Richard Melson

January 2005

CFG World Economy




1993 Cambridge Forecast Group

From 1000AD - 1700AD, while Europe was making the transition from feudalism to early capitalism, the rest of the civilized world on the Eurasian continent[1] was being periodically battered by Mongol, Turkic and Tungusic nomadic invasions. These invasions half depopulated Russia, decimated China, and practically annihilated Persia and large parts of the Middle East. They ultimately led to the pre-colonial governments of much of what is now known as the "Third World" (the Ottoman Empire, Mughal India, and Manchu China). They also strongly influenced Russia's political and social evolution, (Ivan the Great was a tax collector for the Mongol empire) and, in fact, the development of the entire "Eastern bloc".

The western tip of the Eurasian continent (Western Europe) and the island of Japan, to its east, were spared the nomadic invasions. If you take these two regions and throw in the United States (a European implant) you have the geographical area now known as the "developed world". [i]

We wish to address the following questions: Why, when the rest of the world was being "driven from pillar to post", first by the nomadic invasions and then by European expansion, did the small continent of Europe develop a scientific and industrial revolution and a form of society that "changed man's way of life more than anything since the discovery of fire." (D. Landes 1969)? If an industrial revolution had not taken place in Europe, would it have taken place elsewhere? Was the industrial revolution a "natural" occurrence, something that would have inevitably taken place somewhere sooner or later, had it not occurred in Europe? Or was it a "fluke", the result of an unlikely conjuncture of circumstances, that could very well never have happened at all had it not occurred in Europe?

Before addressing these questions, however, we will touch on another, far more fundamental, question, which is: Why do we care why the industrial revolution occurred in Europe and not elsewhere, or whether it would have occurred elsewhere had it not occurred in Europe? What practical use does the answer to that question have today, 200 years later? In other words, why does history matter, and does history matter? Does it matter, for example, that Russia started out as Scandinavian colony? Does such an origin for Russia have any implication at all, say, for present day Swedish investment in Russia? To take another example, did the fact that the words "pound" and "lira" originate as names of coins minted by Charlemagne have any bearing at all on the recent European monetary crisis?

In his book "The Historian's Craft", the French historian Marc Bloch discusses these kinds of questions. The book, written during the second world war, attempts to defend the study of history against the charge of total irrelevance. Marc Bloch admits that he, like most historians, has an "obsession with origins", a desire to claim that everything in the past is terribly significant for the present. He also maintains that such an obssession is not as crazy as it seems, that, in the past, it was even widely shared by most educated people.

"Must we believe that because the past does not entirely account for the present, that it is utterly useless for its interpretation? The curious thing is that we should be able to ask the question today. Not so very long ago, the answer was almost unanimously predetermined. 'He who would confine his thought to the present time will not understand present reality.' So Michelet expressed it at the beginning of his Peuple-a fine book but infected with the fever of the age in which it was written. And Leibnitz before him ranked among those benefits which attend the study of history 'the origin of things present which are to be found in things past; for a reality is never better understood than through its causes.' But since Leibnitz and since Michelet, great changes has taken place. Successive technological revolutions have immeasurably widened the psychological gap between generations. With some reason perhaps the man of the age of electricity and of the airplane feels himself far removed from his ancestors."

With each new invention of the industrial revolution, the railroad, the steam engine, the telegraph, electricity, the study of the past began to seem less and less relevant. In the 19th century, for example, Marc Bloch's high school teacher could say, "Since 1830 there has been no more history." And, finally, in the early 20th century, Henry Ford could say, "History is bunk.". Marc Bloch, on the other hand, defends Leibnitz's statement about history:

"A society that could be completely molded by its immediately preceding period would have to be a structure so malleable as to be virtually invertebrate. It would have to be a society in which communication between generations was conducted so to speak in 'Indian file' - the children having contact with their ancestors only through the mediation of their parents".

In other words, the historical evolution of a society is not a "Markov process", where the future state depends only on the immediate past. The future evolution of a society depends on its entire past history.[ii] To give a simple physical analogy, let's look at the physics of snowflake formation. The exact shape of a snowflake depends on the air pressure at every point of its entire previous trajectory; i.e. depends on its entire history, not just on its immediately preceding state.

Let's assume, for the moment, that the above analogy is accurate. Surely (to play the devil's advocate), the study of past history is not always useful. For example, once the snowflake melts (or is squashed), then its present shape does not depend on its entire past history. In other words, if some sufficiently momentous event (such as the collision of the earth with a large comet, or the invention of a new source of cheap, limitless, nonpolluting power) takes place , then, for many purposes, its impact on human society overwhelms the effect of past history. When Henry Ford, for example, (who conceptualized and implemented a totally new technique of manufacturing) said "history is bunk", wasn't he right? Wasn't the study of past production techniques as misleading as it was useful for his purposes?

So in answering the question, "Does history matter?", we first have to answer four other questions, "Whose history?", "Matter to whom?", "Matter in what way?" and "When?". To the vast majority of people in 19th century Europe, a knowledge of Japanese history had no practical use whatever. Yet, to the Japanese reformers of the Meiji period, a knowledge of Western history proved to be very useful indeed. The Spanish Conquistadors had little use for the intricacies of pre-1942 South American history. Yet, for North American investors, a knowledge of pre-1992 South American history might be useful.

So to answer the second question above, "Matter to whom?", we say "Matter to corporate planners". Does history matter to corporate planners? Well, obviously, an accurate prognosis of future conditions matters to corporate planners. But when, and under what circumstances, does a study of past history matter to corporate planners? For example, suppose that some revolutionary new technology (i.e. "cold fusion") materializes, whose commercial repercussions are immediately apparent and enormous. In such a case, wouldn't time be better spent in analyzing these commercial repercussions, and not in worrying about past history? Conversely, in a period of benign and stable economic expansion (such as occurred, for example, in the postwar period prior to the 70's), purely mechanical techniques of forecasting give reasonably useful results. Under such circumstances, to study, say, the history of the various regions of the world, and the history of the interactions between these regions, and to try to anticipate how these historical tendencies will work themselves out in the future, would be, to put it mildly, "overkill".

However, if it turns out to be the case, that the primary engine of world economic growth in the future is the spread of capitalist economic development from the areas of the world where it exists (the G7 countries) to the areas of the world where it does not (the Eastern bloc and the underdeveloped world) then precisely such a study is what is needed. Furthermore, many of the egregiously wrong, "out of the ballpark", predictions that have been made in the last 20 years result precisely from the failure to do such an analysis! This is because, with the globalization of the world's economies, many of the current economic and political events are "driven" by the complex interactions between the various regions of the world!

Before turning to our question about the industrial revolution, we would like to touch on yet another question. Is historical causality knowable? Does our question about the industrial revolution have an answer?. After all, human historical evolution is very complicated, far more complicated, say, than the evolution of the physical cosmos, or biological evolution. Human history is something which happens once and in one direction. It can't be "rewound" and "restarted" with "different parameters" in order to make a "scientific observation". Nor can it be separated into its "constituent parts", its "DNA" or "elementary particles". In fact, it's not at all obvious what its "constituent parts" would be. Technologies? Beliefs? Customs? Geography? Climate? Access to draught animals? Soil fertility? Diseases? Crops? Natural disasters? Chance? The effect of very influential individuals such as Jesus, St. Paul, Muhammad, or Alexander the Great?[iii] Innate human biological tendencies? Of course, it's easy enough to pick out this or that feature of a society such as caste, primogeniture, bulk trade, irrigation or flood control, Confucian values, landed property, or whatever, and attribute to it some other feature, such as "cyclical dynastic change in Asia vice unidirectional historical change in Europe", etc., but very hard to come to conclusions that could be called "scientific". It's hard to imagine how even 100,000 statisticians with 100,000 time machines could come to scientific conclusions about historical causality.

