2: Ocean-Based Globalization: 1500-1800

In the second week of the course, Professor Sachs expands on the Ocean-Based Globalization Period, or fourth-wave of globalization, as he calls it. He describes this period as being a time of “true” globalization, because, for the first time since the dispersal of humanity out of Africa, all continents of the world found themselves connected to each other. Christopher Columbus’ and Vasco da Gama’s voyages gave way to global scale industry, production chains and trade. Professor Sachs points out that these exchanges, which also included the exchanges of pathogens, were often marked with cruelty and violence. During this period, not only global scale, early capitalism, but also world-scale wars, based on the competition between European empires, shaped the modern world. To conclude, Professor Sachs introduces the concept of the period of the great divergence and presents existing arguments that try to explain the reasons behind it.

2.1 Sea-Based Globalization

What was different between the ocean-based globalization and the land-based globalization described in the previous module?

• Why does he call the ocean-based globalization the “true” globalization?
• According to Professor Sachs’ interpretation of Adam Smith, what does Adam Smith think will enable the eventual rebalancing of power?

In this module, I want to talk about an absolutely pivotal era for human history and that is the period between Christopher Columbus and essentially James Watt, the inventor of the steam engine.

It’s the period in which modern globalization first takes hold and in which many of the characteristics of our world today are developed. I’ve talked about waves of globalization and I have, somewhat arbitrarily perhaps, described six waves.

And now we’re at the fourth of these six globalizations and that is the era of ocean- based globalization.

This is a very distinctive period. In fact one could say that unlike the preceding era of the great land-based empires this one is true globalization for the first time since the dispersal of humanity out of Africa, because this globalization that begins in 1492 is a globalization that brings together Europe and Asia, which have long been connected by land, together with Africa, but now together with the Americas and with Oceania, with Australia and New Zealand and eventually the Pacific islands as well.

This is a true globalization for all parts of the world. It is a momentous change of human history in all regards. It begins with the great advances of ocean based navigation, which were taking place both in China and in fact China was the leader in world technology and the leader in ocean based navigation, and increasingly, on the other western, far side of Eurasia, indeed in the Iberian peninsula where the Atlantic Ocean countries, first Portugal and Spain and then later, Britain and other of the ocean bordered countries of western Europe become navigational leaders in their own right.

In the early 15th Century, China’s navigational capacity was second to none in the world. The famed seven voyages of the Admiral Zheng He in the first three decades of the 15^th Century are justly remembered hundreds of years later as remarkable accomplishments of China of the time, as this map shows for the fourth of the voyages, from China throughout southeast Asia, the South China Sea, through the Malacca Pass, around Java and Sumatra, into the Indian Ocean, all the way to east Africa, to Arabia, the coast of India and then back to China.

This great navigational leader with this unbelievable capacity shown by the vast grand fleet that he sailed throughout the Indian Ocean region was a triumph of technology, a triumph of China’s grandeur and also of course an act of Chinese statecraft, because one of the goals of Admiral Zheng He was to make sure that the rest of the countries of the Indian Ocean understood who was who in the geopolitical ordering of the time, with China viewing itself, understandably, as the kingdom to which all of the others needed to pay tribute and obeisance.

On the other side of Eurasia, to a vastly smaller extent, a very pioneering Henry the Navigator of Portugal was encouraging naval exploration and navigational technological advances with an exploration down the coast of west Africa.

Eventually, that would culminate with the Portuguese navigators reaching the southern tip of Africa, the Cape of Good Hope, and with the help of Arab knowhow in the Indian Ocean, sailing from the southern tip of Africa to the coast of India, that is Vasco da Gama’s famed voyage of 1498.

One of the reasons why the Europeans and Henry the Navigator in this case was increasingly interested in ocean-based navigation is that with the fall of the eastern Roman Empire, Byzantium, the fall of Constantinople to the Ottoman Empire in 1453, the Mediterranean as a sea route to the Indian Ocean and to trade with Asia was now blocked, controlled by Turkish forces, by the Islamic world.

