Copyright © 2000 by George Modelski

 

 

 

 

 

 

 

 

 

 

 

EVOLUTION OF THE WORLD ECONOMY

 

 

 

George Modelski

 

 

 

 

 

 

 

 

 

 

 

 

 

                                    Start by proposing, without further discussion, that to-day’s students of economics pay less than full attention to three problem areas:

 

1.     the very long-range analysis of the world economy;

2.     the all-pervasive role of innovation, and

3.     the links between the economy, and politics, society, and culture.

 

                                    In this paper I set out to contribute to the exploration of these expansive questions in a systematic manner.   The manner is systematic because it is grounded in an evolutionary perspective.   In particular, after setting out the essentials of that perspective, I go on to

 

1.     sketch out a long term perspective on economic history;

2.     highlight the role of innovation in that process; and

3.     sketch out the links between economics and politics at the global level

in the millennium just past.

 

 

 I.   Evolution of the world economy

 

                        The principal assignment for this article is to trace long-term patterns in the evolution of economic and political structures.    Particular interest focuses on the modern era, and the interactions, in that time span, of these two sets of processes.   But to put such large-scale developments in context, it is necessary to clarify the nature of this evolutionary approach, and the broad outlines of the evolution of the world economy over the long span of what we know as history.

 

                        The approach adopted here is best described as “evolutionary” because it centers on the problem of understanding social change as the product of learning processes involving the mechanisms of innovation, selection, cooperation, and reinforcement.   It seeks to clarify how and why the economic organization of the human species has reached the degree of complexity and productivity it exhibits to-day, and how and why the world political system exhibits the degree of global reach and effectiveness it has today, and how both of these sets of structures might change over the foreseeable future.  

 

                        The distinctive characteristic of this approach is its “human species” focus, that is, its conception of social evolution as a set of continuing and inter-linked processes of change involving the entire human species.   It might be contrasted, in the first instance, with accounts that place the emphasis on the “evolution” of individual societies and on the question “why do societies differ, and how do they change over time”,  questions that have preoccupied many social scientists attracted by evolutionary theories.   By contrast, the present approach adopts a species approach, and focuses on the world as a whole.

 

          Among evolutionary approaches the present is, furthermore,  an institutional one,  in the traditions of Thorstein Veblen,  Friedrich von Hayek, and Douglass North;  in that respect it needs to be contrasted with biopolitical studies that emphasize above all else the role of the genetics and the biological endowment.   An institutional approach  allows us to portray social and organizational systems as products of Darwinian search and selection that constitute multi-layered, nested learning processes moved forward by innovators.   That in turn shows that such social evolutionary analysis does not ignore individual or social actors, for it does indeed single out for special attention the agents of innovation, inventors and innovative organizations, and societies that offer evolutionary potential.   But the focus remains on institutional change for the human species, and at the global level in particular.

 

                        The features of the evolutionary approach might be seen more clearly when contrasted with the standard “rational choice” paradigm of neoclassical economics.   Table 1 singles out four such characteristic features and compares them for the two perspectives.   It makes it clear that each have their own place, and domain of maximum effectiveness, and that in important respects they might indeed be regarded as complementary;   but it also makes plain that an evolutionary approach is the one that is best suited for problems of analyzing patterns of long-range change.   That is so because such an approach naturally inclines toward a long-term perspective;   it focuses in on structural transformations rather than on equilibrium states;  it does not require the postulate of rationality and it sees collective choice processes as resulting from trial and error search and selection procedures.   Best of all, it gets away from a purely instrumental rationality and allows for ends to be seen to be changeable, and for constraints to be altered as the result of evolutionary processes.