"There are reasons why the search for statistical uniformities is of little use for the explanation and prediction of the general course of history. It is generally difficult or even impossible to specify the class or category of events from which examples should be selected,..........And if certain statistical uniformities have been selected between clearly defined phenomena, we often cannot tell whether these uniformities reflect functional relationships between the variables examined. Nor is it possible to predict with confidence whether the uniformities or relationships will persist... There are many valid generalizations that can be made about the ...conditions of humankind throughout the ages. But these generalizations are not about variables that predictably affect the course of history." P. T. Bauer, 1991

P. T. Bauer (1991) also makes the point that strongly held beliefs in "underlying laws of history", especially when applied to political advocacy or political movements, have led to the authoritarian tendencies that so plagued the 20th century.

"Many of those who have claimed to have discerned the laws of history have simultaneously claimed it as their mission to bring about and hasten an outcome that was in any case inevitable. And in pursuit of this march the proponents of these ambitious claims have been ready to tolerate or to perpetrate large-scale and lasting brutality."

Also, the search for broad patterns of historical development (patterns which can never be known in any objective sense) can divert scholarly attention and effort from more modest, but much more rewarding intellectual endeavors. Thus, we agree with P. T. Bauer that, if the goal is to (1) find some basis for a political doctrine, or (2) to find a fool-proof development strategy, or (3) to expand the sum total of objective human knowledge, then the questions we posed at the beginning of this chapter simply have no answer.[iv] However, if the goal is to find information which, although subjective, incomplete and provisional, is, nonetheless, extremely useful for long term business planning and decision making, then, as we shall see, these questions do indeed have an answer!

Thus, we ask again "Why did the industrial revolution occur in Europe and would it have occurred elsewhere had it not occurred in Europe?". Many historians have proposed theories to answer these questions. While these theories can, in no way, be called scientific, there's certainly "something to them", and we believe they can be extremely useful in thinking about present-day and future global trends. In this chapter, we will present a brief history of them.

The West and the Rest

P. Anderson (1974) (462-549) gives a succinct history of the of attitude of post-renaissance Europeans to non-European societies. After the renaissance, European philosophers and travelers such as Machiavelli, Bernier, Adam Smith, Montesquiue, and Hegel began to speculate about the nature of non-European Society. Their speculations were primarily based on observations of the Ottoman and Mughal and Safavid Empires. Francois Bernier was a French physician (and a perceptive tourist) who travelled widely through the Ottoman, Mughal and Persian empires. For a period of time he was the personal physician of the last Mughal Emperor Aurangzeb. He wrote down his observations in his book "Voyages" published in Amsterdam in 1710:

"How insignificant is the wealth of Turkey in comparison with its natural advantages! Let us only suppose that country as populous and cultivated as it would become if the right of private property were acknowledged, and we cannot doubt that it could retain armies as prodigious as formerly. I have traveled through every part of the empire and witnessed it is ruined and depopulated...Take away the right of private property in land, and you introduce, as an infallible consequence, tyranny, slavery, injustice, beggary and barbarism, the ground will cease to be cultivated and become a wilderness, the road will be opened to the destruction of nations, the ruin of kings and states. It is the hope by which a man is animated that he shall retain the fruits of his industry, and transmit them to his descendants, the forms the main foundation of everything excellent and beneficial in this world; and if we take a review of the different kingdoms of the globe, we shall find that they prosper or decline according as it is acknowledged or condemned"[2]

Bernier also attributed Indian agricultural backwardness to restrictions placed on landed property. He put the following much quoted (and perhaps exaggerated remark) into the mouth of an Indian official with whom he was familiar:

"Why should the neglected state of this land create uneasiness in our minds. And why should be spend our money and time to render it fruitful? We may be deprived of it in a single moment (by the Mughal administration) and our exertions would benefit neither ourselves nor our children. Let us draw from the soil all the money we can, though the peasant should starve or abscond (flee to an area outside Mughal rule), and we should leave it when commanded to quit, a dreary wilderness." [3]

The early 18th century French political analyst, Montesquieu, was very influenced by Bernier's observations. In De l'Esprit des Lois, Montesquieu used Bernier's account to warn about the dangers of an overly powerful French monarchy.

"The Grand Seignior (European word for Turkish Osmanli Sultan) grants most of the land to his soldiers and disposes of it at his whim; he can seize the entire inheritance of the officers of his empire; when a subject dies without male descent, his daughters are left with mere usufruct of his goods, for the Turkish ruler acquires the ownership of them; the result is that the possession of most assets in society is precarious. There is no despotism so injurious as that whose prince himself proprietor of all landed estates and heir of all subjects; the consequence is always the abandonment of cultivation, and if the ruler interferes in trade, the ruin of every industry".[4]

The point made by Bernier and Montesquieu was that, in India and Turkey, the existence of an "all powerful" sovereign who owned all the land, and could interfere in commerce at will, blocked agricultural and commercial progress. As European colonial expansion and exploration led to more and more knowledge of Manchu China, Montesquieu's and Bernier's generalizations were applied to China as well. This led to the general European theory of Asiatic despotism which was believed to apply to non-European societies generally. The theory of Asiatic despotism is known as a Eurocentric theory because it lumps (the very different) Mughal, Ottoman, Safavid and Manchu societies into the general category of "not Europe". An Asiatic Despotism, according to European social philosophers, consisted, at its base, of a large mass of peasant villages, indifferent to dynastic changes above them, and engaged in a primitive and unchanging form of agriculture. Above these peasants, were a class of people who "ate food but didn't grow food", officials, warriors, priests, scholars, clerks, artisans, domestic retainers, tax collectors, and, where taxes were paid in cash rather than in produce, rural money lenders. At the top was an all powerful sovereign, an emperor or sultan, who owned all the land, controlled everyone below him and could interfere in commerce and trade at will. An Asiatic Despotism was devoid of legal codes, religion (Hinduism and caste, Islam, Confucianism) or the emperor's whim acting as a substitute. Property in land and the free flow of commerce were not protected by a legal system. The emperor and the "non-producing classes" formed a tiny fraction of the population which consisted mostly of peasants. Asiatic societies were believed to be decrepid, stagnant and unchanging:

"China and Indian remain stationary and perpetuate a natural vegetative existence even to the present time" G. W. Hegel

Adam Smith emphasized the centralized nature of the capital stock in Asia; capital investment consisted primarily of large public works, particularly hydraulic works for irrigation, transport and flood control. This led to the centralization of political control. An all powerful sovereign and a strong, centralized bureaucracy is necessary to construct and maintain an extensive system of hydraulic works. It was this centralization of political power and capital stock that made non-European political structures brittle and fragile, vulnerable to periodic disintegration into civil chaos through maladministration, factional fighting, natural disasters, peasant uprisings or nomadic invasions.

In fact, the non-European societies that Europe was observing were already beginning to come under economic and military pressure from Europe. The Ottoman empire had lost its monopoly of the East-West trade routes, its finances had been depleted by the European "price revolution", and its territorial expansion (a large source of revenues) had been stymied by European military power. The Europeans monopolized India's foreign trade. In addition, the Qing dynasty in China was beginning to encounter severe internal crises, as evidenced by the peasant uprisings of the 18th century, the precursors to the massive Taiping rebellion of the mid-19th century. However, historically, as Anderson (1974) points out, these non-European societies were anything but stagnant. On the contrary, during many periods in history, these societies were extremely dynamic. During the Song dynasty (960-1279), the Chinese invented water driven machinery for pumping and milling, water-powered spinning machines for hemp, piston bellows for iron manufacture, fire arms, compasses, movable type, paddle wheels for shipping, and pound-locks for canals. Prior to that, the Chinese had invented the seismograph, iron chain suspension bridges, porcelain, paper and steel. In addition, there was considerable progress in mathematics, astronomy and medicine. In the 13th century, the Mongol invasions led to the Yuan dynasty whose policies promoted advances in mercantile enterprise, commerce, international shipping and the introduction of a national non-convertible paper currency. In 1368, a massive peasant uprising led to the replacement of the Yuan dynasty by the Ming dynasty. The Ming dynasty (1368-1644), oversaw an "agrarian revolution" based on drought resistant rice, alternating crops, and the use of aquaculture to control malaria. There were also significant advances in naval exploration. Chinese ships of a size and seaworthiness exceeding anything in Europe, or anywhere else, ranged from the Philippines to Africa. During that period, the Chinese possessed the technology and resources to explore and colonize North America. However, this naval progress was accompanied by a certain amount of technological retrogression in other areas. In addition, the Ming government, for reasons that are obscure, eventually called a halt to sea trade and naval exploration.

