First Wave: Civilizations and Economic Drivers
Homo Sapiens has lived on our planet for over 200,000 years. What we call “civilization” has only been with us comparatively recently, from about 3500 BCE, less than 3% of our species lifetime.
Typically, historians mark the beginning of civilizations to events and developments in Mesopotamia.1 What emerged in the valleys of the Tigris and Euphrates Rivers was the organization of supra-family groups to ensure the stability, encouragement, and security of the economy and society, which we use as a rough working definition of a civilized society.
What existed prior to civilizations? Humans were hunter-gatherers and/or nomadic herders, organized by family or tribes. These small organizations were sufficient to defend the lifestyle of their members; hunters and soldiers (generally men) defended the tribe, provided weapons and supplied the tribe with meat. Gatherers and maintainers (generally women) collected plant food, processed it for the tribe and provided utensils and implements to the tribe.
What is most important is that prior to civilization, farming was minimal to nonexistent. There was almost no effort put into growing plants or tending domestic animals (with the exception of herding). What was unique about Mesopotamia in 3500 BCE was the emergence of agriculture as the primary means of food production for the population. In fact, civilization was the price that humans paid to develop and maintain agriculture at the time. Agriculture dramatically changed the efficiency by which humans could feed themselves. Previously, humans had to spend close to 100% of their time gathering food. Farming permitted a much more efficient means of humans feeding themselves, so farming was a great technological innovation. But not without cost; agriculture demanded farmland, which demanded property rights2 on a large scale to induce farmers to plant and harvest crops and invest in future crops. Without such protection, outsiders or indeed neighbors could raid the product of farms, reducing the incentives for farmers to farm. Farming also included irrigation (or water management generally), generally on a large scale. Managing the irrigation in the Tigris and Euphrates valleys required large-scale organized and ongoing efforts, to which all society’s members had to agree (or at least abide by). Similarly, ancient Egypt’s Nile Valley was subject to annual flooding. After such floods, property boundaries had to be reestablished, requiring a strong government (Baines 2011). Agriculture moved on from its origins in Mesopotamia and Egypt to East Asia, South Asia, and to Mediterranean Europe. Eventually, agriculture spread to Africa and North and South America. In order to support the agricultural economies around the world, some form of civilization had to develop, along with agriculture. These civilizations were quite different; Babylonian civilization was much different from Chinese civilization, Indian much different from Mediterranean. But all civilizations had to accomplish the same ends: organizing a large population to ensure stability, encouragement, and security of the economy and society.
But any economy must be based on economic drivers: scarce resources that are absolutely essential for the economy to function. In the case of agriculture, there is one unique scarce resource, and that is land. Without land, agriculture is simply not possible. In Mesopotamia and Egypt, control of this scarce resource, land, was the basis not only of the economy but of the civilization. Although the civilizations of this first wave were different from each other, they were all based on the single scarce resource of land. Those who controlled the land controlled the society; as a result, all first wave civilizations shared these common traits:
- Steeply hierarchical
- Wealth and power determined by landownership
- Emperor/king, then landowning nobles, then fighting men, then craftspeople, then serfs
- Extreme income inequality
Succeeding agrarian civilizations were different, but all possessed these characteristics:
- Babylon: manage property rights in Tigris-Euphrates valley
- Egypt: pharaoh rules all; Nile flooding leads to problems with property rights control; irrigation
- China: Emperor’s mandarins control
- Japan: decentralized shogunates control
- Britain: land-based aristocracy control
- US: land more equally distributed (except the Southern states)
These civilizations evolved slowly. The signing of the Magna Carta in thirteenth-century England shifted power between the king and nobles. England’s Glorious Revolution of 1688, further dispersed power from the monarchy. Perhaps most dramatic, the American and French Revolutions of the late eighteenth century drastically shifted power away from monarchies toward a more popular distribution of power. But Europe and America were not the only loci of change: the Meiji Restoration in nineteenth-century Japan shifted power from the Tokugawa shogunates to the (restored) emperor and a central government.
While these changes have been celebrated, it must be borne in mind that all societies at this time continued to be dominated by the one scarce resource: land. This dominance stems from the economic base of all civilizations at this time: agriculture. Unless and until the economic driver were to change, all civilizations possessed the structure and properties outlined above; changes were minor.
Second Wave: Civilizations and Economic Drivers
The earliest indication that the key economic driver was about to change occurred in the middle of the eighteenth century in Great Britain. The economy began a shift to manufacturing: the production of goods with interchangeable parts using large powered factories. This is not to say that production of goods was not part of human history before; the earliest civilizations did produce goods for personal and military uses. However, production was piecemeal; parts were not interchangeable, the location of production was often the home of the craftsperson, and there was no industrial-level power. In the late eighteenth century, however, the shift to manufacturing began in earnest, embarking on what we were to call the Industrial Revolution. British production of armaments in this time period signaled an early example of what would become known as mass production. Another early landmark occurred in 1793 when Samuel Slater brought British manufacturing technology to the US and built the first cotton mill in North America in Pawtucket, Rhode Island (Gaur 2013). These early examples were merely precursors of manufacturing and production in Britain, the US, Continental Europe, and indeed around the developed world. At first, the power for these factories was provided by water, but as steam power developed in the first half of the nineteenth century, steam became the choice for industrial production.
A key to industrial production was size; no longer would the manufacture of products and services take place in the craftsman’s home, but rather in a far larger facility with costly machinery and equipment. While each industry required different facilities and machinery, they all required lots of it, and it was always costly. Essential to industrial production, then is capital, funds to be invested in costly facilities in order to produce goods and services in the future. Capital would then be repaid, with interest and dividends from the revenues from the sale of the produced goods and services. But industrial production required investors to surrender their money today for a promise of future cash. And they were being asked to give up a great deal of money in order to invest in the great enterprises of the nineteenth century. One major industry that required large amounts of capital was railroads. Not only in Great Britain but more so in the US, where railroads spanned the continent. Telegraph, steel production, and shipbuilding were but a few of the industries demanding capital.
Capital, then, became the driver of the second wave of civilization. Capital was the scarce resource required to drive the Industrial Revolution.
The second wave grew exponentially in the second half of t...