Creating A World Economy

Merchant Capital, Colonialism, And World Trade, 1400-1825

Alan K. Smith

• Publisher: Routledge
• Year: 2019
• ISBN:
  9780429710421
• Edition: 1
• Topic: History
• Subtopic: World History
• Index: History

This is an exploration in world history that examines complex and intriguing questions concerning the origins of the first truly global economy, centered in Europe, which served in turn as a solid basis for the later emergence of the modern world system. Professor Smith first examines the remarkable progress achieved by many cultures around the world, achievements that for some time far exceeded anything then found in Europe. The study then probes beyond "traditionalism" as a sufficient explanation of the inability of these societies to maintain the economic momentum that had begun so auspiciously and carefully examines the experience of European societies by way of comparison, finding that remarkably similar processes tended to unfold at first: regions of Europe that made the earliest gains in material progress were, like other parts of the world, unable to sustain these advances. Still, in some parts of Europe–particularly the Netherlands and England–a new alignment of social forces was yielding the social system that would eventually evolve into capitalism. This breakthrough allowed for continued dynamic material progress, particularly for the English. Able to establish an unprecedented commercial dominance in vast reaches of the world, the British found themselves at the hub of a new world economy much more complex than any earlier intercultural commercial system. The book delineates the systemic roles assumed by the various regions of the world and by European merchant capital and explains the tensions within this system that ensured its continued dynamism and eventual transformation into the current world economic system. Creating a World Economy combines an epic sweep with a mastery of historical detail and is sure to stimulate discussion among sociologists and historians interested in questions of a global nature.

1
Introduction

This volume represents an attempt to write history on a global scale. More specifically, it seeks to investigate the dynamics of the creation of what is referred to as the first world economy and to identify the component parts of that structure. The term itself refers to a vast economic system in which various regions played different roles. It is not, however, defined purely by economics. Rather, social systems both affected and were affected by the specific forms of participation assumed by each of the contributors to the overall system. Thus, the world is seen not as being composed of separate entities, each independently charting its own destiny, but every system is part of a larger whole, which presents certain opportunities and also imposes certain constraints on the direction that each may take.

A generation ago in Western literature, world history was interpreted as something quite different. The world was assumed to be virtually synonymous with Europe, although a sort of perverse cultural imperialism extended its frontiers to include Egypt and the Fertile Crescent. As is aptly pointed out by the title of Eric Wolf's recent study, the rest of the world was composed of people without history.¹ Even in university courses that carried the title "world history," India and China were given scant mention; the Muslim world emerged from obscurity only when Europe chose to crusade against it; and Africa, the Americas, and southeast Asia simply did not exist. Thus, for all intents and purposes, the history of the world began with classical antiquity, marched through the Middle Ages, and eventually erupted into the glory of the modern European nation-state.

More recently, however, some scholars have included the rest of the world in their world histories. This is especially true of the works of the prolific historians L. S. Stavrianos and William McNeill. Each devotes considerably more attention to other parts of the globe than Europe and successfully defuses any notion that such phenomena as invention, progress, and "civilization" were European monopolies. However, although this body of scholarship makes an invaluable contribution by highlighting many of the achievements of diverse cultures around the world, it does not seek to focus on the reasons for the relative success of Europe vis-à-vis the rest of the world.²

Some modern scholars, however, have addressed the question of why only Europe was able to achieve sustained growth. Although this suggests tacit recognition of the existence of the rest of the world, it in no way acknowledges parity. In fact, in many instances, this new approach is as ethnocentric as that of the earlier generation, which had completely ignored the wider world. For although they were more aware of societies and cultures beyond the borders of Europe, they paid scant attention to the study of that world. Rather, they assumed that failure for most parts of the globe was preordained and natural. Thus, instead of sensing the need for in-depth comparative analyses, these authors continued to place themselves entirely within a European framework. As a result, their investigations are limited to locating the prime mover that enabled Europe completely to outdistance Africa, Asia, and the Americas.