The Manchu conquest of China in the 17th century led to the Qing dynasty. During the Qing dynasty, there was a tremendous expansion of commerce and manufacturing, a gradual assimilation of outside technology, large increases in agricultural extension and productivity, improvements in the techniques of civil administration, and an enormous demographic increase culminating in a population of over 400 million by 1850. By the early 19th century, however, the Qing dynasty was already running into a severe crisis of soil erosion, declining land/man ratios and peasant unrest, when it began to be buffeted by European penetration starting with the Opium Wars.

The British chemist Joseph Needham compiled an extensive survey of technology and science in China. All the "constituent parts" for an industrial and scientific revolution seemed to have been present at one time or another in China, but they never quite came together in the right way.

"It is truly striking to see how earth-shaking were the effects of Chinese innovations upon the social systems of Europe when once they found there way there, yet they left Chinese society relatively unmoved" J. Needham 1981

In China, a new invention would be registered, perhaps a temple built to commemorate the inventor, and, in some cases, that would be the end of it. In other cases, the inventions would be gradually absorbed into Chinese society and put to use, but without generating the kind of economic and conceptual upheavals that occurred in the West. At the level of the craft guilds, manufacturing innovations often became family secrets and never diffused into the society as a whole. At the level of the "macro-economy", gains in agricultural output and extension were matched and then exceeded by a demographic increase which ultimately strained the carrying capacity of the land and the administrative capacity of the Qing government, resulting in famine, flooding, soil erosion and political upheavals.

If Chinese civilization was the world's most advanced civilization at the beginning of the current millennium, then Islamic civilization was the world's most advanced civilization at the end of the previous millennium. The Islamic world, the Byzantine empire and European civilization were all offshoots of the Hellenistic world, formed by the conquests of Alexander the Great of Macedonia. At the end of the previous millennium, European civilization consisted of Barbarian Kings, landed magnates and Christian clergy who were trying to patch together a society which was collapsing around them. (As we shall see later, a combination of political disintegration and technological dynamism was a critical feature of early feudal European society). In contrast, Islamic civilization was built by a coalition of urban merchants and nomadic fighters who took control of entrenched, pre-existing societies in the Hellenistic world and beyond. At first, these nomadic fighters were Arab caravaneers from the deserts. Later on, they were Turkic/Mongol invaders (or conscripts) from the steppes. The Arab/Isamic world was ".. stamped by its merchant character, with Egypt the only peasant exception. " (S. Amin, 1976). Its ruling class, the "cement" which held the Arab/Islamic world together, was urban and highly mobile. It spoke a common language and eventually came to adopt the same orthodox Sunni Islamic culture.

"Its prosperity was linked to that of long distance trade. The latter was the basis for this class's alliance with the nomad tribes (its caravaneers) and for the isolation of the agricultural areas, which retained a distinct personality." S. Amin, 1978.

Islamic civilization quickly brought a vast portion of the civilized world, extending from China to Spain, into a single culture and a single language. In this way, it was able to pool technology, ideas and knowledge from many regions of the world into a single body of work which included Euclidean geometry, Arabic numerals (actually from India), deductive logic and Hellenistic metaphysical and philosophical speculation. Arab and Islamic scholars made progress in astronomy, medicine, optics, chemistry and mathematics including the invention of algebra, trigonometry, and logarithms. The Islamic world bestrode the major East-West trade routes and unleashed a pre-modern global "commercial revolution" by its means of its political unification of the Roman and Persian domains, and its linking of the Mediterranean and the Indian ocean into a single maritime trading system. (See J. L. Abu-Lughod, 1989).

Contrary to the theories of "Asiatic despotism", Islamic and Asian societies were both very dynamic. They both experienced periods of advance in areas such as commerce, technology, theoretical and empirical knowledge. These periods of advance were both rapid and explosive.

However, the "equations of motion" of Chinese, Islamic and European societies were all very different. From 400AD to the present. European civilization experienced, what seems in retrospect, to be a sort of unidirectional, progressive, dialectical change, change that could be characterized by the word "development". It consisted of crisis, conflict, advance, crisis, conflict advance, etc. eventually culminating in an industrial and scientific revolution. In contrast, Chinese history consisted of cyclical, dynastic change; periods of economic and population growth culminating in social and political collapse, civil chaos, population loss, and then reconstitution of a new dynasty along the same centralized lines. In Islamic civilization, there was a bewildering succession of dynastic changes (Muhammad left no male heirs and no successor scheme), along with a continuing cultural, linguistic and commercial unity. To some extent, Islamic civilization can be regarded as the "solution" to the problem of linking together so many disparate societies for so long a period of time. (However, once this linkage was achieved, Arab-Islamic intellectual advance slowed down considerably.) To oversimplify enormously, Islamic history can be divided into three periods; the Caliphate period, the Middle Period and the period of the Gunpowder Empires. The Caliphate period, in the second half of the last millenium, was the period of the Arab conquests. The Caliphates based their legitimacy on claims of being political successors (Caliphs) to Muhammad. The Ummayad Caliphate founded in 661AD in Damascus was based on Arab tribesmen. It was overthrown in 750AD by the Abbasid caliphate, based on Persian administrators and structured along the lines of Sassanid Persia. The Abbasid Caliphate quickly evolved into the most advanced civilization of its time. Towards the end of the 10th century, along with the shift of the east-west trade routes due to the rise of commerce in western Europe, the center of the Islamic world shifted to the Fatimid caliphate based in the newly build city of Cairo (Al-Qahira), Egypt. The Middle Period, during the first half of this millenium, was a period of political fragmentation, internecine conflict, enormously destructive nomadic invasions, and the development of an international, cosmopolitican Islamic society which transcended the rapidly shifting political boundaries. Notable dynasties of this period include the dynasty of the Seljuq Turks, Saladin's dynasty, the Mamluk dynasty in Eqypt, (based on former Turkic and Circassion military slaves), and a succession of Mongol dynasties in Persia. An important feature of this period was the spread of the Muslim religion, in all directions, to all parts of the civilized world, a spread which continues to this day. The middle of this millennium saw the rise of the gunpowder empires, the Ottoman, Mughal and Safavid empires. Firearms rendered these empires more stable and protected them from further nomadic invasions from the steppes. However, there was a certain loss of commercial vitality due to the loss of the East-West trade routes to European navigation. The final declines of the Ottoman and Mughal empires unleashed a sort of "protoindustrialization" in both cases. (See R. Mukherjee, 1974 and S. D. Petmezas, 1990). There were upsurges in commerce and manufacturing, including a putting out system in India in the 18th century, and an abortive attempt at industrialization along English lines in Eqypt in the early 19th century. (All this was quickly overwhelmed by European economic expansion however.)