 

 

 

Table 1:   Rational choice and evolutionary approaches compared

 

Characteristic features

Rational choice

Evolutionary

Perspective 

(time horizon)

Short-term

Long-term

Focus of explanation

Decisions,

equilibrium

Institutions,

transitions

Choice process

Rational maximization

Trial and error

search and selection

Ends-means schema

Given constraints and

preferences, choice of means

Both constraints and

preferences are

variable

 

 

 

The world economy

 

                        World history is conventionally regarded as comprising the ancient, classical, and modern eras;  the first two, of about two millennia each, and the last, the modern, taking up the last millennium, as shown in Table 2 below.  Together, these three categories yield a basic grid against which long-term trends might be appraised in more detail.   But they might also be seen as presenting such history as a continuing process, as successive phases in the evolution of the social organization of the human species and it is within that grid that the world economy assumes shape.  

 

 

 

                        Table 2:   Evolution of the world economy

 

From about

(yr)

Era

World Economy Process

 

 

Command Economy

BC  3400    

Ancient

I.     Bronze

      2300

 

II.    Fertile Crescent

      1200

Classical

III.   Iron

      100

 

IV.  Silk Roads

 

 

Market Economy

AD   930           

Modern

V.   Market Systems

      1850

 

VI.  World Market

 

 

                        That is why economic history, too,  might be seen as a process of such continuity, as proposed by John Hicks.   Within the overall framework of the ancient, classical, and modern eras unfolds world economic organization, over millennia-long periods marking major institutional innovations.   These innovations fall into two broad categories, supply-side, concerning broad productive and construction undertakings, and demand-side, relating to distributive, commercial, and trading aspects, such that millennial (supply-side) periods of production achievements might be seen to alternate with (demand-side) periods , of similar length, of trade networking that bring about a  diffusion of technology and wealth.

 

                        The ancient era is commonly also known as the Bronze Age because it is that new alloy that is characteristic of the  material culture of that time, especially in Mesopotamia.   The tools, weapons, and art objects fashioned of that material were keys to the development of irrigation agriculture, public works, water and land transportation, and warfare.   But within the ancient era, two periods might then be distinguished:   the launching of bronze metallurgy, centered on Sumer, and secondly, the development of the Fertile Crescent into a wider and more dispersed economic and trading zone.  

 

           The classical era, after 1200 BC, opens with the age of Iron, as the innovation that makes possible yet greater strides in agriculture, and weaponry, and produces rapid population growth in, and the urbanization of, China and India.   In the second period of that era, the Silk Roads create for the first time a transcontinental system of trade, where products such as silk, spices, or silver, travel from one end of the Eurasia to the other.

 

                        These four periods might be said to have instituted and comprised the command economy as the paradigmatic institutional arrangement for the world economic system.   The command economy is an economic system in which the great instruments of production are publicly owned, either by the temple or the state, and in which basic economic decisions on investment, production, and exchange, are centrally controlled.   That is not to say that the pre-modern period saw no individual property or private transactions but only that the differentiation between economic and political functions was weak, and that the great projects of investment or long-distance trade were strongly dominated by public concerns.

 

                        John Hicks has argued that the central tendency of economic history has been the movement from command to market economy.  The larger an economy, the more difficult, if not wholly impossible. it is to coordinate economic (and political) activities from one central point.   That is why in a general sense and over the very long run, the command economy is unstable, and tends toward “decline”;     the market economy is, in comparison, more resilient and therefore more likely to prevail.   But that is not to say that in the short run, central direction might not yield better results for certain limited purposes, and in particular at times of major warfare, when a large share of economic output is directed to the one goal of achieving military victory.   In the 20th century, the global war period of World Wars I and II saw the resurgence of such planning on all sides.   That is why the rise of the market economy has hardly been a smooth or straight-line process.