A key example of this phenomenon appeared with the publication of The Rise of the Western World. Its authors, Douglass North and Robert Thomas, categorically state that "this book explains that unique historical achievement, the rise of the Western world." They continue that "we submit . . . that the development and expansion of a market economy during the Middle Ages was a direct response to opportunity gained from the specialization and trade made feasible by population growth." Moreover, they take European superiority as a given. Seemingly with little investigation of the problem, they conclude that much of Latin America, Asia, and Africa, even in recent times, failed because of inefficient economic organization.³

In How It All Began, Walt Rostow addresses the same problem. He, too, is impressed by the genius of the West, although he sees a different source as being the prime mover in its success. Rostow argues that "the central thesis of this book is that the scientific revolution is the element in the equation of history that distinguishes early modern Europe." Moreover, even if his source material appears inadequate for the task, he does devote some attention to the wider world. Nevertheless, the conclusion is that "the decisive weakness in traditional societies was on the demand side: in the lack of innovators, of men moved by economic incentives or perceptions actively to seek changes in technology."⁴

Yet another scholar who was fascinated by the question of European hegemony was E. L. Jones. As might be expected, The European Economic Miracle discovers a different main catalyst behind the miracle. For Jones, European expansion overseas was decisive. "Europe," he observes, "discovered an unprecedented ecological windfall. Europe was sufficiently decentralized and flexible to develop in response. . . . This conjunction of windfall and entrepreneurship happened only once in history." Insofar as he believes that the process that led Europe to industrialization was achieved "by pure accident," his book lacks some of the disguised ethnocentricism of the other studies. Moreover, a significant percentage of the volume is devoted to the wider world. Unfortunately, these sections concentrate on the failures of these societies, virtually ignoring their impressive accomplishments.⁵

The most recent contribution to the literature was coauthored by Nathan Rosenberg and L. E. Birdzell. Like several other studies, How the West Grew Rich devotes scant attention to societies beyond Europe. In a fashion similar to Rostow, the authors place great emphasis on Western innovation and experimentation as being crucial in the development of capitalism. "The immediate sources of western growth," they contend, "were innovations in trade, technology, and organization." This was aided by decentralization, which served to prevent any single source from inhibiting this growth. Under these circumstances, European technology was able to improve rapidly. There thus emerged in Europe and, they imply, nowhere else a dynamic system propelled by the transition to capitalism.⁶

Capitalism is also the key variable in the work of Immanuel Wallerstein, whose two volumes on The Modern World System constitute the most controversial and most important of the contributions that seek to answer the question why Europe was relatively so successful. Although his background was originally that of an Africanist and one feels that he is more sympathetic to the societies of the wider world, the focus of his studies is also almost exclusively on Europe. He sees trade within Europe itself as having been particularly important because it allowed certain regions to specialize in commodities of higher value. Whereas others emphasize the importance of the decentralized nature of early-modern Europe, Wallerstein believes that the creation of strong state machineries, which were capable of underwriting economic advance, was crucial. Where these elements were prominent, the degree of skill in the labor force was advanced and economic growth was fomented.⁷

If The Modern World System is Eurocentric in its focus, it is very different in its deductions. More so than any of the other authors, Wallerstein sees the emergence of Europe as having contributed not only to its own advance but also to the development of a highly structured world economy. Consisting of a capitalist core centered in northwestern Europe, a rather nebulously defined semiperiphery, a periphery, and areas that were "external," this world economy formed a multiregional economic system, with each of the component parts contributing in different ways. One key variable was the form of labor control and specialization. As one descends the ladder from core through semiperiphery to periphery, one finds the transition from skilled to semiskilled to unskilled labor. Moreover, the amount of naked coercion required in the more advanced regions is much less than in the peripheries. Thus, even though Wallerstein concentrates on Europe, his major concern is with an entity, however ill-defined, that is much larger and constitutes an integrated whole.⁸

Although he also stresses the decisive nature of capitalism and also employs an avowedly Marxist analysis, Eric Wolf's approach and conclusions are very different. To begin with, his is the only volume in which more attention is devoted to the wider world than to Europe. In looking at non-European societies that were dominated by the tributary mode of production, he finds a crucial weakness in that they were dominated by the "competition between classes of non-producers for power at the top." Europe, on the other hand, was saved by capitalism, which (unlike Weber, Wallerstein, or Frank) Wolf sees not as a lineal development from the tributary mode but "as a qualitatively new phenomenon." This emergence of a new mode of production, in turn, was facilitated by overseas expansion. He observes that "the crisis of feudalism was solved by locating, seizing, and distributing resources beyond the European frontiers." In the process, producers in different parts of the world were drawn into a common web of exchange. By the era of the industrial revolution, capitalism, which he emphasizes must be capital in production, had taken root.⁹