In the 14th century, the Arab historian, Ibn-Khaldun, worked out a theory of cyclical dynastic change in the Islamic world, a theory which involved a sort of cyclical interaction between urban societies and pastoral, nomadic societies. More recently, some historians have actually claimed that world history as a whole, can be divided into cyclical, "dynastic" cycles; cycles which consist of alternate periods of global expansion and contraction. According to these historians, the long term historical development of the world's various societies has always been synchronized via trade, conquest, technological diffusion, cultural influence, diplomacy, etc. For example, according to this perspective, the period from 100BC to 200AD was an expansionary phase in all of the societies along the entire "silk route"; in Rome, in Persia, in Central Asia and in China. The period from 200AD to 500AD was a period of disintegration in all of these societies. The period from 500 to 800AD was an expansionary period in many parts of the world (but not western Europe). During this period, Byzantium and Sassanid Persia expanded, collided, and then lost out to the rapidly expanding Islamic Empire. This period saw the rise and fall of the Chinese Tang dynasty and its collision with the Islamic world at the battle of Talas. The Abbasid empire was probably the world's "superpower" during this period. The period from 750/800AD to 1000/1050AD was a period of crisis which saw the fragmentation of the Carolingian empire into European feudalism, the breakup of the Abbasid caliphate, a Byzantine military revival, and the disintegration of the Tang dynasty into warlordism. The period from 1000/1050 to 1250/1300 was a period of widespread economic growth in the many parts of the world. Western Europe experienced an "agricultural and technological revolution", invaded the Islamic world in the crusades, enormously expanded both its internal and external trade, and acquired Hellenistic science, mathematics and culture via the Islamic world and Byzantium. The most spectacular economic, commercial, technological and demographic advance was in the Song dynasty in China which was the world's most advanced society of that time and came very close to having an "industrial revolution" 800 years before the West. North Africa, Eqypt and the Middle East experienced strong economic and commercial growth. Byzantium, on the other hand, lost economic and military power to landed magnates, lost its eastern Provinces to an irruption of Seljuq Turks, became an arena for commercial competition between Venice and Genoa, and was finally conquered, and dismembered by a Venetian crusade. The period from 1250/1300 to 1450 was a period of severe crisis, a crisis of hemispheric proportions. This period saw the Mongol conquest of Russia, China and the Middle East, the hundred years war in Europe, the spread of the Black Death from its origins in the rodent populations of Mongol Central Asia outward to the Islamic world, to Europe and to China and elsewhere, resulting in a collapse of the Mongol empire and a massive global depopulation. Byzantium threw off the Latin occupiers, but remained an Italian economic colony, and went into a long decline. The period from 1450 to 1600 was another period of expansion, a period which saw the rise of the Ming dynasty in China, the rise of the Mughal empire in India and the Ottoman empire in Anatolia and the Middle East. It also saw the beginning of Europe's 500 hundred year long rise to dominance over the world.

The Advantages of Backwardness

So, to return to our original question, why did an industrial revolution take place in Europe and not elsewhere? In "The European Miracle" 1981, the noted historian E. L. Jones (1981) discusses this question. He maintains that the industrial revolution was by no means a sure thing, even in Europe.

"Europe's very long term development appears miraculous. Comparable development (elsewhere) would have been supermiraculous."

E. L. Jones (1981) presents an exhaustive discussion of reasons why "early Europe was different". Such reasons include a cultural propensity to restrain population; a cultural propensity to use non-human energy; the existence of extensive rivers and coastlines for bulk transport; a more benign epidemiology; a location which allowed it to be influenced by, or "educated by" other societies, without at the same time being overwhelmed (or overrun) by them; a more geophysically and climatically stable environment; the discovery and colonization of the new world; and so on. A discussion of "European exceptionalism" can also be found in J. Baechler et al (1988), P. Crone (1989) and in the introduction to D. S. Landes (1969).

For the purposes of this chapter, we present a more "universalist" and "globalist" theory due to S. Amin (1980,1989). S. Amin's theory is a "super super generalization" in the sense that it involves all periods of historical time and all types of societies. In fact, S. Amin's theory is the epitomy of everything that P. T. Bauer warns against in historical theorizing. As Amin himself puts it:

"Social reality considered in its totality, has three dimensions: economic,political and cultural. The economy probably constitutes the best-known dimension of social reality...Economics has forged instruments for its analysis and, with a greater or lesser degree of success, for (its management)..The domain of power and the political is considerably less well known, and the eclecticism of the various theories that have been proposed reflects (society's) feeble mastery of this area of reality...As for the cultural dimension, it remains mysterious and unknown; empirical observation of cultural phenomena (religion, for example) has not produced, up until now, anything more than some intuitive essays." S. Amin (1989)

However, the very breadth and scope of S. Amin's theory makes it useful for the purpose of this chapter (which, after all, is "historical intuition" and not absolute scientific truth).

S. Amin's theory divides all societies into three types or modes. They are;

- a tribal, communal,kinship mode;

- a tributary mode;

- an industrial, capitalist mode.

Each mode has a socio-economic aspect (physical production and the social relations attendent to it), a political aspect (power and control relations), and a metaphysical, religious and spiritual aspect, (the realm of ideas, knowledge and beliefs) . A tribal, communal, kinship society engages in hunting and gathering and/or agriculture. It possesses a certain amount of empirical knowledge in many areas such as navigation, astronomy, textiles, pottery, animal husbandry, etc. It possesses a local mythology which seeks to explain the origin and characteristics of the world in which the "tribe" finds itself; the physical universe, people, and the social order of the "tribe". This particular mode of social organization, as defined by Amin, can apply to societies at many different levels of development, from primitive tribes to fairly advanced agricultural civilizations. An example of a communal, tribal, kinship society would the Barbarian peoples that invaded the Western Roman empire at the beginning of the last millennium. In fact the English name for the head of each group of barbarian people was king, which is derived from the word cyning ("man of the kin").

Amin defines a tributory formation as an advanced pre-capitalist civilization. Examples of the latter would be the Hellenistic world (the Ptolomaic, Macedonian and Seleucid Empires), the Islamic world, Byzantium and China. To some extent, the European theory of "Asiatic despotism" can be regarded as a over simplified, one-dimensional description of a tributory formation. To explain briefly, a tributory formation is still primarily agricultural, but its political and social structure is much more elaborate and its base of theoretical and empirical knowledge is at a much higher level. There is a clear class division of society into a mass of peasant producers at the bottom and a group above them of "people who eat food, but don't grow food". This class division is maintained by an elaborate "political superstructure", usually a centralized, "top-down" governmental structure, which can take a wide variety of forms depending on the specific tributory form in question. There is a considerable amount of manufacture, but the primary mode of production is still agriculture, There is a considerable amount of commerce and trade, but the primary mode of distribution is "tribute"; a direct commandeering of output or labor from the agricultural producers (peasants, serfs, slaves or rural laborers). Some of the forms that this "tribute" can take are taxes in kind, taxes in money, crop sharing, corvee' labor, slave labor and bonded labor. Tributory formations were more complex and dynamic than would be implied by the theory of "Asiatic despotism". Contrary to this theory, there was land ownership in pre-capitalist China for example, and not all investment was centralized. For example, many of the investments in hydraulic works, marsh draining and land reclamation were undertaken by local officials.

A tributary formation also has a metaphysical, religious and "ideational" aspect. Centralized political control over a large area cannot be maintained by force alone. There has to be some accepted system of belief that "legitimates" central rule. In a tributory society, this role is played by religion. (Although there is nothing uniquely "Asian" about this. In Europe, for example, Charlemagne's rule was bolstered by the support of the Papacy.) A tributory formation is a centralized empire over a large geographical area, which contains many local cultures and religious beliefs. This leads to "conceptual crises" (how can all these beliefs be true), crises which are resolved, in many areas of the world, by the spread of belief systems with a claim to completeness and universality. Examples, of the latter would be Hellenistic thought, Islam, Confucianism, Hinduism, Byzantine (Eastern) Christianity and later European (Western) Christianity.

