Vagas de Globalização XII

3.2 The Next Comers: US, Germany, Japan and the Rest

Which are the two diffusion channels of industrialization that Professor Sachs presents?

Were countries subdued to European imperialism able to industrialize rather quickly or did imperialism itself create a barrier for those countries to catch up?

We’re discussing the fifth wave of globalization, the industrial era, roughly from 1800 to our time right now, roughly two centuries. And my point of view is that this is the Anglo-American-led age. The Industrial Revolution begins in England, actually it begins in Scotland to be more precise, in Glasgow University, with James Watt’s improvement of Newcomen’s steam engine.

But it is an English and a British development, and of course, Britain becomes the primary power of the world because it becomes the first modern industrial economy. It becomes overwhelmingly urban, already in the 19th Century. It becomes a powerhouse militarily. Its navy dominates the world’s oceans. And because of the British navy, there is also trade throughout sea lanes of global supply chains reaching around the world.

We can use Angus Maddison’s estimates of output in different parts of the world to get a sense of how dominant the British Empire, and more generally, what I’ll call the Anglo-American world, became because industrialization started within Britain and spread to the British Empire, at least important parts of it, and also to other areas that were either part of the British Empire or closely associated with it.

So for our purposes, I’ll define the British Empire to mean Britain and its colonial possessions, Ireland, India, Egypt and others that were part of the British Empire. And in the broader Anglo-American world, I want to include the United States, Canada, Australia, New Zealand, areas that at some point were part of the British Empire, later on, independent countries, part of the Commonwealth, but what Angus Maddison calls the western offshoots, but what really could be called the British offshoots. If one uses Maddison’s estimates, the British Empire itself as of 1820 had as a share of the world economy around 5% of world output.

Of course, the empire itself was still very limited and Britain as a part of the world economy was still mostly in its pre-industrial era. By 1870, the British Empire is the world leader. By then, India has become part of the British Empire, after 1857. That’s about a quarter of the world’s population. And Britain itself has become the great industrial power.

By 1870 the British Empire is around one-fourth of the whole world output. And if one adds in the growing economies of the United States, Canada, Australia, and New Zealand, one adds about 10% more of world output. So the Anglo-American world as of 1870 is roughly a third of the total world output. Almost 35% of the total. This share will continue to rise.

The Anglo-American world, especially now powered by a surging North American economy and especially U.S. industrialization after the U.S. Civil War and in the final decades of the 19th Century, means that by 1913, there’s no doubt that the world is an Anglo-American world with about 40% of world output emanating either from the British Empire or from the British offshoots of North America and Oceania, especially the United States.-

As of 1913, Britain was undoubtedly the conductor of this whole Anglo-American orchestra, if you will. I say that because Britain itself was an industrial powerhouse, because the city of London, meaning the financial center, was also the indisputable financial center of the world, because insurance and banking, finance, flows of currency, the central role of the pound sterling were all indisputable.

And one could probably hardly imagine a world in which Britain was not the dominant power. Of course, France had its empire and Germany had a new empire. And the United States, a late-comer after closing the American frontier as it were, meaning pushing the indigenous populations aside and making a continental-scale economy looked out at the end of the 19th century and said, well where can we create an empire?

And quickly decided, we’ll take some of the Spanish colonies, Puerto Rico, Cuba, the Philippines and we’ll start our own empire, by golly. And so America began its imperial expansion, as well. Well as of 1913, this Anglo-American world was dominant, but huge changes were of course about to happen, because I pick 1913 as the eve of one of the great cataclysms of history, the onset of World War I, 1914.

And not just World War I and the utter shocking, industrial-scale destruction and loss of life of World War I, unprecedented in history, but all of the disasters that continued after that. Let us instead now return to the 19th Century to ask how does this unfolding of the industrial age look from a more global point of view?

Remember the basic idea, innovation and diffusion. Britain becomes an industrial power. Innovation begins as a British innovation and then it begins to diffuse. On the horizontal axis is the distance of the European countries from London. To calculate this I took the capital cities of other countries of Europe and just took the direct, shortest path from London to capital city.

What is shown on the vertical axis is the year in which that country first surpasses an income threshold of $2000 per person as measured in the system of Angus Maddison, which is a unit of international pricing in 1990 prices. What’s important for our purpose here is that the vertical axis measures basically the calendar year in which each country in Europe begins to take off economically.

All the countries are poor at the start of the industrial age. Britain as well. Then this great set of innovations occurs. Income per capita starts to rise in Britain as the first industrial economy. And as it rises, businesses Britain start looking out and saying, we should invest in our neighborhood, or, we should sell steam engines in France or in Belgium. We should help open up coal mines in other countries. And of course, entrepreneurs in those countries and government officials looking at Britain, say, we’re falling far behind, we need to promote industrialization in our own countries lest we become so weak militarily that we can no longer defend ourselves.

The innovation lifts Britain to unprecedented levels of output per capita and other countries relatively speaking, and so what ensues throughout Europe in the 19th century is a catching-up process. Countries begin to industrialize. They industrialize by attracting investment, by entrepreneurs saying, we’ll develop or take on the factory technology, we’ll buy Watt steam engines. We’ll buy the industrial machinery that is propelling Britain’s industrial revolution. We will innovate because France and Germany and other countries through their own university systems and their commercial enterprises become innovators, realizing that there are now new rounds of technological advance that are possible.

