Friday, July 17, 2020

The economic rise of the Western World

BC/AD (Before Christ/Anno Domini or 'Year of Our Lord') was adopted 500 years after the beginning of the millennium. The use of BCE/CE (Before the Common or Current Era/Common or Current Era) was first used in German in the 17th century and in English in the 18th. The latter designations have become more common in recent decades, not because of political correctness but in a global context, religious neutrality is appropriate.

The economic rise of the Western World dates from the 11th century CE. It was a slow, but persistent, process of advancement in science, education, printing and shipping technology. It also had its negatives including slavery and genocide of indigenous populations. However, it's striking that despite colonial plunder some of the European countries with a Mediterranean coastline, in particular Spain, had poor economic outcomes for much of the last millennium.

Jan de Vries (b. 1937), the Dutch economic historian, in 1984 noted that urbanisation fell from 5% in Western Europe during the Roman Empire, to zero by 1000 CE. Excluding Muslim Spain and the Emirate of Sicily, there were only 4 cities/ towns that had populations of over 10,000 inhabitants and they were all in Italy (Amalfi; Naples; Rome and Florence). By 1800 the number of Western European cities with a population of over 10,000 had grown to 364.

The population of Rome — the once capital of the mighty Roman Empire — fell from less than 500,000 in the early years of the first millennium to about 30,000 in 1000 CE, over 500 years after the Western Empire collapsed.

‘Ozymandias’ (the Greek name of Pharaoh Ramses II of Egypt c.1303-1213 BCE) is one of the English poet Percy Bysshe Shelley’s (1792-1822) best-known poems and he wrote it between December 1817 and January 1818. It's believed to have been inspired by the purchase of a huge statue of the narcissistic pharaoh by the British Museum, from an Italian adventurer. In the sonnet, a "traveller from an antique land" tells the poet of the crumbling remains of a colossal statue of an ancient Egyptian tyrant that he had found in the desert. The head of the statue, now lying on the sands, reveals the tyrant’s "sneer of cold command"; on the statue’s pedestal is a pompous inscription: "My name is Ozymandias, King of Kings; / Look on my Works, ye Mighty, and despair!"

Cleopatra was the last pharaoh before Egypt became a province of Rome while the pattern of the rise, decline and collapse of empires would endure. She was a member of the colonial dynasty of Greek Macedonian rulers led by Ptolemy, who had served as general under Alexander the Great during the latter's conquest of Egypt in 332 BCE.

The development of agriculture which happened independently in several regions of the world provided a surplus that promoted the development of cities and also empires. In the Fertile Crescent in particular in Mesopotamia, there was significant domestication of plants and animals from 8000 BCE. Among the six most important domesticated animals, only the horse (developed in the Ukraine area) and the chicken (China and Southeast Asia) were domesticated outside the Fertile Crescent. Irrigation was also a feature of farming in Mesopotamia.

Only 14 large mammals in total have ever been domesticated as they fulfil all four basic criteria for domestication. The cow is a great example.

In the Americas, animal domesticates included only two large birds (the turkey in North America and muscovy duck from Mexico into South America, together with two camelids, llama and the alpaca.

An example of an ancient city in the Americas is Teotihuacán, a Mayan settlement developed in the early centuries of the CE. It "was the greatest city...of all pre-Columbian America" and it may have had a population of 100 to 150,000.

Fertile Crescent

Decline and fall of the Roman Empire

Angus Maddison (1925-2010), a renowned British economic historian, estimated that in the lifetime of Jesus Christ (0-33 CE) — who lived in the land of Caanan that the Romans called the province of Judea — the population of the world was at about 230m with the Roman Empire's population at  50m and that of the Chinese Han Empire 60m. The population of Western Europe was almost 25m.

In 146 BCE, Carthage, Rome's arch-Mediterranean rival, was vanquished. The city, which was once the wealthiest urban area in the world, was located near the site of the modern city of Tunis. It was burned and demolished. Later that year, almost three centuries since the death of the Greek statesman Pericles (429 BCE), the Roman Republic captured the Greek peninsula and after the Battle of Corinth, the city was looted and destroyed. In both cities, people were either slaughtered or enslaved.

