Maturation of Global Economy

  1. Global population explosion

    1. Global population grows dramatically in 1700s - from 600 to 800 million

      1. growth strongest in China, India, Europe and the Americas

      2. this trend an acceleration of on that started as early as 1500

      3. stagnation in Persia and the Ottoman Empire

      4. growth tempered by losses due to disease along expanding imperial frontiers

    2. This expansion will lead to economic growth, as labor and consumer markets grow

    3. Urbanization a key element of this growth

      1. cities grown dramatically in Asia, Europe, the Americas

      2. cities over 100,000 become more common

      3. many reflect growing importance of trade and manufacturing

    4. Causes of growth

      1. Medicine

        1. some improvements in medicine, but limited

        2. cure for scurvy discovered in Europe (but not the cause)

        3. smallpox inoculation begins to spread in Europe

          1. promoted by Mary Wortley Montagu (early 1700s) and Edward Jenner (late 1700s)

          2. why it worked was still not understood

      2. Epidemics of previous centuries begin to fade

        1. surviving populations in epidemic zones begin to develop stronger immunities

        2. disease pathogens evolve to become less virulent

      3. Improved food supply - Columbian exchange provides new foodstuffs

      4. Demographers still unsure about these explanations

  2. Limits of economic development in China and India

    1. Both China and India economically powerful in the 1700s

      1. significant manufacturing

        1. large factories producing food, textiles, iron and steel

        2. while much of the labor was by hand, water-powered mechanization in some factories

      2. large internal markets to sell manufactured goods to

      3. significant trade surpluses with the outside world

        1. China exported tea, porcelain, silk, and rhubarb

        2. India exported silk, steel, spices

        3. European merchant generally paid cash for these items, lacking trade goods to sell

    2. But this dominance fade in the mid and late 1700s

      1. high-level equilibrium trap

        1. large manufacturing output based on traditional methods absorbed by large, readily available markets of consumers

        2. no incentive to upgrade manufacturing processes

      2. jobs go overseas

        1. Europeans step up rival silk, tea, and rhubarb plantations elsewhere, and centers to process them

        2. rival porcelain and steel production develops in Europe

      3. British disrupt Indian manufacturing through conquest

      4. British turn trade deficit with China around by importing opium from India

  3. Britain's Productivity Explosion

    1. Being First - Great Britain's Advantages

      1. Abundant cheap labor supply
      2. Critical natural resources
      3. Investment capital
      4. Entrepreneurs - people who organize and manage businesses
      5. Transportation - rivers, canals, well developed ocean going fleet
      6. Available domestic and foreign markets
      7. Governmental support
      8. Increasing use of paper money - eases transactions
    2. Necessity as the Mother of Invention
      1. Britain faced growing land and population pressures
        1. Because of the plague, population of England and Wales fell to 2 million c.1450
        2. By 1700, that had risen to 9 million
        3. Less available land for farmers, but also increasing need for food
      2. Environmental bottlenecks also appeared - the "forest famine" being a prime example
        1. Britain used wood extensively for both fuel and shipbuilding
        2. Clearing of land for fields and cities created a scarcity, causing price of wood to go up at twice the rate of inflation, 1500-1700
        3. While coal was abundant, it was inappropriate for most uses, given available technology
      3. Bottlenecks like these would be broken by advances in farming, iron making, spinning and weaving, mining, and transportation
    3. The Norfolk System
      1. Increasing demand for food and and greater commercialization of economy lead to sweeping agricultural changes
        1. Innovations such as new fertilizer and four-field rotation increased productivity
        2. Growth of cities resulted in higher cereal prices, encouraging commercial agriculture and creating land pressures
      2. Enclosure
        1. Enclosure involved joining together small strips of fields into larger fields and walling or fencing them off
        2. Also involved fencing off the Commons and turning them into private farms
        3. This enabled large-scale production, and was more profitable to large land owners than renting to peasants
        4. A number of Enclosure Acts by parliament in the mid-1700s greatly accelerated this process
        5. This greatly increased efficiency of British agriculture
          1. Pushed many people off the land, creating a pool of landless laborers
          2. Also increased the wealth of landowners and the value of land, creating investment capital
          3. By 1870, England had 300% more food than 1700, but only 14% of agricultural labor
    4. New developments respond to these pressures
      1. Abraham Darby develops a system for forging iron with coal - 1709
      2. Thomas Newcomen invents a steam engine for pumping water out of mines, 1712
      3. James Watt develops a dramatically improved steam engine, 1765
    5. New technologies develop in response to others
      1. Weaving and Spinning
        1. John Kay invents the flying shuttle in 1733, increasing the speed of weaving
        2. this creates a gap in spinning, as thread production can't keep up
        3. various inventions in 1760s and 1770s close that gap (spinning jenny, carding)
        4. powered loom (1785) accelerates weaving again, and creates demand for more (and better) Watt steam engines
      2. All the new technologies are interlocking, as growth in one enables and demands growth in another
        1. coal
        2. iron