 

                    In the temporal dimension, this great evolutionary transition from command to market is represented (in Table 2), over the last millennium, by periods V and VI, named those of Market System, and World Market.   “Markets Systems” stands for the “invention” of reliable markets  serving productive centers on a national or regional basis.   According to William McNeill, this first occurred in China, in the Sung period, between 1000 and 1200;   it was followed by the trading system of the Italian Renaissance that organized the western end of the Silk Roads;  it reached high gear with the rise of a “West Europe with a global reach” after 1500, and culminated in what we call the “Industrial Revolution” in England after 1700.   “World Market” is the second phase in this story, whose central feature, after 1850, is increasing globalization of economic activities, and the progressive extension of the reach of world markets to more and more segments of the world economy.   There is no reason to believe that this process is about to end anytime soon;   more probably this drastic and unprecedented transformation of the way humanity earns its living is likely to remain the salient feature of the world economy for a  long time to come.

 

                        In long perspective, the transition from command to market has been a gradual one, spanning centuries.   The factor mediating this transition was the rise of the Silk Roads, in period IV, to which reference was made earlier, and is illustrated in Table 3.   This transcontinental system of transportation and communication formed the backbone of the economy of the “Old World” until about 1500, well into the “Market System” period, and the industrial and commercial activities upon which it thrived did in fact help to stimulate the growth of markets in the several areas it did traverse, even though at other times political interventions would for long periods block and immobilize entire segments of those routes.

 

 

            Table 3:    Evolution of the Silk Roads 100 BC to 1500 AD

 

Period

Major linkages

Anchor cities

K-waves

 

 

 

 

IV: Silk Roads

 

 

 

 

 

 

 

-100 - 250

Silk via Parthia

Rome, Luoyang

 

200 - 500

Red Sea Route to India

Alexandria, Guangdong

 

500 - 650

Byzantium develops the northern route

Constantinole, Changan

 

750 - 1000

Abbasids develop Persian Gulf route

Baghdad, Changan

 

 

 

 

 

V.  Market Systems

 

 

 

 

 

 

 

930 - 1125

Northern Song via Central Asia

Constantinople, Kaifeng

K1-2

1150-1250

Southern Song

Cairo,-Hangzhou

K3-4

1250-1350

Mongols restore northern route

Genoa, Peking

K5-6

1350 - 1500

Mamluks, Venice work Red Sea route

Venice, Cairo, Calicut, Malacca, Hangzhou

K7-8

 

                       

Overall, the Silk Roads reveal the central portions of the world economy to be a living, pulsating thing, even if the volume of transactions, or the speed of interactions, might have been low by to-day’s more exacting standards.   Table 3 shows how the intensity of activity along that central artery alternated in a fairly regular manner between the northern and the southern routes, , and in a way that correlated with surges of activity in China, and in Europe.   Most importantly, the Silk Roads, and the key industrial and commercial structures they supported, became the scaffolding upon which arose the truly global economic system of the modern era.

 

 

 

II.   Global economic evolution, and innovation

 

                        This has been so far, in broad strokes, a sketch of the evolution of the world economy as marked by major institutional changes, and above all, viewed as a fundamental transition from command to market economy.   It covers the entire historical experience with world economic systems, from the very inception of the possibility of such arrangements, inherent even in the pre-historical trading linkages of maybe six or seven thousand years ago, right up to the contemporary experience of an increasingly globalized economy.

 

                        The next question is:  how did the process work itself out at global organizational level?   That is, what were the organizational structures that mediated and orchestrated these changes such that a movement toward greater economic interdependence might in fact be observed?   An answer is suggested in Table 4.  

 

                        Table 4:  Organizational evolution in the global economy

 

From about

Phases

Centered on

 

V.     Breakthrough to

market systems

 

 

 

          930

Song move to national market

China

Experiments

        1190

Nautical-Commercial revolution

Italy

Clusters

        1430

Oceanic trading

Atlantic Europe

Critical mass

        1640

Industrial take-off

Britain

Pay-off

VI.  World Market

 

 

 

        1850

Information Economy

United States

Experiments

        2080

 

 

Clusters

 

                        Table 4 above shows the main outlines of the organizational evolution that has moved the world economy toward market solutions, in this case with emphasis on the global level (that is, in respect of long-distance and inter-continental trade, and the activities of leading industrial sectors).   Organizational evolution concerns the setting within which innovation occurs and without which it is unlikely.   It includes the creation of markets, new types of enterprises and communication systems, the background of political security, and the launching of new productive facilities.

