24 April 2020
More: the 10,000 Year Rise of the World Economy
2020, Profile Books, 362 pages,
Reviewer: Rosemary Connell
This book provides a brilliant and thought-provoking context in which to view the current Covid-19 world crisis.
Obviously in the space of one book the 10,000 years of history are not all covered. The first c 9,500 years are sketched in 60 pages. The book then mainly concentrates on the history of Europe, America, and, occasionally, China since 1500 with a few glimpses of events in other parts of the world.
Well written and well researched, the author charts a history of key events, lessons and concepts, providing numerous fascinating facts and explanations, many of which the reader may have forgotten or not known.
Given the extensive range of the book, this review will only give glimpses into the content.
The book starts with the first humans who left Africa at least 100,000 years ago and migrated to other parts of the world. They were hunter gatherers. The move to agriculture started slowly some 11,000 years ago.
Disease and natural disasters were common, but trade, wealth and inequality grew. Slavery too was common. The golden era of ancient Greece began after 750 BC, but was replaced by the Roman Empire in the second century BC. The Romans expanded their empire, facilitating trade, and were prolific builders and engineers. At the same time China was consolidating under various Emperors.
The feudal system emerged in Europe, trade and credit were developed. International trade fairs flourished amidst increasing demand for money and credit. Many trades were organised into Guilds. The Plague left half of Europe’s population dead and the Middle East also suffered badly.
In the early fifteenth century China was the world’s most powerful nation making great voyages. Suddenly these ocean-going voyages were banned. Europe, however, with improvements in ships and navigation was exploring worldwide reaching the Americas and Asia. These European connections led to a twenty-fold growth in world trade 1500-1820.
The real cost of energy fell dramatically and heat, light and power transformed economies. The author describes the effects and outcomes.
Technological inventions such as the steam engine and the printing press were key. The Renaissance and the Protestant Reformation occurred. British industrialisation forged ahead with the colonial empire providing access to raw materials, innovations in agriculture, exports of wool textiles and so on. Adam Smith emphasised the benefits of trade, competition and specialisation.
1820-1914 saw big changes in transportation (including the Suez Canal) and the development of new industries based on chemicals, oil and electricity. At the beginning of the period Britain was the most developed economy, but the USA and Germany made moves to catch up. Japan too by the first world war emerged as a modern power.
New companies were set up and the concept of limited liability encouraged people to invest in shares resulting in a reduction in the cost of capital helping capitalism flourish. Trade unionisation grew, health improved, and some of the world’s great brands were created. The author explores the effects of immigration in many parts of the world and its consequences, including slavery.
Between 1914 and 1945 there were two world wars and the Great Depression. World trade stagnated and globalisation was rejected in favour of nationalism. Spanish flu swept the continent in 1918 so Europe suffered a huge loss of manpower due to the war and flu.
The author describes the problems of the interwar years in Europe and USA, the return of the gold standard, the Wall Street crash and the Great Depression. He goes on to cover the reasons for the horrors of the second world war. Keynes ‘General Theory’ was published and this had great influence post-war.
The development of powered transport was revolutionary and led to the synchronisation of time. The popularity of the car resulted in a network of roads being built. The arrival of the shipping container was a key invention of enormous importance which led to the development of global supply chains and a vast increase in world trade.
For three decades after the second world war the Western world was peaceful and prosperous. The International Monetary Fund, the World Bank and the General Agreement on Tariffs and Trade were born. The European Economic Community was founded. The author touches on other mainly European developments and their effects. American prosperity and the Japanese Miracle are outlined as are some of the developments in other parts of the world.
In the late-seventies malaise appeared in the form of strikes, demonstrations, assassinations and worries about the environment and resources.
The author describes the history of money and the gold standard, the role of central banks, the failures, crises and criticisms they have endured as well as their successes. He stresses their importance to our lives and democracy and the role of the Bank of England in laying the foundations for the strength of the City in London.
At the end of the 70’s key developments included the beginning of modern Islamic militarism, China’s fast economic growth, a rise in independent central banks and a rapid growth in foreign direct investment. 1979 saw another oil crisis followed by recessions.
In the UK many nationalised companies were privatised under Thatcher and union power was reduced. Other European privatisations followed. There was a wave of takeovers helped by Private Equity.
Japan’s manufacturing success was marked but then the first signs of financial excess arose and the bubble burst in 1990. Recovery has been elusive.
Bank regulation was lax and balance sheets risky. This together with a housing boom led to the crash of 2008. The author discusses the role of government versus the private sector, democracy, welfare, the unions, education, technological change and autarky versus globalisation. He describes China’s stupendous economic growth from c1980,
Increasing world trade, and savings and investment. He outlines progress (or lack of it) in other less developed countries.
Innovation is the key factor in long term economic growth. Technological advances spread across the world more rapidly due to better communications. The author focuses on recent technological advances.
The history of the 2008 crisis is described with the increasingly risky mortgage lending followed by drastic measures being put in place. The stock market bottomed in 2009 and a long bull market in the USA followed. A collapse of the Eurozone was averted with the help of the European Central Bank. Austerity, wage stagnation and slow economic growth followed in many countries. The author speculates that the next economic crisis could arise from the interruption of trade.
Coggan raises many of the right questions and his exposition and analysis of economic concepts is insightful. He ends on an optimistic note with obviously no idea that Covid-19 was imminent.
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