Although an extensive critique of the various authors cited could be undertaken, it seems less appropriate than a general commentary on what remains to be done and the ways in which the approach I adopt here will be different from those that others have presented. Because the attempts of those who try to broaden perspectives by expanding their outlook far beyond their specialized bases are subject to attack from so many different directions, no particular benefit would be derived from emphasizing points of disagreement. Yet questions remain about the very questions that have been asked and whether an alternative approach can be suggested. One wonders if it is possible to write a history that is global, interpretative, and offers insight into the basic dynamics of the processes that prepared the world for its current shape.

One major deficiency of the literature, although to varying degrees there are exceptions, is the treatment of the wider world. In some instances it is totally ignored; in others, its history is either truncated or abused. This fault should be corrected not only in order to gain a better balance in the world-view of those who even consider the question of human development, but also to provide precious clues to the evolution of societies in general. For growth, which is interpreted to mean the increasing ability to master the material environment and to make it produce more, at one time or another proceeded at a faster rate on every other continent than it did in Europe. This fundamental observation should open some eyes with respect to the kind of questions that should be asked. So, too, should Peter Farb's harsh judgment that for most of the past ten thousand years "northern Europeans . . . live[d] in squalor and ignorance, producing few cultural innovations."¹⁰ One task of this study, therefore, will be to take a look at the achievements of societies in the wider world, thus providing a better comparative background for an understanding of the forces that shaped Europe and subsequently a new world economy.

Equally important as the growth of the wider world was its inability to maintain its momentum. There are those who believe in natural cycles and therefore deduce that after a period of flowering of material culture in a given society, a form of decadence sets in. In one sense this is a comfortable theory because most of the great achievements of the past were overtaken by periods of decline. Yet this is a particularly unsatisfying answer in that it leaves to cyclical oscillation the intriguing question of why peoples who erect great monuments or produce fine textiles or harvest abundant crops should some centuries later live in poverty and squalor. A look at the wider world provides clues to the puzzle of the failure of continued growth and focuses on the challenges that were to face Europe as well. It will be seen that although some of the patterns that determined this decline were particularistic, others were more universal. Moreover, I will argue that almost everywhere the main problems were social in origin. Thus, rather than some mysterious traditional conservatism, it was the frailty of manmade institutions in the wider world that deflected growth. In essence the wider world fell victim to its inability to resolve the social question of the distribution of its resources.

Medieval Europe passed through cycles not very different from those experienced elsewhere. From humble beginnings in about the eleventh century, it started a lackluster growth that by the thirteenth century brought it to the technological limit it was capable of achieving under the constraints of its social structure. Ironically and crucially, Europe's date with destiny was postponed by a most unlikely source. This was the Black Death, which by suffocating so many people enabled the rest to breathe. Subsequently, technological improvements in Europe, buttressed by social change, would begin radically to alter its position vis-à-vis its material resources. This, however, was not the end of the story. How successfully a particular region within Europe was able to benefit from the new opportunities would be related to a class struggle unique to that region. Ignoring this fundamental dichotomy, scholars often speak of Europe as an entity, all parts of which made similar strides forward. This is a crucial misunderstanding, as a full grasp of the reasons for European failures is important for understanding the reasons for European successes.

The Europe that emerged in the sixteenth century armed with a technology that made continuing growth possible also sought to intensify its contacts with the wider world. In a sense this represented a dramatic departure from the past. For it involved the unprecedented establishment of intimate contact between various parts of the world that paved the way for permanent interaction. The Portuguese, the Spanish, and the Venetians, pioneers in these endeavors, received strong support from their respective governments. While the Portuguese and Venetians competed for the spice trade of Asia, the Spanish began an intensive colonization in the Americas. Initially unchallenged by their northern counterparts, the aggressive Mediterranean fortune seekers began to tap the wealth of hitherto inaccessible or unknown sources. Although these European states glittered for a time during the sixteenth century, they ultimately failed to prosper from their windfall discoveries. The literature abounds with particularistic reasons why each failed to take advantage of its opportunities. In this study emphasis will be placed on how the experiences of these countries fit into a more generalized pattern, specifically showing that they suffered from the contradictions inherent in their respective social structures, which it seems no amount of wealth could have corrected.