 

                        As noted in Table 3 above  China had been, for over a millennium, an anchor of the Silk Road system, and as such, a major participant in the then world trading system, exporting silk, (an early innovation whose secrets were for a long time very well  guarded), and importing i.a. jade from Central, and spices from Southeast Asia.   It is therefore not altogether surprising that about the year 1000 under the Sung Dynasty, China laid the foundations for a “first”:  a national market economy, and became “the” market of the world system, attracting traders from far and wide (ultimately even serving as the ultimate destination  for Columbus).   But in the longer run this proved to be basically an experiment with wide ramifications, and lessons for others;  and soon the ball was taken up by the Italians, whose commercial and industrial organizations and practices have been more directly foundational for global economic evolution. 

 

            It was Italian enterprise that helped to launch Portugal and Spain on their global enterprises that created the first truly global trading (and political) system that in turn served as the foundation for the “industrial revolution”.       Britain built the factories that made that “revolution”,  a feat to be imitated world-wide.   The United States completes the picture, for the time being, with its leading role in the 20th century.  

 

           Interestingly, though broadly speaking, these great organizational waves have been reflected quite closely in the long-term movements in English prices of consumables since about 1200.    A series first constructed by Sir Henry Phelps-Brown and Sheila Hopkins, and recently interpreted by David Hackett Fischer, reveals four great “price revolutions” (each a period of rapidly rising prices):   the medieval one (1200-1350);  the 16th century (1475-1650), the 18th century one (1729-1812-5), and the 20th century one (1896-2000?).   They could equally well be called the Italian, Atlantic, British, and American price revolutions, - and re-organizations.

 

            Both the organizational sequence, and the price data, make it plain that  global economic development  is to be seen as an evolutionary series of path-breaking innovations by a number of organizational centers, rather than a matter of a sudden  and unprecedented and miraculous “revolution” in the British Isles of the 18th and 19th centuries.

 

K-waves as surges of innovation

 

                        What drives global economic evolution, the process depicted in Table 4?

It is the thesis of “Leading sectors and World Powers:  The Co-evolution of Global Economics and Politics” by George Modelski and William R. Thompson, that global economic evolution of the millennium just past has been driven by a succession of K-waves.   

 

                        What are K-waves?   They may be defined as “processes of rise and decline of leading sectors” or,  as paradigm shifts in the global economy.   K-waves are surges of innovation that create new sectors either of industry or commerce.   These sectors are initially of local and national significance but ultimately impact the entire global economy.   A classical example is the rise of the cotton textile industry in the second half of the 18th century on the basis of innovative techniques in spinning and weaving  and the organization of factory production around steam engines that became a leading sector of the British economy  and through exports, both of its products, and of its technology, a leading industrial sector of world-wide impact, the foundation of what at the end of the 19th century came to be described as the Industrial Revolution.

 

                        The term K-wave is short for Kondratieff wave.   That latter term, coined by Joseph Schumpeter (writing in 1939) was intended to honor the fact that the first to draw attention in a sustained manner to this important characteristic of the modern world economy was Nikolai Kondratieff (1892-1938), a leading Russian economist writing in the 1920s.   For a recent translation of his work on this topic see Kondratieff (1984);  a full commentary in the light of more recent work may be found in Van Duijn (1983).  Well received in the 1930s, but neglected in the 1950s and 1960s, Kondratieff’s arguments found once again greater resonance in the 1980s and 1990s.