And so Europe gained interest and the kings of Europe gained special interest in trying to find an ocean-based pathway to Asia that could circumvent an eastern Mediterranean, now controlled by the Turks.

And indeed, this is precisely what was accomplished by the end of the 15th Century with da Gama’s voyage. Now history took a shocking turn one could say, because while China was dominant, preeminent in technology, preeminent in statecraft, preeminent in geopolitics, preeminent in population, that preeminence exactly began to end just in this period.

One fundamental reason, one of the hinge moments of history, was the decision by the imperial court of China, the Ming Dynasty, to end the naval voyages of Admiral Zheng He and any similar voyages afterwards, indeed, for hundreds of years. That great fleet was scrapped. Attention turned from the Indian Ocean to the north of China. The prevailing theories are that this was partly ideological, China feeling, we’re at the center, we are the center of the world, not only at it, but we don’t really need the rest of the world, why should we be engaging in this expensive ocean-based activity?

And probably at a far more pragmatic and perhaps far more important reason, nomadic invaders from the north were threatening China security. And China always faced the challenge of the peoples from the steppes, though they did not have the population numbers, they did not have the Chinese great civilization and technology, they had the military means of cavalry and of a horse-based militaristic society to threaten and to conquer China.

Hence, the Great Wall of China to try to stop the nomadic invaders, and hence perhaps the fundamental reason why this ocean-going, outward-looking China suddenly scrapped its navigational advantages, stopped exploring the Indian Ocean, decided to scrap the fleet, in essence, close the borders, limit trade and to a significant, though not complete extent, to turn inward.

In the end, it was not China circling the Cape of Good Hope on the way to Europe, but the Europeans circling the Cape of Good Hope on the way to India and China that turned out to change history.

And change history they did. The last decade of the 15th Century, thereby became one of the pivot points of all of modern history, where within eight years, Christopher Columbus trying to find a sea route by going west to find a route to Asia, and Vasco da Gama by going south and eventually trying to round Africa and then going east to find the same route, within a period of six years, had their respective successes.

Of course, Columbus thought that he had discovered a sea route to the East Indies, but in fact he had discovered two new continents that Europe had not been aware of, North America and South America.

And Vasco da Gama did succeed in what his purpose was and that was to link Europe and Asia with ocean based navigation. When they did so, they did more than create the sea links. They knit together the entire world for the first time in more than 10,000 years.

They brought the New World and the Old World together. They brought Europe and Asia together in a more intensive way than could ever have been possible by overland trade itself since sea-based navigation, unit by unit was far less costly and therefore far more supportive of large-scale trade than overland navigation could ever have been.

And the Europeans brought back to Asia something that they had received from China, originally, and that was gunpowder and artillery and new weaponry that came with the advances and that came to be carried on European ships that sailed into the Indian Ocean.

It was the Song Dynasty where gunpowder was first invented and developed and where the early cannon and the beginning of guns and all of the technologies that would follow were first developed by the Chinese.

But it was in Europe where that technology was advanced. One theory is that because China was a mostly peaceful and continental scale empire, whereas Europe was an endlessly squabbling and endlessly fighting set of kingdoms and principalities, the learning by doing of warfare in Europe was accelerated relative to that of China.

One could say that Europe leapfrogged in this ironic way and became the masters of the gunpowder age. And certainly when those European vessels started to enter the Indian Ocean, they entered with cannon fire, and they entered with a military power that despite the small numbers of Europeans that came, proved to be able to conquer territory, to set up new colonies, to set up bases for what became subsequently an expansion of European imperial rule throughout Asia.

This certainly marked a pivotal change of human history. And we can see that it meant the rise of western power for hundreds of years to come. And I always find it poignant and powerful to look at what Adam Smith wrote about these events 275 years after they took place.