By 117 CE the Roman Empire was at its zenith in terms of territorial control (see map on top of page) at 5m km2 (1.9m sq mi).

The word barbarian was derived from the Greek bárbaros and it was a shorthand for uncivilised, illiterate foreigners. The Romans adopted the word for all peoples other than those under Greco-Roman influence and domination.

Compared with modern times, the Roman elites were barbarians and millions of people perished in the conquests while following a slave revolt in 70 BCE, up to 6,000 crucifixions were arranged on the Appian Way into Rome to intimidate others.

Rome in the early years of the Common Era had a population of about 450,000 (claims of up to 1m have been debunked) and the death theatre was an enduring entertainment for the public. It was estimated that a fifth of the Italian population were slaves.

Roman emperor Septimius Severus (193–211 CE) is reputed to have said on his deathbed to his son and successor: "Make the soldiers rich, and pay no attention to everyone else."

From 235-284 CE there were 22 emperors who had been military officers. Military coups and assassinations became common. In 284 CE another general became emperor.

Diocletian, Roman emperor (284–305 CE), brought some stability after years of chaos but the persecution of Christians failed to wipe out their religion.

Attacks from Germanic and other "barbarian" tribes became common; plague and debasement of the currency by reducing the quantity of gold or silver in coins accelerated resulting in food price rises.

Diocletian decided to split the empire into two regional areas and he moved to the ancient Greek city of Nicomedia in Asia Minor while his effective deputy Maximian established the western capital at Mediolanum (Milan).

In 324 CE the two Roman emperors Constantine I and Licinius fought for supremacy and Constantine I (306-337 CE) became the sole emperor and set up his capital in Byzantium in Asia Minor which was renamed Constantinople and from 1453 after falling to the Ottoman Turks, as Istanbul.

Constantine was the first emperor to legalise Christianity, along with all other religions/cults in the Roman Empire

In 380 CE the eastern and western emperors signed a decree declaring Christianity the official religion. The decree permitted the persecution of non-believers!

In August 410 CE for the first time since 390 BCE, a foreign invading army sacked Rome. Alaric (370-410), the leader of about 40,000 Goths and Huns, was willing to compromise with the 25-year-old Honorius, the western emperor who was in Ravenna, Northeast Italy, the western capital since 402 CE. Alaric, a former Roman soldier, had enough of humiliation.

In 476 CE the last western emperor, the 16-year old Romulus Augustulus, was deposed by Flavius Odoacer (433-493 CE) a Germanic tribal leader who declared himself king of Italy (476–493 CE).

Italy would become a battleground for foreign forces and the Odoacer was murdered by a rival seeking his throne, at a truce dinner in Ravenna. The rival Theodoric the Great became the Ostrogothic king of Italy.

The eastern emperor Justinian (c.483-565 CE) in control in (527-565 CE) began a war in 535 with the Ostrogothic kingdom to restore the Roman Empire. It lasted until 554 and devastated Italy at a time of bubonic plague.

Justinian had a Pyrrhic victory and soon another Germanic group called the Lombards would arrive to seize control of Italy. Italy would remain fractured until 1861.

Federal Reserve Bank of St Louis, USA

The Dark Ages in Europe

Francesco Petrarca (1304-1374, commonly anglicised as Petrarch, was an Italian scholar and poet who is sometimes credited for coining the expression the Dark Ages, lamented the lack of Latin literature compared with the classical times of Greece and Rome. However, in more modern times, the Dark Ages refers to the early Middle Ages after the collapse of the western part of the Roman Empire.

There were inevitably extensive economic dislocations after the collapse.

There had been a common currency and taxation system, with free trade in Europe. There was also an impressive record of civil engineering that provided thousands of kilometres of paved roads; aqueducts and harbour facilities.