The literature is equally aware that while the western and central Mediterranean were experiencing downward cycles similar to those previously undergone in the wider world, something new and distinctive was taking place in the northwestern corner of Europe. It has been named capitalism. When, why, and how it appeared has produced a voluminous and oftentimes contentious series of debates.¹¹ Many authors who have attempted to determine the reasons for European success have adopted one of the prominent positions in that debate. That is, they place misguided emphasis on the commercial revolution in late medieval Europe instead of focusing on the crucial social changes that took place in a few select regions.

For it is important to note that, quite by chance, well before the Netherlands and England emerged in their mature forms, unique modifications had taken place in their respective social structures. Minor though many of these changes may have seemed at the time, ultimately they would prove decisive in the transition to capitalism. Whereas elsewhere the social structure continued to be heavily weighted in favor of traditionalism, in the Netherlands and England new forces emerged that were capable of offering competition. That the Netherlands was ultimately unable to take full advantage of the opportunity whereas England was able to make continuous progress, demonstrates that the outcome was not inevitable. England, however, avoided the pitfalls that not only ensnared the Dutch but had also hindered social formations in other parts of the world. The crucial watershed must be seen as having been the English Civil War. Traditionalism was defeated, capitalism became entrenched as the dominant mode of production, and neither England nor the world economy would ever be the same again.¹² Thus for almost three centuries the northwestern corner of Europe would form the core of the first world economy.

The emergence of capitalism in northwest Europe facilitated the creation of peripheries. Unlike other global histories, this study will attempt to give a specificity to a term that is usually used in the most random ways. Although spatial location played a part in the creation of peripheries, the term as used here, has little to do with geography. Rather, it refers to certain regions whose social relations of production were transformed by their integration with the core of the world economy. Specifically, as a response to market opportunities that a growing Europe was creating and the structures that the mercantile capitalist mode of production was establishing, social change was being imposed in such diverse regions as eastern Europe, western Africa, northeastern Brazil, and many of the Caribbean Islands. Whether these changes took the form of a reemergence of serfdom or the implantation of chattel slavery, the periphery should be defined as those regions where the social system became dominated by coerced labor, which, in turn, reflected a response to the emergence of a world economy. The periphery, then, is not a vague notion but a category naming regions where a specific and concrete social order arose from and responded to the needs of capitalism.¹³

At the same time capitalism created the periphery, it also established dependencies. Whereas peripheries might exist either as independent entities or as colonies, a dependency derived its status from its colonial position. Although the two categories may have shared some superficial similarities, there were also fundamental differences between them. These stemmed from what was produced, the nature of the organization of production, and the resultant social relations. Thus, whereas production in the periphery required coerced labor, the dominant tendency of labor organization in the dependencies was in the opposite direction. Labor organization, in turn, reflected both what was produced and the priorities of the organizers of production. For example, because the commodities exported by the peripheries served as complements to the economies of the core, the organizers of production in each sphere had every reason to be satisfied with the basic structure of the system and hence tacitly to desire its perpetuation. Output in the dependencies, on the other hand, may have competed with metropolitan production, and therefore, at least at various times, the colonial power may have deemed it necessary to regulate or even to suppress coloni...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Preface
• 1 INTRODUCTION
• 2 THE WIDER WORLD
• 3 MEDIEVAL EUROPE
• 4 OVERSEAS EXPANSION AND DECLINE IN THE MEDITERRANEAN
• 5 EUROPE IN TRANSITION: CAPITALISM
• 6 PERIPHERIES IN THE WORLD ECONOMY
• 7 DEPENDENCIES IN THE WORLD ECONOMY
• 8 THE COLONIAL POWERS AND THE WORLD ECONOMY IN THE EIGHTEENTH CENTURY
• 9 REVOLUTION
• 10 RETROSPECT AND PROSPECT
• Notes
• Bibliography
• About the Book and Author
• Index