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THE WORLD ECONOMY. EXCHANGES, CAPTIALISM, COLONIALISM, AND EMPIRE BUILDING. CHINESE RECONNAISSANCE. Ming China Expel Mongols, reestablish traditional Chinese institutions Reestablish Chinese tributary system; reestablish East Asian trade Resurrects Chinese fleet

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the world economy

THE WORLD ECONOMY

EXCHANGES, CAPTIALISM, COLONIALISM, AND EMPIRE BUILDING

chinese reconnaissance
CHINESE RECONNAISSANCE
  • Ming China
    • Expel Mongols, reestablish traditional Chinese institutions
      • Reestablish Chinese tributary system; reestablish East Asian trade
      • Resurrects Chinese fleet
    • 2nd Ming Emperor seizes control from nephew
      • Nephew flees abroad
      • Emperor sends fleet to find nephew, reestablish Chinese influence, trade, tribute
  • The Chinese reconnaissance of the Indian Ocean basin
    • Zheng He\'s expeditions
      • Ming emperor permitted foreigners to trade at Quanzhou and Guangzhou
      • Refurbished the navy and sent seven large expeditions to the Indian Ocean basin
      • Purposes: to control foreign trade and impress foreign peoples
      • Admiral Zheng He\'s ships were the largest marine crafts in the world
      • Visited southeast Asia, India, Ceylon, Arabia, and east Africa
    • Chinese naval power
      • Zheng He\'s voyages diplomatic: exchanged gifts, envoys
      • Used force to impress foreign powers, for example, against coastal pirates
      • Expeditions enhanced Chinese reputation in the Indian Ocean basin
  • End of the voyages, 1433
    • Confucian ministers mistrusted foreign alliances
    • Resources redirected to agriculture and defense of northern borders
    • Technology of building large ships was forgotten, nautical charts destroyed
european exploration
EUROPEAN EXPLORATION
  • European exploration in the Atlantic and Indian Oceans
    • Portuguese exploration
      • European goals: to expand Christianity and commercial opportunities
      • Portuguese mariners emerged as the early leaders
      • Prince Henry of Portugal determined to increase Portuguese influence
      • Seized Moroccan city of Ceuta in 1415
    • Colonization of the Atlantic Islands
      • Portuguese ventured into the Atlantic, colonized Madeiras, Azores, other islands
      • Italian investors, Portuguese landowners cultivated sugarcane on the islands
    • Slave trade expanded fifteenth century
      • Portuguese traders ventured down west coast of Africa
      • Traded guns, textiles for gold and slaves
      • Thousands of slaves delivered to Atlantic island plantations
  • Indian Ocean trade
    • Portuguese searched for sea route to Asian markets without Muslim intermediaries
    • Portuguese mariners dominated trade between Europe and Asia, sixteenth century
    • Portuguese ships with cannons launched European imperialism in Asia
  • Christopher Columbus hoped to reach Asia by sailing west
    • Plan rejected by Portuguese king but sponsored by king and queen of Spain
    • 1492, led three ships to the Caribbean Sea, believed he was near Japan
    • Other mariners soon followed Columbus and explored American continents
motives for exploration
MOTIVES FOR EXPLORATION
  • Portugal searched for fresh resources
    • Resource poor country block from expanding on land
    • 13th to 15th century they ventured out onto Atlantic
    • Established sugar plantations in Azores, Madiera
  • Direct trade without Muslim intermediaries
    • Bypass Italian trade monopolies with Ottomans
    • Asian spice trade
    • African gold, ivory, and slaves
  • Missionary efforts of European Christians
    • Christians urged to spread the faith throughout the world
    • Crusades and holy wars against Muslims in early centuries
    • Reconquista of Spain inspired Iberian crusaders
  • Motives
    • Gold, glory, God
    • Combined and reinforced each other
influence of technology
INFLUENCE OF TECHNOLOGY
  • New technologies help Europeans travel offshore
    • Sternpost rudder
    • Two types of sails
    • New types of ships
    • Advance, sail against wind
  • Navigational instruments
    • Magnetic compass
    • Astrolabe (and cross and back staffs)
  • Knowledge of winds and currents
    • Enabled Europeans to travel reliably
    • Trade winds north and south of the equator
    • Regular monsoons in Indian Ocean basin
    • The volta do mar
voyages of exploration
VOYAGES OF EXPLORATION
  • Henrique, King of Portugal
    • Encouraged exploration of west Africa
    • Portuguese conquered Ceuta in north Africa in 1415
    • Established trading posts at Sao Jorge da Mina, west Africa
    • Dias rounded the Cape of Good Hope, entered Indian Ocean, 1488