The Pont du Gard, Nîmes, Provence, France, is the highest aqueduct of Roman times and is one of the wonders of the ancient world: a UNESCO World Heritage Site. The structure, over 50 km long through the mountains, supplied water to the city of Nîmes. The bridge was built to allow the aqueduct to cross the river Gardon. The building was completed about 50 CE. The Pont du Gard peaks at over 48 metres and crosses the river over a length of 275 metres.

The rise of Islam with control of Spain, North Africa and West Asia, also dislocated Western European trade routes.

Henri Pirenne (1862–1935), a Belgian historian, summed up the dismal situation in the 9th century:

“If we consider that in the Carolingian epoch, the minting of gold had ceased, the lending of money at interest was prohibited, there was no longer a class of professional merchants, that Oriental products (papyrus, spices and silk) were no longer imported, that the circulation of money was reduced to a minimum, that laymen could neither read or write, that taxes were no longer organised, and that the towns were merely fortresses, we can say without hesitation that we are confronted by a civilisation that had retrogressed to the purely agricultural stage; which no longer needed commerce, credit and regular exchange for the maintenance of the social fabric.”

Holy Roman Empire

Rise of the Kingdom of the Franks and the Carolingian Empire from 800 CE Source: Wikipedia

It was not all bleak in Europe and the Franks, who were of Germanic origin, developed Francia, also called the Kingdom of the Franks, to become the biggest state in Western Europe.

In 800, Pope Leo III crowned Charlemagne (742-814 CE) emperor of the Romans, reviving the title in Western Europe after more than 3 centuries. The Carolingian Empire was created and its territory became known as the Holy Roman Empire.

The spread of Irish monastic schools (scriptoria) in Europe is said to have laid the groundwork for what is called the Carolingian Renaissance.

"Dicuil, (flourished 825 CE, Ireland), monk, grammarian, and geographer whose work is important to the history of science and is a testament to Irish learning in the 9th century," according to Encyclopedia Britannica.

The crown of the Holy Roman Empire was thought to have been made either during Otto the Great’s reign or soon after. Held in the Imperial Treasury at the Hofburg Palace (Vienna).

After the end of the Carolingian Dynasty Otto I or Otto the Great (912-973 CE) became king of Francia and in 962 Otto was crowned by Pope John XII and became the successor of Charlemagne as the Holy Roman Emperor.

John XXII (ca.937-964) who had become pope at the age of about 18 in 955 CE (his father who had been a duke who mandated that his son would become pope) soon fell out with Otto who got a council to depose John, who was likely murdered in 964.

From the 13th century, the German prince-electors including archbishops and later the House of Habsburg had the privilege of electing the monarch. Charles V became the last Holy Roman Emperor to be crowned by a pope, Clement VII (a member of the Florentine Medici banking family) at Bologna, in 1530. The pope was effectively the emperor's hostage.

The empire was abolished in 1806 by Napoléon Bonaparte, the first emperor of France.

The Holy Roman Empire was viewed as the First German Reich (empire).

François-Marie Arouet (1694–1778), known as Voltaire, was a French writer and philosopher. He wrote in 'Essai sur l'histoire générale et sur les moeurs et l'esprit des nations (1756) ch. 70':

"This agglomeration which was called and which still calls itself the Holy Roman Empire was neither holy, nor Roman, nor an empire."

There was nothing holy about the wars between Charles V (1500-1558) of the Holy Roman Empire and the king of Spain, with Francis 1 of France I (1494-1547), for control of the papacy.

The Spanish, German, and Italian troops of Charles V began the sack of Renaissance Rome in May 1527. The mutinous troops were in control of the city for 9 months and they murdered thousands of people, raped, pillaged, ransacked holy places, and tortured citizens to extract riches. See here and here.

The rise of the West to 1820

Angus Maddison estimated that the populations of Western Europe and the Chinese Empire had hardly changed in the first millennium. At 1000 CE China had a population 59m and Western Europe's was at 25m.

Among China's 13 dynasties between c.2070 BCE and 1912 CE, the first millennium had both chaos and significant achievements.

Some of Maddison's economic historian counterparts have argued that China was ahead of the West economically until the Industrial Revolution but he rejected such analyses. He did his own research in China over the years in collaboration with Chinese economic historians.

