This book is a great application of history to global economics. The author Niall Ferguson, tries to figure out how China lost the plot of world economic domination, back in the 1400s. At that time, China dominated world trade, had sailing ships trading with Asia, Australia, Africa and beyond. It had cities of more than 1 million people like Nanjing, the capital at the time. This was where public health and sewage were already being organised by well trained bureaucrats. If so, then how did things change so much and why? How did Western Europe and the USA later come to dominate the world with Western ways?
To compare back then, London had only 40,000 people after the black plague killed much of the population. It had poor general services and limited government bureaucracy then, so how did Western civilisation come to dominate the world economy for 500+ years afterwards? This becomes an economic mystery to find out how the West could come to overtake the East. The follow question though is will the West hold on to this advantage or will the East now take over again in future?
To explain how this all took place, he has come up with 6 "killer apps" or economic principles, that Western Society has developed that have helped drive them ahead of other societies and economic models.
1) Competition, as in the huge amount of decentralized city states and small countries that all fought for economic advantage and trade across Europe and beyond. This forced innovation and progress much faster than the centralized Chinese empire at the time.
2) Science, the amount of scientific technology of clocks, weapons, industrial factories and energy inventions like the steam engine, helped spread this economic expansion far and wide.
3) Property, unlike in South America where plunder of gold and silver with all land remaining in the hands of the king of Spain lead to elites. North America was settled by immigrants who got to own land and vote as part of the bargain.
4) Medicine, disease has stopped many parts of the world from growing but Western medicine, especially the French, brought new ways to fight disease in Africa that allowed many to survive well past their first 30 years and really prosper longer term.
5) Consumerism, the clothes of the West via pop music and movies have spread so far around the globe that the T-shirt and jeans is now a global uniform. This is a never before seen trend that has united tastes in retail fashion.
6) Work Ethic, the protestant work ethic seems to have been another key driver, but why does Europe differ now in lower Church habits compared to the US where worship remains high? Again competition of separate churches competing attracts followers versus centralized European churches with shrinking appeal.
It is all amazing food for thought, but in the conclusion it is also clear that China, Korea & Japan have all learned the very same lessons and have made them part of their own economic miracle. If these lessons, these 6 killer apps, can be learned, will the East regain its place again in the world economy? Due to the savings rates needed, that may be a key reason for longer term success and another major change in how the world works economically. Really fascinating reading. Highly Recommended!
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