Economic Systems

1200 - 1450

• Song China’s economy became more commercialized and continued to rely on free peasant and artisan labor.

• Chinese economy flourished with technological advancements (Grand Canal expansion, textile/porcelain/steel/iron production).

• Commercial practices improved (forms of credit, caravanserai, Chinese paper money) increased the volume of trade and expanded the range of the Silk Roads and with that powerful trade cities.

  • Trade of luxury goods increased, spread by merchants

• The Mongol Empire’s vast control over Asia provided safety and stability which facilitated trade through Afro-Eurasia (Pax Mongolica).

• Indian Ocean trade volume was increased with the predicting of monsoon winds for easy travel as well as the spread of maritime technology. With trade, cities were developed.

• Transportation technology increased trade in the Trans-Saharan, cities like Timbuktu became popular trade spots.

• The Americas participated in inter-regional trade but mostly through the government.

• Europe didn’t participated much in international trade yet but desired to after the findings of Marco Polo. Instead their economies ran through feudalism and manorialism where the serfs/lower class were tied to land and worked similarly to slaves under their lords.

• Japan had a feudal system similar to Europe.

1450 - 1750

Land Based Empires

• Gunpowder Empires gained their strength by trading for military resources, mostly from China.

• Large land empires used taxing systems to generate money to support expansion.

  • Ottoman tax farming, Aztec tribute system, Mughal zamindar tax collection.

Maritime Empires

• European empires such as the Portuguese, gained knowledge of maritime technology and navigational skills allowing them to travel to trade with Africa and Asia and set up trade posts there.

  • Trade post empires later transformed into imperialist empires as they continued to colonize.

• The Indian Ocean trade network continued to flourish, now with the addition of Portuguese, Spanish, and Dutch merchants.

• Europeans traded Chinese luxury goods including tea, silk, and porcelain

• As European countries colonized the Americas, they created cash crop plantations operating with forced labor systems.

  • Tried to implement the Inca Mit’a system and indentured servitude but weren’t successful so they switched to chattel slavery.

• Europeans started the Atlantic Slave Trade to supply workers for their American plantations.

  • Europe traded Africa manufactured goods like textiles →Africa traded enslaved people to European colonies in America → Europe sent their materials/cash crops harvested in the American plantations to Europe (for people and manufactured goods).

• European Maritime empires followed the economic system/ideology of mercantilism (commercialization) where a it was believed there limited amount of wealth in the world and was measured by the supply of a state's gold and silver, thus should try to increase their supply.

  • Promoted that exports should be larger than imports and government economic regulation.

• The Europeans harvested silver from the Americas (mainly Spanish colonies), stood as the new global currency.

  • China had a high demand for the silver currency as they switched from paper money to coins, due to self-inflation and counterfeit bills, thus Europe was able to trade for Chinese luxury goods.

  • Eventually silver causes lots of inflation in China (price revolution).

• Join-stock companies funded these voyages of exploration and colonization (some were state funded).

• The British East India Company and the Dutch East India Company were prime examples, both funded exploration and trade in South/South East Asia.

• Peasant and artisan labor continued to produce these goods.

• Japan closed themselves off from foreign trade (isolationism) under the Tokugawa Shogunate.

• China attempted to do the same but this hurt their export heavy economy moving forward.

  • This also stopped Zheng He’s voyages which expanded their economy prior.

1750 - 1900

Industrialization

• The new industrialized economy came with the industrial revolution and continued with

  • Improved agricultural productivity →less farmers needed so more available for factories.

  • Urbanization → growth of cities and factories in them.

• The industrial revolution began in England due to many rivers and spread through Europe and the US.

• The previous cottage industry where women would produce textiles in their home transformed into the textile industry with mass producing factories.

• Western European countries abandoned mercantilism as their economic system and instead adopted free trade policies.

  • Adam Smith’s support of a Laissez-Faire system and eventually capitalism were adopted by Europe and the US.

• Capitalism did have benefits and created a new social class, the working class.

  • Increased standard of living for some, though cities were low quality.

  • Increased availability, variety, and affordability of goods.

• Large scale transnational businesses rose with the industrial economy. They operated through large scale banking and stock markets.

• In response to the challenges capitalism brought, Marxism and socialism stood as alternative economic systems. They promoted equality through sharing wealth between the working class rather than the company owners.

  • Marxism later transformed into communism, a much more aggressive ideology for equal wealth distribution with businesses being owned by the state.

• New government in Japan (Japan Empire reinstated) started the Mejji Restoration which implemented Western-like policies to promote industrialization (successful).

• In Russia, industrialization increased with steel and railroad manufacturing.

Imperialism

• The resources needed for industrialization were a big causes for imperialism. European countries were trying to expand their industrial economies and markets $$$.

• Economic imperialism was a form of imperialism in which businesses and industrialized states dominate another country's economy.

  • Asia and Latin America were targets of this due to their supply of raw materials for industrialization (cotton, rubber, oil, metals).

  • Traded strategically to give imperialist countries’ merchants a large economic advantage.

• Examples of economic imperialism include:

  • Britain and France expanding economic power in China through the Opium Wars and the rebuilding of the Suez Canal. (Spheres of Influence).

  • International corporations like the banana republics.

• Migration increased as people were looking to work in industrialized states.

• The new capitalist economy relied on semi-coerced and coerced labor migration.

  • Enslavement and indentured servitude of Chinese and Indians.

  • Convict labor.

1900 - Present

World Wars and Interwar Economy

• Both World Wars were fought with total war strategies where they invested their whole economies into weapon manufacturing.

• The Treaty of Versailles placed extensive war reparations on Germany, leading to massive inflation and struggle in the German economy.

• After a extreme stock market crash in the US, the Great Depression began in 1929.

  • Effected global economy due to interconnections, making it the world’s worst economic collapse.

• As a response to the Great Depression, more governments became involved with the economy (increase in socialism).

  • The New Deal in the US involved the government aiding welfare.

• After WW2, new states' governments promoted economic development.

Communist Economies

• Communism was an extreme version of Marxism, it promoted a classless society in which all resources are communally-owned rather than individuals.

• Joseph Stalin’s Five Year Plans monitored the Soviet Union economy through oppressive policies that led to famine.

  • Also forcefully took land away from higher class peasants for redistribution.

• China became communist after the revolution in 1949, motivated by Japanese aggression and internal affairs.

• President Mao Zedong’s Great Leap Forward transformed China into socialist economy through rapid industrialization and collectivization.

  • Like Russia, these oppressive policies had horrific consequences including extensive famine.

Globalization

• After the fall of the Soviet Union at the end of the Cold War, more governments promoted free markets and economic liberalization.

  • Regional trade agreements/organizations like the World Bank, World Trade Organization, and the North American Free Trade Agreement reflected this.

• Informational and technological developments created knowledge economies.

• Manufacturing was transfered more to Asia and Latin America (less developed countries).

  • Businesses often do offshoring where they build their factories in these countries as labor is cheaper there.

• No more isolated states meant multinational corporations could rise (Adidas, McDonalds, ect).