Maddison wrote that "From the second half of the 10th century until late in the 13th there was significant progress in China. The Sung (Song) (960-1279 CE) dynasty successfully promoted intensive rice agriculture, and the centre of gravity of the population moved from North China to the area south of the Yangtse. From 1300 to 1850, the population grew faster than in Western Europe but per capita income stagnated. The century after 1850 was disastrous. Civil wars and foreign invasions reduced per capita income by more than a quarter."

The greater dynamism of Western Europe than Asia from 1000 to 1820 was due to five major changes which had no counterpart elsewhere according to Angus Maddison.

1. In the 11th and 12th centuries, urban trading centres emerged, in Flanders and Northern Italy, with autonomous property rights. This encouraged entrepreneurship and overtook feudal limits on the purchase and sale of property. The development of the double-entry accounting system and banks assisted the evolution of credit while record-keeping helped make contracts enforceable. Insurance and joint-stock projects and companies with limited liability promoted trade.

These features of early merchant capitalism spread to the Netherlands and England and later Britain. They became a standard feature of modern capitalism. As noted above, the number of European cities with a population of more than 10,000 rose from 4 to 364, with urbanisation growing from 0% to 10% of the population.

2. The introduction of printed books in the fifteenth century, the Renaissance and the development of Baconian, Galileian and Newtonian science, systematic experimentation, and the spread of university education and creation of academies of science unleashed a Promethean advance of secular knowledge which was a fundamental prerequisite for later technological development. The first European university, Bologna, was founded in 1080; by 1800, 184 had been created.

3. The influence of the Christian church meant that marriage became very different from what it had been in the Roman empire. It was monogamous, with a ban on concubinage, adoption and divorce, with strong discouragement of remarriage of widows or widowers. Inheritance was limited to close family members and widespread adoption of primogeniture broke down loyalties to clan, tribe or caste, promoted individualism and accumulation, and reinforced the sense of belonging to a nation-state. This contrasted with the polygamy of the Islamic world and the extended family systems of India and China.

4. Advances in maritime technology and navigation techniques revolutionised European knowledge of world geography. The discovery of the Americas, new routes around Africa to Asia, and Magellan’s circumnavigation of the globe led to the development of merchant capitalism and colonialism with global horizons. The economy of the Americas was transformed, and repopulated by slaves and European settlers. There were also substantial profits from trade with Asia.

5. A fifth distinctive feature was the emergence of nation-states in close propinquity, with significant trading relations and relatively easy intellectual interchange in spite of linguistic differences. This benign fragmentation stimulated competition and innovation. Migration to or refuge in a different culture and environment were options open to adventurous and innovative minds. This was the reason why the pace of economic advance was fairly congruent within Western Europe.

Rebasing of Angus Maddison's estimates in 1990 dollars (2013)

The population of Western Europe was 133m in 1820 — a four-fold increase since 1000 while real income had tripled. The Venetian Republic was the richest and most successful West European economy from the 11th to the 16th century until overtaken by the Dutch in the 17th century.

Maddison wrote "The North Italian city-states and, in particular, Venice initiated the growth process and reopened Mediterranean trade. Portugal and Spain opened trade routes to the Americas and Asia, but were less dynamic than the Netherlands which became the economic leader around 1600, followed by the United Kingdom in the 19th century."

Spain was the poor relation despite its colonial possessions and the importation of silver from the Americas was blamed for huge price inflation. In 1550 Portugal had a per capita GDP of $1,142 and 250 years later it was $1,024.

In South America, the colonies were controlled by wealthy elites which continued after independence.

In modern times Argentina could fall from one of the wealthiest countries in the world to a state with persistent economic problems.


Growth and Interaction in the World Economy - The Roots of Modernity by Angus Maddison


Slavery and myth of American exceptionalism by Michael Hennigan

First Modern Economy: Myths on tulips & most valuable firm in history by Michael Hennigan

The human cost of the Western diet and European colonialism by Michael Hennigan