 

                        Some basic features of K-waves are quite widely agreed.   The first is their period, generally seen to last between 50 and 60 years.   These are figures derived in the first place from empirical observations, going back to long-range studies of both price and output series.   More recently the emphasis has been on sectoral output and growth, and on international perspectives.   In a more general context, the period of the K-wave might also be seen to be related to generational turn-over.   A generation period is usually reckoned as the time required for a generation to replace itself, some 25 to 30 years.   A K-wave would then be made up of two generation-long phases.   Indeed, looking again at the empirical record, two phases can usually be discerned, a take-off phase that launches the innovations, but needs to contend with alternative paradigms, in a context where earlier leading sectors have lost their edge and are in decline;  and a high-growth phase, in which the new paradigm prevails and, for a while at least (again, for a generation) occupies center stage, brings prosperity, and leads the world economy.   Most recently, the  period from say 1972 to 2000 might be regarded as the take-off for the information industries, and from 2000 to say 2020-30 as its high-growth phase (see Table 5)..

 

Table 5:   K-waves: the sequence of global leading sectors

 

K-wave

From about

Leading sector

Major innovation

K1

 930

Printing, paper

Learning society,  book printing

K2

 990

National market formation

North-south market unification

K3

1060

Fiscal/administrative framework

Monetization, paper money

K4

1120

Maritime trade expansion

Compass, large junks

 

 

 

 

K5

1190

Champagne fairs

European market organized

K6

1250

Black Sea trade

Innovations from East Asia

K7

1310

Venetian galley fleets

New markets in North Europe

K8

1350

Pepper trade

Alexandria-connection institutionalized

 

 

 

 

K9

1430

Guinea gold

“Discovery” of African trade

K10

1494

Indian spices

Operating oceanic route

K11

1540

Atlantic, Baltic trades

American silver

K12

1580

Asian trade

Dutch East Indies Co. VOC

 

 

 

 

K13

1640

Amerasian trade

Plantations

K14

1688

Amerasian trade

Tobacco

K15

1740

Cotton, iron

Factory production

K16

1792

Steam, rail

New forms of transport

 

 

 

 

K17

1850

Electrics, chemicals,steel

Invention of invention

K18

1914

Electronics, autos, aerospace

New products

K19

1972

Information industries

Computers

K-20

2026

 

 

 

 

                        The substantive content of a K-wave is given by the set of innovations that it launches.   Table 5 lists a dating scheme for K-waves of the modern world economy, starting with developments in Sung China just over a millennium ago, and tentatively shows for each K-wave the innovations that constitute successive paradigm shifts.

 

                        The conception of innovation guiding this listing is Schumpeterian.   In a classic formulation first articulated in 1911, Joseph Schumpeter proposed that economic development is the product of enterpreneurial innovation of the following types:  launching new products;  pioneering new methods of production;  opening new markets;  creating new sources of raw materials;  and introducing new forms of business organization.   Table 5 shows that K-waves have been produced by all of these.  

 

                        What is more, the list in Table 5 shows the individual K-waves as arrayed into groups of four.   This grouping reflects the fact that individual paradigm shifts, however powerful they might be in and of themselves, such as that to railroads, do not stand alone but “stand on the shoulders of others”. and, in their turn, serve as launching pads for new endeavors.   That is how K-waves 9-12, in Table 5, after 1430, might be seen as adding up to the establishment of an “oceanic trading” system in Table 4;  in effect, a change in the organization of the global economy.

 

                       

                        Table 5:  K-waves: the sequence of leading sectors   is, in effect, a “short history of the global economy”.   It also is a dating scheme for K-waves.   It shows them for the entire time span of the modern era, that is at greater length than some other studies.    Analysts who do not focus on long-term s are often content to notice the last five well-known pulses, including the most recent one focussed on information industries.   Students of economic history including Joseph Schumpeter, and Fernand Braudel have proposed pushing the analysis back to the early modern period.   Starting it with rise of the Sung market economy recognizes the role of China, as earlier proposed.    

 

          It remains an open question, though,  whether “leading sector” innovation waves of this length, of some 50-60 years, can also be discerned in pre-modern economies.   The earlier account of the Silk Roads as having mediated the transition from “command” to “market” economies (in Table 3) did point to a regular alternation between northern and southern routes even before what we now call the modern era.   But our data are at present insufficient for tracing economic fluctuations, and the rise and decline of leading sectors, in those earlier times.  