  • Vasco da Gama of Portugal
    • Crossed Indian Ocean; reached India, 1497
    • Brought back huge profit
    • Portuguese merchants built a trading post at Calicut, 1500
  • Christopher Columbus, Genoese mariner
    • Proposed sailing to Asian markets by a western route
    • Sponsored by Catholic kings of Spain; sailed to Bahamas in 1492
  • Columbus\'s voyage inspired others
    • England, France, Holland begin to explore
    • Spain, Portugal sent out more expeditions, conquistadors
other voyages
OTHER VOYAGES
  • Ferdinand Magellan, Portuguese navigator, in service of Spain
    • Crossed both the Atlantic and Pacific Oceans 1519-1522
    • One ship out of five completed the circumnavigation of the world
    • Magellan died in conflict in a Philippine island on the way home
  • Exploration of the Pacific took three centuries to complete
    • Trade route between the Philippines and Mexico, by Spanish merchants
    • Other European mariners searched for a northwest passage from Europe to Asia
  • The English, French, Dutch
    • France: Explored Northern North America, Settled Canada, exploited furs
    • English
      • Atlantic seaboard of North America, Hudson Bay area
      • English East India Company opened Indian Ocean to English trade
    • Dutch
      • Tended to prey on Spanish, Portuguese existing holdings
      • Won independence from Spain, seized control on much of Indian Ocean
      • Dutch East India company established to exploit Indian possessions
  • By 18TH century, Europeans had accurate knowledge of the world
global exchanges
GLOBAL EXCHANGES
  • Biological exchanges between Old and New Worlds
    • Columbian Exchange
      • Global diffusion of plants, food crops, animals, human populations, diseases
      • Columbus\'s voyages began and explorations furthered exchange
      • All continents effected
    • Permanently altered the earth\'s environment
  • Epidemic diseases
    • Smallpox, measles, diphtheria, whooping cough, and influenza
    • Led to staggering population losses
    • Smallpox reduced Aztec population by 95 percent in one century
    • Contagious diseases had same horrifying effects in the Pacific islands
    • Between 1500/1800, 100 million people died of imported diseases
  • New foods and domestic animals
    • Wheat, horses, cattle, sheep, goats, and chickens went to Americas
    • American crops included maize, potatoes, beans, tomatoes, peppers, peanuts
  • Growth of world population: from 425 million in 1500 to 900 million in 1800
  • Migration of human populations
  • Enslaved Africans were largest group of migrants from 1500 to 1800
  • Sizable migration from Europe to the Americas
origins of european trade
ORIGINS OF EUROPEAN TRADE
  • European intermediaries
    • Comparative Advantage
      • Country can do many things but it will excel in some over others
      • Countries develop trade based on comparative advantage
        • Advantage is based on where the nation has greatest advantage
        • Concentrate economic resources in that area
      • European advantage was to act as middle men and shipping for others
    • Absolute Advantage
      • One country has natural advantage in producing certain goods, services
      • Absolute advantage is often a natural monopoly
      • Asians produced spices, goods, which Europeans could not
      • Europeans began by trading with silver, gold
    • European establish monopolies
      • Europeans establish chock points at areas where all trade had to pass
      • Seized lands where spices grown, destroy competition, create monopoly
  • Transoceanic trade
    • European merchants created global trading system
    • Based on supply and demand; linked ports of the world
  • Manila galleons
    • Heavily armed ships sailed between Manila, Mexico
    • Asian luxury goods to Mexico; Silver from Mexico to China
    • East Asia became dependent on American silver
world trade
WORLD TRADE
  • Terms of Trade
    • Agreements on what will be exchanged
    • Agreements on payments, amounts to be exchanged
    • Bilateral is when two nations negotiate equally
      • Europeans had to negotiate with China, Japan, Muslims, Russia (too powerful)
      • Only allowed to trade though one port
        • Canton (Guangzou) in China
        • Nagasaki in Japan
    • Unilateral is when one nation dictates terms of trade
  • Composition of Trade
    • Europe and Trade
      • Europeans traded finished goods, especially manufactured( Guns, cloths)
      • Europeans purchased unfinished goods to trade (Silver, sugar)
      • Europeans sought luxuries, spices, slaves, gems, silks, porcelain
    • World and Trade
      • Low-cost goods: gold, silver; sugar, spice, tobacco, cotton; slaves