"The syncretisms of the Hellenistic period thus prepare the ground for Christianity and Islam, the bearers and sowers of a new universalist message. The social crisis which so frequently is used to describe the end of the Roman empire,... was above all a product of this general and complex questioning. The medieval construct unfolds in three time periods; a first Hellenistic period (approximately three centuries B.C.), a second Christian period, first appearing in the East (from the first until the 7th century of the Christian era) and then, much later, in the West (starting from the 12th century), and finally, a third Islamic period (from the 7th until the 12th century). The core of this construct ...goes back to the Hellenistic period. Neoplatonism serves as the base for the constitution of the first Christian scholasticism (in the East), an Islamic scholasticism and finally the second Christian scholasticism (in the West), this last form being greatly imbued with Islamic thought. Undoubtedly each of these periods has its own specific traits and its particular interpretations; but, in my opinion, the common characteristics far outweigh the differences....The fundamental characteristic of medieval thought is the triumph of metaphysics, henceforth considered synonymous with philosophy (or wisdom). This trait is to be found in Hellenism, as well as in subsequent Islamic and Christian scholasticism. Metaphysics proposes to discover the ultimate principle governing the universe in its totality; namely, 'absolute truth'. It is not interested in 'partial truths' established by means of particular sciences; or, more precisely, it is only interested in them to the extent that these partial truths can contribute to the discovery of the final principles governing the universe....The entire enterprise of Islamic and Christian metaphysics will consist in seeking to establish that there is no conflict between the use of deductive reason and the content of the revealed texts......What the new metaphysics - which will crystallize into scholasticism - calls human reason is, in fact, exclusively deductive reason..Medieval scholasticism ....remains superbly ignorant of scientific induction, although by force of circumstances certain scientific practises, notably medicine, always employed inductive reasoning", S. Amin 1989.

This "Medieval construct" contains deductive logic, pre-calculus mathematics, a large body of empirical scientific knowledge in astronomy, chemistry, medicine, geography, and a large body of technology in civil engineering, navigation, agriculture, and military combat. It contains a belief that everything which should be known can be known by deductive reasoning, historical revelation (i.e. the Quran, the Gospels), and/or direct personal perception of "divine reality" under religious guidance and instruction (i.e. Sufism).

The third type of society is the industrial, capitalist mode This is the type of society which we live in today and which embraces the vast majority of the human race. In the place of metaphysics and religion there is the "scientific method". The "scientific method" consists of controlled experimentation and the linking of mathematization to empirical observation. The goal of the scientific method is not the search for "absolute truth", but rather the search for a larger and larger body of "partial truths", (and the application of the latter to industrial innovation for profit). Unlike the former tributory formations, the "political economy" of capitalism is truly global in scope. Although billions of people on the globe have not, as yet, benefitted from it, all are affected by it. It has brought about an enormous increase in the gobal population, most of it occuring since 1950. It is causing unpredictable changes in the Earth's atmosphere and bio-physical environment, changes of a magnitude unprecedented in geologic time. It operates in a global economy of enormous wealth for a minority of the world's population and desperate poverty for the majority.

At the end of the last millenium, an "outside observer", looking at societies such as Byzantium, the Islamic world, China and the Frankish empire in Europe, would certainly have characterized Europe as "backward". And yet it was Europe which experienced the industrial and scientific revolutions and which went on to dominate the world. Why? According to Amin, it was precisely the fact that Europe was backward that allowed it to circumvent the barriers to further development characteristic of the tributory societies.

"The Roman empire might have evolved and developed into a complete tributary form..It fell before doing so. Three entities grew up on the ruins of Rome, the Christian West, the Byzantium and the Arab-Islamic world. The latter groups probably went further than Rome in developing the tributory mode....On the other hand, the West remained marked by the primitive societies of barbarian Europe. This is precisely the reason why feudal Western Christianity offered the most favorable conditions for transcendence of the tributory mode (and the rise of industry)." S. Amin 1980.

In other words, it was the fact that European feudalism was a backward, "underdeveloped" version of the tributory mode, that allowed Europe to transcend the tributory mode. E. L. Jones has described Europe as a "a mutant civilization in its uninterrupted amassing of knowledge about technology". In Amin's formulation, one could describe early Europe as a "hybrid" civilization. It was a mixture of Barbarian and Roman elements coalescing in a context of rapid technological and agricultural change.

According to most historians, the "genetic mutation" which produced European society took place some time between the sack of Rome by Alaric in 410 and the European crusades of the 11th century. In this period of time Europe was culturally and commercially "delinked" and then "relinked" with the outside world. In period of "isolation", it developed the characteristics of nascent "Western civilization". According to the famous Belgian historian Henri Pirenne, it was the Arab conquest of the southern Mediterranean that "delinked" Europe from the outside world and caused it to evolve in a different direction. This is the so-called Pirenne thesis. According to the Pirenne thesis, the wreckage of the western Roman empire could have reconstituted itself into a full fledged "tributory formation", either under the influence of one of the Romanized Frankish kings or under the influence of Byzantium. However, the Arab conquests of the 7th century cut off Europe's export trade and deprived the Frankish kings of the "hard currency" needed to finance their administrations. At this point, land became the sole source of wealth. The landed aristocracy translated this economic wealth into political and military power by the use of feudal institutions, such as land grants to warriors in exchange for pledges of military service, creating land tenureships known as fiefs or feudums. The first man to do this was Charles Martel.

"After (the battle of) Poitiers, Charles Martel decided to create a cavalry - following the example of the Arabs - which could rapidly confront the enemy and replace the advantage of numbers by that of mobility. ........ It was out of the question to expect freemen to maintain a war horse and acquire the costly equipment of the horse-soldier, or to undergo the long and difficult apprenticeship that would qualify them to fight on horseback. To attain his object, Martel had to create a class of warriers with resources to correspond with the part they had to play. A generous distribution of land made to the stongest vassals (bonded servants)... Each man at arms thus provided with a tenure - or to employ the technical term, a benefice - was required to rear a war horse and to do military service whenever required. An oath of fidelity confirmed his obligations.... This institution (feudalism) was soon introduced throughout the kingdom. The immense (landed) domains of the aristocracy (landed magnates) enabled each of its members to form a troop of horse, which they did not fail to do." H. Pirenne, 1939.

The Feudal institutions, thus created, led to a geographical and social decentralization of political power. Pirenne (1939) gives a vivid picture of this process in his description of the coronation of Charlemagne:

"The kings no longer had any finances...The Merovingian king bought or paid men with gold; the Carolingian king had to give them fragments of his domain. This was a serious cause of weakness which was offset by booty as long as the country was at war under Charlemagne, but soon after his reign the consequences made themselves felt. And, here let it be repeated , there was a definite break with the financial tradition of the Romans. To this first essential difference between the Merovingian and Carolingian empire another must be added. The new king, as we have seen, was king by grace of God. The rite of consecration...made him in some sort a sacerdotal personage. The Carolingian was crowned only by the intervention of the Church, and the king, by virtue of his consecration, entered into the Church. He now had a religious ideal, and there were limits to his power-the limits imposed by Christian morality."

A complex network of competing, yet interdependent political power centers developed in feudal Europe; the kings, the landed/warrier nobility, and the church. When Europe was commercially and culturally "relinked" with the outside world through the crusades, commerce, manufacturing and technical innovation could flourish with an unprecedented degree of freedom from outside authority.