Adam Smith, the great inventor of modern economic thought, living in Scotland, publishing his magnum opus, The Wealth of Nations, in 1776 gives a panoramic view of the world economy. He was a piercingly perceptive observer, a genius and a humanist. And this is what he had to say about this period of human history. And I’m going to quote at length, because I think it’s wonderful to listen to a great mind like Adam Smith reflecting on these pivotal events. It inspires us to think hard about our own times and about the possibility of reflecting meaningfully on great events such as this.

Smith writes, “The discovery of America and that of a passage to the East Indies by the Cape of Good Hope are the two greatest and most important events recorded in the history of mankind.” Wow, think about that statement, “the two greatest and most important events recorded in the history of mankind.

Their consequences have been very great. But in the short period of between two and three centuries, which has elapsed since these discoveries were made, it is impossible that the whole extent of their consequences can have been seen.

“What benefits or what misfortunes to mankind may hereafter result from those great events, no human wisdom can foresee.” And here is Smith coming about their meaning. “By uniting in some measure the most distant parts of the world, by enabling them to relieve one another’s wants, to increase one another’s enjoyments and to encourage one another’s industry, their general tendency would seem to be beneficial.”

What Smith is saying is, we now have globalization. We now have global trade. All parts of the world connected. That would seem to be good.

Each part of the world could help others in what they want through mutually beneficial specialization and trade. But Smith being a great humanist goes on. He writes, “To the natives however, both of the East and West Indies, all the commercial benefits which can have resulted from those events have been sunk and lost in the dreadful misfortunes which they have occasioned.”

In other words, the native inhabitants in the Caribbean, the Carib Indians for example, or the native inhabitants of Java and Sumatra or the Calicut or the Malabar coast of India, they suffered from this. They didn’t gain commercially. “These misfortunes however seem to have arisen rather from accident than from anything in the nature of those events themselves.

At the particular time when these discoveries were made the superiority of force happened to be so great on the side of the Europeans that they were enabled to commit with impunity every sort of injustice in those remote countries.”

What is Smith saying? He’s saying, the Europeans arrived, they plundered, they dominated, they enslaved, they murdered the native inhabitants.

And it was this advantage of power that meant that what should have been mutually beneficial trade proved to be not mutually beneficial at all. Then Smith goes on.

“Hereafter perhaps the natives of those countries may grow stronger, or those of Europe may grow weaker and the inhabitants of all of the different quarters of the world may arrive at that equality of courage and force, which by inspiring mutual fear can alone overawe the injustice of independent nations into some sort of respect for the rights of one another.”

What is Smith saying? He’s saying, the Europeans were so dominant they did not respect the human rights of the inhabitants of the East and West Indies. They were able to act with impunity, with brutality, in fact.

But Smith is looking at benefits for all of humanity and he’s saying that some day those distant quarters may gain in power sufficiently that they will be treated with respect, because there will be an equality of courage and force, which by inspiring fear will stop the injustice, stop the plundering.

And then Smith gives the added twist of the great economist that he was, “Nothing seems more likely to establish that equality of force than the mutual communication of knowledge and of all sorts of improvements which an extensive commerce from all countries to all countries naturally or rather necessarily, carries along with it.”

What is Smith saying? What will lead to a rebalancing of power? Well, nothing less than international trade and globalization itself, because globalization will lead to an exchange of knowledge. It will lead to a communication of technological knowhow, what Smith calls “all sorts of the improvements.” Meaning, technological advances. And commerce will make that possible.

Globalization will rebalance, allow a catching up by the laggard regions of the world so that they can catch up, they can gain in force, in power, in mutual respect.

And then from Smith’s point of view, and I hope from our point of view, thereby have the mutual benefits of globalization, not the one-sided globalization that comes from conquest by the powerful of the weak.

This is a wonderful statement filled with meaning for us. But what Smith is saying is, these events of what I’ve called the fourth wave of globalization, the ocean-based navigation are the most significant events of human history because they united all of humanity.

But they didn’t bring benefits for all of humanity. They brought benefits for one part of humanity, western Europe, but they did bring a lot of misery for those who incurred the wrath and the dominant power of the Europeans who came not only to trade, but also to plunder and to conquer.

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