      • Africa, Latin America became one commodity exporters
      • E. Europe sold commodities through W. Europe (grains, timber, tar, fish)
      • E. Asia, S. Asia, S.E. Asia, S.W. Asia: balanced agreements of trade
  • Balance of Trade
    • Amount to the profit or loss involved in trade
    • Europeans had an enormous surplus or positive balance of trade
international inequalities
INTERNATIONAL INEQUALITIES
  • International Inequality
    • Center or Core of world trade was Western Europe
      • Most of world in an unequal relationship to Europe
      • Most countries did not control own economies
    • Local trading elites often grew rich trading
      • Worked with Western Europeans on seas, coasts
      • Controlled their own interior economies
    • Most of locals not involved in world economy
      • Population existed at subsistence level
      • Contacts limited to coasts, ports
  • Coercive Labor
    • Most of world labor was unfree
    • Slavery differed little from serfdom, caste slavery, peasants
    • Profits often depended on keeping labor cheap
    • Europeans often established plantations with cheap labor
was there a world economy c 1600
WAS THERE A WORLD ECONOMY, c. 1600?
  • Yes
    • Western Europe
      • European Atlantic Seaboard
      • Colonial possessions in North America, South America
    • Poland and Russia
    • Coasts of West, East Africa
    • Coasts of India, S.E. Asia, E. Asia
    • Muslim S.W. Asia
  • No
    • European areas of Ottoman Empire
    • Interior of Africa
    • Interior (steppes, deserts) of Eurasia
    • Interior of South Asia
    • Indochina
    • Australia and New Zealand
    • Interior of North and South America
    • Pacific islands of Micronesia, Polynesia, Melanesia
east asia
EAST ASIA
  • Benefited from global trade
    • Allowed Limited Contacts
      • Strong government disincentives to trade
      • Used Chinese navy to keep pirates, Europeans out
      • Tended towards official isolation
      • Japan, Korea equally apprehensive
    • Chinese manufacturing better than Europeans
      • Tended towards luxury goods
      • Chinese demanded silver in payment
    • Not active participants on scale of Europe
  • China failed to appreciate European threat
    • Neo-Confucianism clouded understanding
    • Technology considered beneath Chinese
    • Profits, trade considered inferior occupations
  • Japan understood impact of Europeans
    • Most troubled by European firearms as un-samurai
    • Eventually limited trade to one yearly ship at Nagasaki
    • Officially closed Japan until 1854
other parts of world
OTHER PARTS OF WORLD
  • Muslim World: Mughal India, Ottomans, Safavids
    • Interested in trade, cooperated to a degree
    • Allowed small port colonies to arise
    • External trade often handled by ethnic minorities
    • Exchanged goods for silver, luxuries, processed goods
    • Eventually became dependent on European manufactured goods
    • Internal expansion, development over external trade
  • Russia
    • Agricultural economy
    • More concerned with steppe nomads, internal problems
    • Not involved until 18th century
  • Africa
    • Except for coasts, Cape Colony generally outside world economy
    • Diseases, climate kept Europeans out of Africa
    • Contacts limited to coastal states
colonial expansion
COLONIAL EXPANSION
  • The Americas
    • Spain: Began with control of Caribbean, Invaded Mexico 1521, Peru 1531
    • Portugal: Cabral visit coast of Brazil; Treaty of Tordesillas granted Brazil
    • Colonies developed
      • By small band land hungry conquistadors, colonial rulers exploit Indians
      • Only later did formal Iberian rule replace corrupt conquistators
    • Direct Rule
      • Colonial administrators sent out from Spain, Portugal
      • Established agricultural (ranching or plantation) colonies
      • Colonial societies with Europeans at top created rarely had European majorities
      • Missionaries sent out to covert Indians
  • English, French, Dutch create smaller empires on fringes
    • Caribbean holdings more profitable than North American colonies
    • Caribbean islands and Southern American colonies
      • Export sugar, rice, tobacco, cotton, indigo rice
      • Dominated by slaves, plantations; relied on importation of Africans for labor
    • Atlantic Seaboard: settler colonies for Europeans (called Neo-Europes)
      • Land grants made to encourage colonization
      • European populations surpassed native Indians
      • European society, economic systems reestablished; mini copies of Western European
      • Europeans displaced, drove off most Indians and converted land to agriculture
trading post empires
TRADING POST EMPIRES