"The genesis of urban commodity production is not to be located within feudalism as such: it of course predates it. But the feudal mode ..was the first to permit it autonomous development within a natural-agrarian economy. The fact that the largest medieval towns never rivaled the scale of either antiquity or Asian empires has often obscured the truth that their function within the (feudal) social formation was a much more advanced one. In the Roman empire, with its highly sophisticated urban civilization, the towns were subordinated to the rule of noble landowners who lived in them but not from them; in China, vast provincial agglomerations were controlled by mandarin bureaucrats resident in a special district segregated from all commercial activity. By contrast, the paradigmatic medieval towns of Europe which practised trade and manufacture were self-governing communes enjoying corporate and military autonomy from the nobility and the church." P. Anderson (1974)

To summarize, the Pirenne thesis postulates a sharp transition between post-Roman Europe and medieval Europe. This transition occurred when the Arab invasions cut off Europe's export trade and precipitated a "financial crisis" in the Merovingian empire. The Carolingian empire responded to this crisis by founding its power on the land, moving its economic and political center to the north, and forming an alliance with the Papacy. This was the transition from antiquity to feudalism. according to the Pirenne thesis. More recent research has tended to cast doubt on the Pirenne thesis, particularly on the effect of Mediterrannean trade on the evolution of early Europe, and the effect of Arab conquests on this trade. Feudal social relations and feudal land tenure relations were very complex, and the origins of these institutions were equally complex. There was a gradual fusion of German and Roman societies. Both of these societies had institutions similar to vasalage and the benefice (a precursor to the fief). The Roman slave economy, under the impact of dynastic collapse and barbarian invasion, underwent a social and technological transformation to become the far more advanced European feudal economy. The importance of this transformation to Europe's long term development vastly exceeds the amount of source material available about it.

For those who are interested, there are hundreds of explanations for the failure of western Rome to reconstitute itself after the barbarian invasions. Perry Anderson (1974), for example, highlights the unsustainability of the western Roman slave economy, once the limits of territorial expansion and enslavement had been reached. According to this explanation, the fall of the western Roman empire was no mere dynastic collapse. It was the collapse of an entire socioeconomic "system of production". Therefore, when western Roman society collapsed, it left no "template" upon which a new dynasty could reconstitute itself. This, in turn, left the field open for a new and radically different type of society to evolve on the wreckage.

The important point to make is that feudal European society, whatever its exact origins, was decentralized. without, at the same time, being completely anarchic. It consisted of a complex and interlocking pattern of local governances; duchies, counties, royal domains, urban communes, ecclessiastical holdings, free towns, etc., loosely linked together by the church, the German emperors and the monarchs at the apexes of complex feudal hierarchies. This led to a pattern of constant feuding, urban factional fighting and endemic warfare. But it also gave European society a great degree of flexibility and openness to innovation. Viewed as a system, and in comparison with the tributory societies, European society was far more flexible, "fault tolerant", and had far more "degrees of freedom". Although European society was politically decentralized, "cultural connections and the competitive nature of the states encouraged continual borrowing" which facilitated the spread of technological and commercial advances. (E. I. Jones, 1981).

In Europe, as in other societies, powerful tendencies towards centralization arose. At a certain point, the process of feudal fragmentation came to a halt, and a complex and uneven pattern of centralization began, a pattern which was, for a long time, concentrated in areas outside Italy and Germany, and which was intensified by the prolonged European crisis of the 14th century. However this process of centralization was itself, shaped and molded by the existence of already entrenched and autonomous commercial, artisanal and scholastic sectors in the towns, so that what emerged was not a centralized "tributory formation", as in the pre-capitalist world, but rather a "states system" of competitive "city states" and then "nation-states". The competition between these states was mediated not only through conquest, and absorption, but also through commerce, innovation, exploration, and the competitive colonization of the non-European world. Thus, the last 500 years have seen, not the political, centralization of Europe, but its military, political, economic, demographic and cultural expansion into the rest of the world, creating what we have today, the world's first truly global society, linked together, not by a single political structure, but by a world market. (And Europe continues to have a surprisingly hard time creating a centralized political structure.)

In the realm of ideas, the European "world view" in feudal times was an incomplete version of the "tributory world view" (the "Medieval construct"). We will the discuss the way in which this fact contributed to the European scientific revolution. One of the important components of the "medieval construct" was Hellenistic thought, particularly Aristotelian thought. Ibn-Rushd (Averroes) was one of the scholars who introduced Aristotelian thought into the Islamic world. Saint Thomas Aquinas was one of the European scholars who "Christianized" Aristotle. S. Amin (1989) contrasts European Medieval thought with Islamic Medieval thought:

"Western medieval scholasticism takes shape beginning in the twelfth century, not by chance in regions in contact with the Islamic world; Arab Andalusia and the Sicily of Frederick II. It shares certain characteristics with its Islamic source of inspiration: an unlimited reliance on syllogism and formal logic, an appreciable indifference to facts and science in general, and an appeal to reason to confirm conclusions fixed in advance by revelation (principally the existence of God). But whereas the perfected metaphysics of the Islamic avant-garde purifies these conclusions of their textual dross, retaining only the abstract principle of immortality of the soul ...Western scholasticism remains at at inferior level. Even St Thomas Aquinas, the most advanced mind of his age, does not go so far in his Summa contra gentiles as ibn-Rushd (Averroes), whose conclusions he rejects as too daring and potentially threatening for the faith. But this poverty of Western scholasticism is precisely what gave Europe it advantage. Necessarily leaving a greater sense of dissatisfaction that Islam's refined version, Western scholasticism could offer only slight resistance to the assaults of empiricism, in which Roger Bacon, restoring the importance of experience over the dialectics of scholastic syllogism, initiates a process of development independent of metaphysical discourse. Historians of the Crusades know how much the Arabs were scandalized by Frankish practises. Their 'justice' founded in superstition (trial by ordeal) could not withstand comparison with subtleties of the Sharia. This is often forgotten today, when the Sharia is characterized as Medieval: It was easier to get rid of a body of 'law' as primitive as the Frankish one than it was to go beyond the erudite causistry of Moslem law."

Ironically, it was the primitive Frankish idea of "trial by ordeal" which was eventually to become one of the inspirations for the concept of a "controlled experiment" ("The secrets of nature, betray themselves more readily when tormented by art (outside manipulation) then when left to their own course". Francis Bacon, New Organum, 1620). The concepts of empirical observation and deductive logic were well known to Eastern Christian and Islamic scholarship, but the concept of a controlled experiment was a distinctive European advance and an essential feature of the European "scientific revolution". Another essential feature of the scientific revolution was the Galilean-Newtonian union of mechanics, astronomy and mathematics. In the 16th and early 17th centuries, after the Renaissance, European Christian cosmology was in a state of profound crisis. At first, this crisis was marked by an outburst of unbridled and heretical, non-rational metaphysical speculation, much of it derived from a collection of mystical Neo-Platonist texts known as the Hermetica. In 1543, Copernicus (who was influenced by the Hermetic belief in the divinity of the sun) published his work De Revolutionibus Orbium. In it, he suggested that the earth and planets revolve around the sun and that the earth rotates on its axis every 24 hours. By making these assumptions he drastically simplified the mathematics of medieval astronomy. The total number of circular motions needed to explain planetary motion was reduced from 80 to 34. However, his approach aroused widespread skepticism. If the earth was rotating rather than the heavens, then why didn't the earth fly apart? Why wasn't there a perpetual wind from east to west? How could an enormously heavy body such as the earth revolve around a supposedly weightless body such as the sun (which had to be weightless so as not to fall down to the earth). If the earth was revolving around the sun, then why didn't the stars appear to shift position or change brightness during the course of the year? In order for the stars to appear the same all year round, while the earth moved over enormous distances, they would have to be of a size, brightness and distance from the earth which was absurd. too large to be plausible. In 1572, a new star appeared in the heavens which was brighter than anything in the sky except for the sun, the moon and venus. It shone throughout 1573, contradicting the belief that the creation of the heavens had been completed on the 7th day, since something new had seemingly been created. In 1577, a new comet appeared. Measurements by the Danish astonomer Tycho Brahe, placed showed that this comet was at a greater distance from the earth than the moon, (previously comets were thought to be atmospheric phenomena), and that it was passing through space that was supposed to be occupied by the crystalline spheres that were supposed to be holding the planets in place.