 

                        The agents of innovation driving the K-waves are clusters of enterpreneurs: in individual or family firms, companies, or more recently, multinational corporations.   In earlier periods it is hard or impossible to identify such individuals whose deeds  have been recorded with less assiduity than those of kings or military heroes.  Such families as the Grimaldi or the Spinola led much of Genoese activity;   South German merchant houses such as the Fugger or the Welsers, cooperated with the King of Portugal (and his Casa da India) in organizing and financing the crucial voyages to the East.   It was the advent of the Dutch East Indies Company (VOC) in 1600 that not only put the organization of Asian trade on a solid footing but it also served as a potent model of corporate management, superior by an entire order of magnitude  to the organization that the King of Portugal put together a century earlier. 

 

           By the mid-19th century the innovations can be clearly linked to individual enterpreneurs and their companies:  e.g. the locomotive, and the Liverpool and Manchester Railway (Stevenson), with the railway K-wave (K-16), or the electric dynamo, with Siemens, and the electricity K-wave (K17).   More interestingly, no single enterpreneur or even firm can confidently be named as the single carrier of any one K-wave;  mostly it is a cluster of related, and competing individuals and firms that carry forward these great changes, and the more recent the K-wave, the thicker these clusters become.   That is how evolutionary changes of global proportions are carried forward by the concerted action of individual agents, many of whom are difficult to name so long after the event, but whose initiatives continue to impact our lives.

 

                        An essential dimension of innovation, and of waves of innovation is location.   This is not merely a matter of geography:  innovative activity tends to be localized within particular regions of a country, as textiles were in Northwest England, or the information industries, more recently, in Silicon Valley.   More importantly however, all K-waves have been prominently located in distinct national economies.   Such economies would afford a supply of factors of evolutionary potential:  markets that generated the initial demand for its products; and capital resources as supply factors, openness to trade and financial institutions ready to support innovation.   Beyond that, political support, and security.    This high degree to which innovative activity initially centers on one key economy is a key to understanding the linkage between global economics and politics.

 

                        Data brought together by Modelski and Thompson (1996) in Tables 6.11,6.12,6.13 make plain these two crucial characteristics of K-waves:   surges of innovation have their origin in one national economy, and then diffuse more widely, at first to other major economies, and ultimately world-wide.   Secondly,  K-waves are not the automatic property of the largest countries or the wealthiest economies;  they occur in certain specific conditions that favor innovation.   It is, of course, the case, that hosting a K-wave greatly adds to the value of the output of an economy, for a period of at least  two generations, and therefore greatly adds to its ‘size’.    But size alone does not place an economy into the vanguard of economic evolution.

 

 

                        The Modelski-Thompson data on national shares for key products of K-waves 15-18 show that Britain leads in cotton consumption, a good indicator of textile production until well past the mid-19th (not to be overtaken by the United States until 1900).   Britain also leads in pig iron production,  only to lose its lead by 1890.   In railroad construction the lead in the indicator used here passes to the United States by 1870, but much of the rail construction in the world continues to be undertaken by British builders, with British expertise and machinery, and on the basis of British capital investment.   The picture changes with K-17.   Sulphuric acid is one indicator of the output of the chemical industry that was a locus of innovation of that wave.   Britain start well in 1870 but is outpaced by the United States in 1900, and is followed closely by Germany, that is also strong in other new branches of that industry, and in particular in dyestuffs.   The story is the same in steel production.   In electric power, Britain falls behind right from the start.   In motor vehicle production (and the closely linked oil industry) the American lead is decisive from the beginning,  European production is less substantial, and by 1980s, the important competition comes from Japan, and the Asia-Pacific area.  