  • No attempt to create empires but control trade, wealth
  • Portuguese built 50+ posts between west Africa and east Asia
    • Alfonso d\'Albuquerque
      • 16TH century Portuguese commander in Indian Ocean
      • Seized Hormuz in 1508, Goa in 1510, and Melaka in 1511
      • Forced all merchant ships to purchase safe-conduct passes
    • Portuguese hegemony grew weak by the late sixteenth century
  • English, Dutch established trading posts in Asian coasts
    • English in India, the Dutch at Cape Town and Indonesia
    • Created efficient commercial organization
      • Joint-stock company
        • Shares could be bought by anyone with money
        • % of shares correspond to percentage of profit due
        • Allowed for larger, richer entities to operate
        • Limited risk of any one participant to cost of the stock purchased
        • Privileges, terms often guaranteed by government, which often also owned stock
      • Insurance
        • Companies arose which insured ventures
        • Lloyds of London is the oldest in world
  • Formation of powerful, profitable joint-stock companies
    • English East India Company, founded in 1600
    • United East India Company (VOC), Dutch, founded in 1602
    • Private enterprises, enjoyed government support, little oversight
europeans in indian ocean
EUROPEANS IN INDIAN OCEAN
  • Posts were commercial ventures not areas of colonization
  • Portuguese controlled area initially
    • Established ports in India, dominated trade to, from India
      • Goa was capital for Indian Ocean Portuguese Empire
      • Conquered Sri Lanka, several other ports with permission of Mughals
      • Introduced Catholic missionaries to Indian Ocean
    • Seized port of Malacca on Malay peninsula to do same as in India
      • Traded with locals for spice
      • Later conquered parts of Spice Islands
  • Spanish conquest of the Philippines
    • Manila, bustling port city, became Spanish capital; Spanish tended to live in cities
    • Islands divided into plantations to grow sugar
    • Spanish, Filipinos massacred Chinese merchants
    • Christianity spread by Dominicans throughout archipelago
    • Muslim resistance on southern island of Mindanao
  • Conquest of Java by the Dutch
    • Began with VOC trading city of Batavia in 1619
    • Drove Portuguese out, seized their possessions
    • Policy: secure VOC monopoly over spice production, trade
    • Enormous monopoly profit led to prosperity of Netherlands
    • Forced locals to grow rich, coffee in place of regular crops
  • English arrive 17th century to attack Portugal, later displaced Dutch
    • Establish British East India Company
    • Relied heavily on Royal backing, Royal navy, and acquisition of Indian lands
commerical rivalries
COMMERICAL RIVALRIES
  • Global competition and conflict
    • Dutch forces expelled most Portuguese merchants from southeast Asia
    • Conflict between English and French merchants over control of India
      • Began as rivalry with Portuguese
      • Each side made alliances with local rulers to establish trading rights
      • Cotton and tea from Ceylon, early eighteenth century
    • Competition in the Americas among English, French, and Spanish forces
  • Anglo-Dutch Wars (1640s to 1670s)
    • English and Dutch fight three wars for control of seas
    • English win and take New Netherlands (New York); Dutch reduced in world role
  • War of Spanish Succession (1704-1714)
    • Hapsburg family has no heirs to Spanish throne
    • France set to inherit empire; England, Dutch, Austrians oppose
  • The Seven Years\' War (1756-1763)
    • In Europe: British and Prussia against France, Austria, and Russia
    • In India: fighting between British and French forces, each with local allies
    • In the Caribbean: Spanish and French united to limit British expansion
    • In North America: fights between British and French forces
  • Outcome of All: British hegemony
    • British gained control of India, Canada, Florida
    • Dutch allowed to retain Ceylon, South Africa, Indonesia as English allies
    • In Europe, Prussian armies held off massive armies of the enemies
    • War paved the way for the British empire in the nineteenth century
    • British influence paramount in Latin America
early capitalism
EARLY CAPITALISM
  • First arose in Italian city-states, Dutch controlled Netherlands
  • Early capitalism and proto-industrialization
    • Capitalism is use of capital, money, investments to create industry, profit
      • Relies on freedom to invest capital in most profitable venture
      • Relies on minimal government regulation and right of investors to make a profit
    • The nature of capitalism