To get an idea of the magnitude of ensuing conceptual crisis, imagine the impact on present day society of the discovery, say, of Bronze Age artifacts on Mars. Both lay scholars and the church were alarmed at the disorder into which the outside universe had seemingly fallen. ("'Tis all in pieces, all coherence gone", J Donne, 1611) The 17th century saw a flurry of attempts by many researchers to set things to right. These attempts included the gathering of more astronomical data, the use of new mathematical techniques (conic sections) to fit this data into mathematical patterns, experiments with weights and pendulums (under the assumption that the physics of terrestrial objects was similar to the physics of planetary motion), and advances in mathematics (analytic geometry and calculus). All this activity culminated in the late 17th century with Newton's synthesis of mechanics, mathematics, and astronomy. As Bacon predicted, the search for final truths and ultimate causes was left to religion and future scientific efforts were directed to discovery of a larger and larger body of partial truths by means of the scientific method.

The "tributory world view", by its very completeness and claim to universality, tended to inhibit such conceptual advances. Hellenistic thought, in particular, because it was such an impressive, all encompassing intellectual construct, especially when combined with a "universal" religion, tended to have an intimidating effect on researchers. The 9th century Arab scientist Al-Kindi was cautious in his approach to Hellenistic thought.

"It would have been impossible for us, despite all our zeal, during the whole of our lifetime, to assemble these principles of truth which form the basis of the final inferences of our research. The assembling of all these elements has been effected century by century, in past ages down to our own time....It is fitting then (for us) to remain faithful to the principles that we have followed in all our works, which is first to record in complete quotations all that the Ancients have said on the subject, secondly to complete what the Ancients have not fully expressed, and this according to the usage of our Arabic language, the customs of our age and our own ability"

Like the European world view, the Islamic "tributory" world view also went into a conceptual crisis, but one with a different outcome. "The discovery of the limits of the power of reason could have led to a questioning of metaphysics and its doomed project for arriving at absolute knowledge, but this did not happen. Renewed questioning of rational metaphysics (led to) ... the affirmation of non-rational metaphysics" (S. Amin, 1989).

However, the European world-view, despite its post-Renaissance flirtation with non-rational metaphysics, (and partially because it was an "underdeveloped" version of the Islamic world view) was more able to advance to the "scientific revolution", when it encountered the limits of rational metaphysics.

In other words, it's wrong to think of religious or cultural belief systems as demiurges of scientific progress or stagnation. "It is better to think to think of (them) .... as filters through which actions had to pass, to be slowed down, or (speeded up)...according to the occasions" (E. I. Jones, 1988,). The feudal Western "world view" was simply a "weaker filter" than the medieval Islamic world view. It was "weaker" in the sense that it offered less resistance to "the assaults of empiricism".

How did the medieval Western world view compare with the medieval Chinese world view? One important difference between the two was the very strong Western notion (derived from Aristotelian physics and Neo-Platonism) that the motion of heavenly bodies should be perfectly describable mathematically with no deviations. It was this notion that made anomalies in astronomical observations so threatening to Western cosmology. It was this notion, therefore, which led to the successful effort to resolve these anomalies by means of the "scientific revolution". Prior to that revolution, however, there was no a priori reason, other than faith, to believe that the motion of heavenly bodies should always be "perfect". The Chinese, for example, tolerated anomalies in astronomical observations ("Even the heavens occasionally go astray"). Thus, it is interesting to speculate how Chinese astronomy might have evolved had the European scientific revolution not occurred. E. L .Jones (1988) speculates that, in China, a continued progress in technology might have eventually led to a "scientific revolution" based on empirical observation, and from there to an independent discovery of Western mathematics and deductive logic.

In China, as in the Islamic world, the use of "cultural values" to explain progress (or the lack of it) has to be viewed with skepticism. For example, Weber used "Confucian values" to explain China's failure to industrialize, and later analysts have used the same "Confucian values" to explain the ability of the "Pacific rim" to industrialize. In fact, the real significance of "Confucian values", for our purposes, lies not in the differences between China and Europe at all, but in the differences between China and Japan. It was because the Japanese world view was an "incomplete", not yet fully developed, variant of the Chinese Confucian world view that it was more easily transcended by Japan's successful assimilation of the modern western world view.

This (according to Amin's thesis) was an important reason why Japan, as opposed to China, escaped the destructive effects of European colonialism, and went on to develop a successful capitalist economy. One of the important factors behind this outcome was the Japanese feudal system. Following Amin (1989), we can describe the Japanese feudal system as an "underdeveloped" version of the Chinese tributory system. Under the Taika reform of 646AD and the Taiho codes of 702AD, Japan instituted a country-wide administrative system modeled after the Tang dynasty in China. By the middle of this millennium, this system (which included an imperial dynasty and an official religion based on Buddhism and Shinto) had evolved into a feudal system with striking parallels to feudal Europe. The emperor had evolved into a sort of religious figure (analogous to the Papacy) but the real power was vested in a military structure known as the Bakufu ( military regime), headed by a "generalissimo" (Shogun). Under the Tokugawa Shogunate, (1615-1868) the Shogun's "royal demesne" (tenryo lands) included about 20% of the country. There were several hundred feudal lords (daimyo), who owned and governed fiefs (han). and who retained trained warriors known as bushi or samurai. During the Tokugawa period, the samurai were eventually absorbed into bureaucracies which constituted the real administrative governments of the han. Although, trade and cultural contact with the outside world was prohibited, the Tokugawa period was marked by a "commercial revolution" based on Japan's large internal market. There was extensive monetization of agriculture (about 50%), and extensive cultivation of cash crops such as cotton, indigo, sugar, tea and tobacco. Although the Japanese bourgeoisie (chonin) occupied a low place in the Japan's formal class structure (shinokosho), they controlled the bulk of Japan's wealth. One of the reasons for this "commercial revolution" was the sakin kotai system developed by the Bakufu in order to establish centralized control over the country. This system obligated the daimyo to maintain elaborate residences in the capital city of Edo and to leave family members in Edo as hostages to the Bakufu. The large outlays needed to construct and maintain these residences and the outlays needed to finance the travel to and from Edo of the daimyos and their retainers provided a large part of the economic stimulus for Japan's commercial revolution. In other words, the manufacturing and commercial sector, because it had arisen in the interstices of Japanese feudal society prior to the centralization attempts of the Tokugawa shogunate, was, therefore, strengthened not weakened by the Tokugawa "centralization process", even without the benefits of external trade and despite the fact that Confucian culture held the merchant class in low esteem. However, by the beginning of the 19th century the enormous growth in luxury spending was creating a severe financial crisis for the daimyo and the Bakufu. Exacerbated by crop failures, this crisis was accompanied by debasement of the currency, famines and peasant upheavals. After the opening of Japan by Admiral Perry in 1854, this crisis became terminal. Unequal trade agreements, forced on Japan by the Western powers, precipitated massive currency devaluations, massive inflation and widespread internal disorder. Had the bakufu been the only source of political cohesion in Japan, the result could have been a slide into backwardness and colonial dependency. However, in Japan's southwest, there were han known as "outside" (tozama) han. These han were historically antagonistic to the Bakufu. They had been involved in illegal foreign trade and had knowledge of outside affairs. They had witnessed the destructive effects of European intervention on China, and were alarmed at the impotence of the Bakufu in the face of European pressure. They smuggled samurai abroad and assimilated Western military, scientific and industrial techniques. In 1868, the tozama han of Satsuma, Choshu and Tosa launched a successful coup against the Bakufu. Using "emperor worship" as a "ruling ideology" (tennoism), they established a capitalist state along Prussian lines.

Like the European feudal system, the Japanese feudal system had a large degree of "fault tolerance" and "redundancy" built in. Therefore, when it went into crisis in the early 19th century, the result was not collapse, but advance, as the collapsing Bakufu gave way to the "modernizing han". Japan's feudal structure made it an unappetizing target for the colonial powers. It was difficult for the colonial powers to coopt or manipulate a society like Japan's with a complex partially decentralized power structure. In fact, Britain finally ended up supporting the "modernizing han".