The closer you are to London, the faster is your industrialization. Industrialization proceeds like a spreading wave. Drop a pebble in a still lake and you get a circle, a wave that spreads with a  widening concentric circle. Drop an Industrial Revolution into England and what you get is a spreading wave of industrialization, the first industrializers are the countries closest to Britain. They are Belgium and France and The Netherlands. And then the wave spreads and the next round of countries Germany, for example, northern Italy begin to industrialize.

Then, a generation later, the wave spreads further and the Scandinavian countries begin to industrialize. Spain, which is a laggard, farther away begins to industrialize. Industrialization begins in central Europe, in what is today the Czech Republic and Slovakia. So this fascinating graph shows that proximity, geographical proximity, is a key feature of diffusion of innovation in general; that we’ve known for thousands of years.

And it proved to be a key feature of diffusion of industrialization as well. As that wave spread it spread preferentially to those places with coal, because coal was the energy source for the Industrial Revolution. So Germany, with it’s great coal deposits, became an early industrializer.

Of course, proximity was not the only issue of transformation, there were many other channels by which industrialization could proceed. And many other pathways by which industrialization was blocked.

For example, America, being so close to what was the mother land until very recently, England, sharing a common language, sharing an ancestry, family links, made it possible for many inventors in the United States in the early days of the Republic to take on the industrial innovations of England and begin a very early process of industrialization in the United States. Common language, common cultural, common heritage, shared family, made it possible to have that diffusion. ~

Another way that diffusion worked most rapidly is when the ecological setting of Britain could be found in different areas of the world. Britain is a temperate zone, mid-latitude geography. And it has its wheat farming and barley and other temperate zone crops. Its mixed animal husbandry with a large dairy and beef eating population. So in other places in the world with similar climate and ecology, it was possible to transfer British technological knowhow readily.

And one place that’s notable for that were the countries of Argentina and Uruguay, which though across the Atlantic and in South America, on the other side of the equator are temperate zone economies where it was possible to grow wool, possible to grow cattle, to create a meat industry, and now with the new ocean shipping, possible actually with later technological developments to create refrigerated ocean steamers and create a worldwide meat exporting industry based in the pampas of Argentina with industry financed from London, based in Buenos Aires to create a quite wealthy economy by the end of the 19th Century. One can study the diffusion of the Industrial Revolution worldwide.

And the summary conclusions are first, industrialization spread first in Europe and in the British offshoots: Canada, the United States, Australia, New Zealand.

Second, advances of income spread most easily where there was a possibility of sharing technology, whether in agriculture or in industry. And so temperate zone settings like Uruguay and Argentina, or New Zealand for massive wool production, were able to become part of the British-made worldwide industrial economy early on.

Most other countries had to wait a long time before they reached the ability to harness the Industrial Revolution. It took ideas, a fertile ground both in the physical, literal sense of adequate agricultural production, often requiring local coal deposits to create local industry because shipping coal until later in the 19th Century was too expensive. And a national leadership that was able and interested in implementing institutional changes to create the groundwork for an Industrial Revolution.

In Asia this happened in precisely one place, in the 19th Century and that is Japan. When Japan was threatened by the military might of the newly industrialized powers of Europe and the United States, when literally the U.S. sent naval vessels into the Tokyo Bay in 1853 to demand concessions from Japan, Japan experienced a rapid political change, really a revolution, where the revolutionary leader said, we will not lose sovereignty, rather we will industrialize.

And Japan invented a kind of catching-up industrialization in a revolutionary manner that goes under the banner of the Meiji Restoration. This is a term for the political change in 1868 which brought to power modernizers of Japan to end the feudal era, open up Japan to the world, but especially, to attract technology and to train Japanese engineers to run Japanese factories, to industrialize Japan. And this succeeded.

Japan became the industrial economy at the end of the 19th Century. So much so that Japan embarked on its own imperial adventures at that point, in winning wars with China and winning wars with Russia in 1905. Becoming the imperial power in what is today’s Taiwan and in Korea, Japan showed its industrial might.

Alas, it seems to go with the territory, get rich and then go out and conquer somebody. But this was the history of so many of the industrial powers in Europe, the United States, Japan during this period. Most of the rest of the world would not industrialize until the 20th Century. Some parts of the world, not even throughout the course of the 20th Century.

One main fact that I want to close with is when regions succumbed to European imperialism so that they were no longer sovereign, no longer masters of their own fate, this almost invariably blocked catching-up growth.

Because when Britain or France or Italy or Portugal or Germany or the United States or Japan became the colonial masters, then the countries that were in the subservient position were not in a position to invest in education, skill-building, or the promotion of industry to compete with the already industrialized powers. So imperial rule which became the rule of the 19th Century for much of the world was itself a fundamental barrier to catching up by the countries that fell under the machinery and the heavy weight of the European imperial powers.


Pedro Pereira Leite

Researcher and professor. He had his PhD. on museology in 2011, with the title “Muss-amb-ike Homeland: The commitment on musicological process”, that was published in 2011. In 2012 he finishes a Post-PhD Research on "Biographical Glances: The intersubjectivity poetry on museology, at Lusófona University (Lisbon). Presently he is working in his Post PhD. Research about: “Global Heritages" with the aims to build a network on local cognizance and memory manager has a tool to build the will of action in 3 different communities, linked by past communed heritages.” He works at CES. He participates on different Research network, presented papers in national and international conferences, and had published books on research subjects.

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