5 - Modern World Economy

ucla | GEOG 4 | 2023-10-16 09:40

Table of Contents

Introduction

  • Diminishing world empires and feudalism gave way to colonialism and mercantilism
  • this developed across the new world and western Europe and secluded in China
  • Why Europe? China’s limit to expansion was their falling compared to expansive greedy european new empires
  • Cast system developed based on labor as a method of socio-economic las differentiation

    Types of Economies

    Karl Polanyi

  • Reciprocity
    • based on Trust
    • usually expanded locally as political or familial expansion
  • Redistribution - Polanyi argues the world has been like this for a MAJORITY of the time
    • relies on coercion and colonies/territories
    • based heavily on militaristic power and bound locally (continental)
  • Market Exchange
    • The rise of the new world economy across expansive trade hubs and markets
    • fueled by anonymity and portability across the globe - no need for direct coercion, proxies

      Immanuel Wallerstein

  • mini-systems
    • localized towns and intra-territorial trade
  • empires
    • redistribution-eque based on trade bw superpowers and colonies/territories
  • world economy
    • what wee know today as large-scale trade between world cities, beyond empires and land ownership

Modern World Economy

Market Exchange Driven

  • the anonymity of parties and long-distance trade
  • prices decided in the market for goods/services
  • loans and interest to fuel financing to procure goods/services
  • insurance markets for security and risk/trust issues
  • reliable currencies backed by gold/silver
    • now, mostly govt backed by central bank - fiat currency
    • real gold and silver coins for the longest time
  • market places, locations, infrastructure, easy travel
    • needs roads, water, food, and towns nearby
    • internet and easy global access is very new
    • physical banks, merchants, fairs

      Other Principles

  • reciprocity survives in kinship/familial exchange, monarchies, etc.
    • self-perpetuating political class through nepotism
  • redistribution as core principle of empire development
    • production favors home country
    • autarky in Soviet states and welfare states
  • some countries and monopolies still use tactics to transform into “empires”

History of Early European World Economy

15th to 16th cent.

  • western Europe: modern Italy to Flanders (northern Belgium, Netherlands)
  • fall of feudalism and shift to market exchange
  • city-states as centers of exchange - Florence
  • merchant class - developed as a new and large socio-economic class
  • banking and insurance - regulation of usury by govts and religion
  • limited liability company
  • increased agriculture and manufacturing
  • new world
  • concurrent empire building (Spain, Portugal) - more gold/silver in market

    16th cent. to Present

  • blend of market exchange and redistribution (through colonialism)
    • drawing in resources from colonies and then investing in inside-out infrastructure and selling manufactured goods to captive markets
  • Market exchange thrived
    • Western Europe in 16th Century, early 18th Century Europe, late 19th Century Europe, and North America
  • Since the mid-20th Century, market exchange has risen to greatest worldwide prominence
    • end of empires, end of colonialism (mostly), fall of state-based economies like Soviet Union

      Western Europe vs China - 1500s

  • China had a single centralized government - Western Europe was divided politically
  • China had meritocratic civil service - European nepotism
  • China is largely autarkic (economic self-sufficiency), with not much external trade
  • China had a labor-intensive rice economy - Europe’s land-based cereal and cattle economy
  • Europe had private banking
  • Europe had some advantages in navigation and weapons but not in other technologies