those countries that succumbed to the IMF and its lethal medicine by permitting a
speculative capital outflow that also destroyed their productive apparatus and multiplied
unemployment into an unbearable economic, social, and political problem, especially in
6] That underlying political economic strength also puts East Asia, and especially China,
Japan and Korea in a much more favorable position than the rest of the Third
World and even Russia and Eastern Europe to resist Western blackmail as it is now
exercised by the U.S. Treasury Department through the International Monetary Fund, the
World Bank, the World Trade Organization, Wall Street and other instruments.
7] The very act and cost of East Asian concessions to this Western pressure during the
past recession makes it politically more likely, since it is economically possible, that
East Asia will take measures, including especially a new financial bloc and banking
institutions, that can prevent a recurrence of the present situation in the future by
escaping from the strangle-hold of Western controlled capital markets. The recent Nobel
Prize laureate in Economics and dissenting former World Bank official, Joseph Stiglitz
observes such efforts already in his recent private discussions with Asian officials as
reported in his 2002 book GLOBALIZATION AND ITS DISCONTENTS.
8]. Indeed, one of the present battles, first by the Japanese and now also by the Chinese,
is to remodel the world financial and trade institutions that were designed by the United
States to work in its favor. Thus, Japan wanted to establish an Asian monetary fund to
prevent the East Asian recession from deepening as it has thanks to the International
Monetary Fund based in and subservient to Washington. And China wishes to join the World
Trade Organization but also seeks to have this Western dominated institution reformed to
9] A related political economic struggle is the competition between the United States and
China to displace Japan, Korea and Southeast Asia in the market by taking advantage of
their bankruptcies. American capital is buying up some East Asian productive facilities at
bargain basement prices, while China is waiting for them either to be squeezed out of the
competitive market altogether, and if not to engage in joint operations. Indeed it had
been the devaluation of the Chinese currency before 1997 that reduced the world market
share of other Asian economies and helped generate the financial crisis itself. Only time
will tell which strategy will be more successful, but the Chinese and perhaps also some
Southeast Asians seem like the better bet over the long term. Moreover, no matter how deep
the recession in Japan; it is not for that eliminated as an economic power, especially in
10] Equally significant is that India and to recently to a lesser extent China have
remained substantially immune from the present recession, thanks in part to the
inconvertibility of their remin ribao and rupee currencies and the valve in their capital
markets that permits the inflow but controls the outflow of capital. The currency
devaluations of Chinas competitors elsewhere in East Asia and the reduced inflow
into China of Overseas Chinese and Japanese capital that is negatively affected by the
recession in East Asia may oblige China to devalue again as well to remain competitive.
Nonetheless and despite their serious economic problems, the Chinese and Japanese
economies appear already to have and to continue to be able to become sufficiently
productively and competitively strong to resist and overcome these problems. In Southeast
Asia, Malaysia has successfully followed the Chinese model of opening its capital market
to inflows but restricting especially speculative capital outflows from the same. Korea
did not need such emergency measures, since it had received relatively little foreign
capital to begin with.
11] It is noteworthy that the economically most dynamic regions of East Asia today are
also still or again exactly the same ones as before 1800:
1. In the South, Lingnan centered on the Hong Kong B Guangzhou corridor, 2. Fujian, still
centered on Amoy/Xiamen and focusing on the Taiwan straits and all of Southeast Asia in
the South China Sea; and between them, 3. The Yangtze Valley, centered on Shanghai and
trade with Japan that is already taking the lead away again from the southern and northern
regions. 4. But already then there was also a fourth economic region around the North
China Sea, the quadrangular trade relations among Manchuria and elsewhere in Northeast
China, Siberia/ Russian Far East, [northern?] Japan, and Korea, but also including
Mongolia. Although the first three above-named regions are already again undergoing
tremendous economic growth [and political power?] in the absolute sense, the fourth one
around Korea seems to enjoy the greatest relative boom, and within it that of Korean
capital as well. It is helping to develop resources in the Russian Far East and as far
west as Central Asian Khazhakstan. The Chinese population on the Russian side of the Amur
River has been estimated already to exceed 5 million people as a pool of cheap labor.
Probable political change in the DRNK may well add a new source of cheap labor for this
growing pool of labor in the Northeast Asian Region and for its Far East Russian also
cheap base of ample metallurgical, forestry, agricultural and even petroleum resources.
Korean and Japanese capital could make that a very attractive regional growth pole in
itself and a highly competitive region on the world market.
In conclusion and looking at the longer term past, present and future, as already observed
the rate of economic growth in Asia, albeit starting from a much lower level, has exceeded
that in the West over the entire twentieth century; and since liberation and independence
has been double that of the West during the past half century . All of these regions and
especially the afore mentioned four macro-regions, in turn were and still or again
increasingly are important segments of world trade and of the global economy. Parts of
them are now being called the "Greater China," including Taiwan and the large
overseas Chinese population, which are responsible for a major share of investment on the
Chinese mainland. This ''region" does not usually, but perhaps should, include the
already 5 million and still growing migrant Chinese population north of the frontier with
Regarding the mainland Chinese economy, the President of the Chinese Society of World
Economy, Pu Shan, observed already the in the mid 1990s:
Results of the economic reform are remarkable. Real gross national product in 1995
increased 4 times that of 1980, with an average annual growth rate close to 10% during
that period. Real income peer capita more than trippled. Exports and imports of
merchandize trade in 1995 increased more than 7 times that of 1980 in terms of U.S.
dollars, while China's share in world trade more than tripled And China became the largest
recipient lf foreign direct investment among developing countries. It is also noteworthy
that the large scale transfer of agricultural labor to industry has been accomplished amid
unprecedented prosperity in the rural economy, unlike many other countries that went
through the painful process of widespread bankruptcy of farmers (Pu 2004: 174].
In the decade since then, most of these trends have still continued, though the rural
economy and agricultural income have lagged. In particular however, the ten percent annual
growth rate has still been maintained, which means doubling in size in six years, soon to
become the world's second largest after that of the United States. But China now also
holds the greatest single share of the huge and ever growing American foreign debt,
although it is doubtful that anyone will ever be able to collect on any substantial part
of it. Nor does this mean that China's growth does not also pose immense problems, from
gaping inequality between the coast and the interior or urban and rural, or its growing
demand and import of raw materials and especially oil and soon of foodstuffs, and the
menacing shortage of water. Japan's major fiscal and economic crisis of the 1990s has
abated and economic performance and prospects have improved again despite the continuing
debt overlag. As to India, although its growth has been lagging behind, it has recently
increased and shows promise or at least possibility of further acceleration: from 1.5
percent annually during the three decades following independence to 5.5 percent over all
and 3.5 percent per capita in the 1980s, and 6 and 4 percent respectively in the 1990s.
For the next half decade, projections range from 5 to 7.5 percent annually. That is still
less than for East Asia, but sufficient to double in a decade or so. All of these Asian
medium term growth rates exceed by far those ever previously achieved anywhere in the
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