 

                        This reiterates the central point that over the experience of the modern economy for the past millennium, K-wave animated leading sectors have invariably originated in one well-organized national economy linked to a wider network, and then diffused from there.   That happened in the early (Sung) China economy, with its links via the Silk Roads, and in the Italian city states that organized the western end of those linkages, and  in the successive stages of the Atlantic economy.    The source of strength of these economies was not so much population , or size of territory, but evolutionary potential married to innovation that met the needs of the time.   That is how, broadly speaking, also David Landes explains “The Causes of the Wealth and Poverty of Nations” (1996).   The alternative view would argue, as does Andre Gunder Frank (1998),  that because of their relative size, Asia in general, and China in particular were the center of the world economy through most of the millennium, and right up to 1800.   While it is true that Asia did hold some 50-60 per cent of the world population throughout that period, its economies contributed much less then their share to major innovations, and stopped leading global evolution after about 1200.

 

                        The association of major innovations and specific location might once again be illustrated in Table 6:   The Clustering of Major Innovations.   An independently compiled list of 160 major innovations over the best part of the 19th and 20th centuries shows that in K16, the plurality of such advances in industrial competitiveness occurred in Britain (44 per cent), followed by the United States.   In the next two K-waves, the United States holds the lead, followed by Germany as the runner-up.   In each case, these lead-ins to key  industrial sectors are linked to major innovative firms:   e.g. the telephone, with the then Bell company, since reorganized into ATT and “Baby Bells” and now one of central players in the information industry, and the microprocessor, the product of Intel, a major participant in the Silicon Valley.

 

(Table 6 about here)

 

 

Table 6:   Clustering of major innovations, (K16-K18).

 

K-wave     (data for)

Total of major

innovations

Originating in

(percentage shares)

Examples

K16         (1811-1849)

18

Britain 44

USA 22

Steam locomotive

Vulcanized rubber

K17         (1850-1914)

67

USA 45

Germany 18

Telephone

Electric dynamo

K18         (1915-1971)

75

United States 57

 Germany 17.

Microprocessor

Jet airplane

Derived from list of major innovations in Van Duijn (1983:176-9).

 

 

 

III.   K-waves and global political leadership

 

                        The localization of K-waves, and their initial close association with a particular national economy, means that national leading sectors translate rather smoothly into global economic leadership.   The successful launching of new industries of global impact confers high standing on an entire economic system.   It means new high-growth industries,  products and services meeting a world-wide demand, and consequently prosperity, and added wealth.  But does it also automatically confer political leadership in international affairs,  does it directly lead to global leadership?

 

                         Global leadership is here understood as the exercise of a role that has been  central to world politics in the last millennium.   This world power role has evolved from early experiments in Eurasia, to form, after 1500, the principal component of the Atlantic European nucleus that shaped the global system.   After about 1850, it became a crucial building bloc of world organization.   Held most recently by the United States, this has been a role for a nation-state with a commanding presence on the world ocean, and a decisive role in the global wars that periodically reorganized the system, in a pattern of “long cycles”, at intervals of about a century.   

 

                        In the experience of the modern era, the rise and decline of leading sectors - discussed above- is paralleled quite closely by the rise and decline of world powers exercising global leadership.   We have seen that the first is a process driving economic transformation.   The latter, too, is an evolutionary process,   This “co-evolution of global economics and politics” is shown in Table 7.   Just as K-waves can be numbered consecutively for the entire modern period, so can successive long cycles (LCs), and the powers associated with them.

 

Table 7 shows that global economic leadership - that is earned by innovation - has consistently gone hand-in-hand with global political leadership - that has been the chief carrier of political innovation, including new forms of world organization.   But the relationship has not been an automatic but a mutually interdependent one:  with the economic line of enterprise being supportive of, and supported by, political initiatives.   What precisely has been the pattern of that relationship?

 

 

Table 7:   The Co-evolution of Global Economics and Politics

 

About

K-waves (global leading sectors)

Long cycles

(world powers after 1500)

 930

K1   Printing and paper

LC1   Northern Sung

 990

K2   National market