      • Private parties sought to take advantage of free market conditions
      • Economic decisions by private parties, not by governments or nobility
      • Forces of supply and demand determined price
    • Supply and demand
      • Merchants built efficient transportation and communication networks
      • New institutions and services: banks, insurance, stock exchanges
    • Joint-stock companies like EEIC and VOC organized commerce on a new scale
    • Capitalism actively supported by governments, especially England, Netherlands
      • Protected rights of private property, upheld contracts, settled disputes
      • Chartered joint-stock companies authorized to explore, conquer, and colonize distant lands
    • The putting-out system of seventeenth and eighteenth centuries
      • Entrepreneurs bypassed guilds, moved production to countryside
      • Rural labor cheap, cloth production highly profitable
  • Mercantilism is government supported national capitalism
    • Nations should not important products from outside its own empire
    • Goods should be shipped only on national ships
    • National tariffs, taxes discourage importation, stimulate local production
    • Economic health reflected in positive balance of trade
    • Wealth measured in positive amounts of gold, silver earned
    • All currencies backed by gold, silver
early capitalist societies
EARLY CAPITALIST SOCIETIES
  • Mindset about capitalism
    • Profits and ethics
      • Medieval theologians saw profit making as selfish and sinful
      • Renaissance altered concepts of wealth, profit
    • Reformation
      • Protestants saw success as vindication of God’s favor
      • Many Protestants in upper middle class, Protestant states supported capitalism
  • Population growth and urbanization
    • Population growth
      • American food crops improved Europeans\' nutrition and diets
      • Increased resistance to epidemic diseases after the mid-seventeenth century
      • European population increased from 81 million in 1500 to 180 million in 1800
    • Urbanization
      • Rapid growth of major cities (Paris from 130,000 in 1550 to 500,000 in 1650)
      • Cities increasingly important as administrative and commercial centers
  • Social change in early modern Europe
    • Early capitalism altered rural society
      • Societies became monetary based and not barter
      • Improved material standards if grains sold for high profits
        • Increased financial independence of rural workers
        • Society would prosper as individuals pursued their own interests
        • New propertied classes, especially urban middle classes began to appear
      • Capitalism created problems
        • Generated deep social strains
        • Aristocrats, peasants on fixed incomes, payment of wealth in kind hurt
        • Crime associated with wealth, poverty arose
        • Massive importation of gold, silver led to massive inflation
    • The nuclear family strengthened by capitalism
      • Families more independent economically, socially, and emotionally
      • Love between men and women, parents and children became more important
european impacts
EUROPEAN IMPACTS
  • Western Europe
    • Commercial impacts
      • Beginning of Commercial Revolution, Capital Revolution, Price Revolution
      • Incredible wealth generated
      • Wealth funds European internal development
      • New products, foods imported
    • Diplomatic impacts
      • European trans-Atlantic empires created
      • Colonial rivalries
      • War for colonies
    • Social Impact
      • Rise of groups with wealth based on money not land
      • Rise of cities, urban groups
      • Commercialization made new products available
      • Dependence on agriculture reduced
    • Intellectual Impact
      • European ideas, religions, philosophies began to spread abroad
      • Europeans began to borrow foreign ideas if it suited their needs
      • Contacts with the world challenged traditional European beliefs
new world order
NEW WORLD ORDER
  • All continents eventually connected by trade
    • American silver, foodstuffs spread throughout world
    • Terms of trade tend to favor Western Europeans for first time
    • Commerce generateS wealth which only agriculture had in past
    • Europeans began to dominate world trade
    • Increase of unfree labor systems to support commercialization
      • Rise of Atlantic Slave trade
      • Spread of serfdom in Russia
  • Changes in non-European social classes
    • Non-European landowners in Asia make money from trade, too
    • Muslim merchants largely replaced by European merchants
    • Rise of African slave trading states, kings who made great wealth
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