This, in brief, was the history of Japan and the West. The history of the rest of the world, is essentially the history of the impact of 500 years of Western colonization on that world. An overstatement to be sure, but the fact is that there is no society in the world today whose history and present condition would be at all comprehensible apart from its relations with the West. This is why the "multiculturalists" are wrong when they downplay the importance of Western society. If one wants to understand the present state of the world, including the non-Western world, the only place to start is with Western society. Let's examine this assertion briefly. In what might seem like a paradoxical, upside down analogy, L. S. Stavrianos (1976) draws some striking parallels between today's world and the West's dark ages. Specifically, Western society was formed by the Barbarian invasions of Rome. Present day global society was formed by the Western "invasion" of the rest of the world. The Barbarian invasions of Rome were followed by a period of "Roman/Barbarian dualism", (enclaves of Barbarian society surrounded by large areas of Latin society coexisting under separate political structures). The European expansion into the rest of the world has been followed by a period of "developed/underdeveloped" dualism. World society today consists of a "developed enclave" (known as the "North", the "Center", or the "developed economies") surrounded by a far larger area of underdevelopment" (known as the "South", the "periphery" or the "underdeveloped economies"). In turn, each of the underdeveloped economies in the "South" consists of a developed "enclave" which is itself surrounded by a far larger area of underdevelopment. (Dualism on a global scale is mirrored by dualism on a national scale) Each of these "developed enclaves", in turn, was created by some form or another of Western economic penetration of the non-Western world; administrative alliances with local elites (as in India or Egypt), use of tax systems to monetize peasant agriculture (as in Africa) direct construction of mines, oil wells, and plantations (as in Indonesia or Africa), economic alliances with rural oligarchies (as in Latin America), and the "treaty port" system to penetrate large pre-capitalist markets (as in China). (In the latter case, Western economic penetration led to a capitalist zone in the coastal areas of China which expanded to become the rapidly developing "enclave" known as the "Pacific rim economies".)

It's important to stress that the present day capitalist system, in contrast to the previous tributary forms, is a truly global system. This is why it is wrong to refer to an underdeveloped region as "feudal" or "pre-capitalist". Even where "pre-capitalist, feudal activities", such crop-sharing, corvee' labor, debt bondage, peasant agriculture, handicraft manufacture, subsistence agriculture or slavery, exist, these activities are nonetheless linked to the world capitalist system. For example, in many cases, these "backward sectors" of Third World economies subsidize the "advanced sectors", which are, in turn, dependent on the outside world economy for markets, financing and intermediate inputs. In other cases, these "backward sectors" are, themselves, subsidized by remittances from workers in advanced countries or advanced sectors. Thus, there isn't a region in the world today that isn't, to a greater or lesser extent, and, for better or worse, economically and culturally linked to the world, capitalist system; the world's first truly global social system.

Like the Barbarian invasions of Rome, the Western "invasion" of the rest of the world was extremely traumatic. The catastrophes visited on South American and African societies by the Spanish conquests and the trans-atlantic slave trade have been well described. Even when European penetration was more neutral, it still administered a tremendous shock to societies that were, in any case, experiencing severe internal difficulties as well.

"A typical third world economy with settled, rather than shifting agriculture, before contact with European capitalism would be almost entirely agrarian. The development of productive forces in such an economy would take the form of acquisition of new skills and use of new techniques for the cultivation of crops or production of goods without any great increase in the use of fixed capital. However, such an economy would be characterized by a centralized state....Most of these economies would be endowed with a handicraft sector which would produce the simple tools and consumer goods needed by the peasantry...Viewed from outside such an ecnonomy may appear to have considerable slack in it...The fact that landlords or noblemen have a large number of retainers or that considerable resources are devoted to social ceremonies or that vast amounts of land are used as pasture may be taken as evidence of such slack. But, in many cases, this 'surplus'.....turns out to be illusory: the employment of retainers is essential to the maintenance and smooth functioning of a landlord dominated society, the expenditure of resources in social ceremonies is often an essential part of redistribution within the society, and the reservation of vast amounts of land as pasture or cultivable waste is necessary to maintain the fertility of the soil and the productivity and number of the domestic animals...When European capitalists burst on the scene as conquerers...the balance of this economy was upset. The Europeans apppeared with a demand...for particular types of goods, it had to be met by changing the structure of production. The change in the structure of production could not be effected without upsetting the existing social relationshsips, for (a) the economy was not geared to the production of commodities for the market, except as a subsidiary activity, and (b) where demand was for tribute, it could not be met without depriving some sectors of the population of their earlier earnings. Thus, the impact was rarely, if ever, a costless adjustment to an increased monetary demand." A. K. Bagchi, 1982

Now What?

Did the traumatic impact of the West on the non-Western world block this world from experiencing its own, indigenous "industrial revolution". In other words, would the industrial revolution have occurred elsewhere had it not occurred in the West? Some historians think not. They maintain that so many events had to happen at just the right time, and under just the right circumstances, to produce these revolutions, that to talk about these events occurring elsewhere is pointless. (D. Landes, 1969, P. Crone, 1989). Other historians think otherwise. They maintain that the forces leading to industrial capitalism were global in nature and not purely European. Eventually, according to this view, Western levels of scientific and economic advance would, by the sheer passage of time, inevitably have been reached somewhere; if not in the West, then elsewhere. (See J. L. Abu-lughod, 1989, S. Amin, 1980, 1989, E. L. Jones, 1988, and E. L. Jones et al, 1993). However, these kinds of "counterfactual" historical speculations ("What would have happened if?") are ultimately beyond the scope of this chapter whose primary concern is with the questions "What happened?", "Why did it happen?", and "Now what?".

To address this latter question, what does Amin's formulation have to say about the present state of world society and its possible future? In Amin's formulation, world society consists of a developed Center (North) and an underdeveloped Periphery (South). It operates under the capitalist mode, which is a global mode. Global capitalism, in turn, is divided into Central capitalism and Peripheral capitalism. Peripheral capitalism bears the same relationship to Central capitalism that feudalism bore to the tributory mode, namely Peripheral capitalism is an incomplete, not yet fully formed version of the capitalist mode. It is for this reason, Amin speculates, that any potential barriers to world economic growth, while they would be far more traumatic to the populations of the Periphery than to the populations of the Center, might also be far more readily transcended in the Periphery than in the Center, precisely because the Periphery operates under an incomplete, and, thus, more flexible, version of the capitalist mode. Thus, Amin's formulation puts "North/South relations" at the center of all socioeconomic and political trends, problems and crises in the world today. In fact, many analysts are coming to the conclusion that developments in the South will, for reasons of demography alone, play an increasingly important role in all aspects of life everywhere. The World Bank Development Report of 1991 puts it as follows:

"In the time that it takes to read this paragraph, roughly a hundred children will be born- six in industrial countries and ninety-four in developing countries, Here lies the global challenge. No matter what the outlook in the industrial countries, the world's long-term prosperity and security- by sheer force of numbers - depends on LDC development."

In other words, there's no question that, if the populations of the underdeveloped world "weigh in" at anything approaching their relative numbers, it is inevitable that the influence of the South on the North can only grow over time. It is for this reason, we believe, that much of the widespread confusion over future trends stems precisely from an inability to adequately conceptualize North-South relations. For example, here's a common misconception; the belief that the North differs from the South by a time gap; that Asia, is decades behind the West, Africa centuries behind the West, and so on; This "time gap" misconception is essentially the belief that the North is the South's future, and that the South is the North's past. To be sure, both the North and the South have evolved enormously over the past 500 years, but this evolution has taken the South as far away from the ages of feudalism or antiquity as it has taken the North. A country like Somalia, for instance, where warlords fight with rocket propelled grenades and armored vehicles, and, where this fighting is televised, is as far away from the feudal ages as is any country in Western Europe. As far as the future is concerned, it could just as well be said that the South is the North's future. Just as the dark ages of "Barbarian/Roman dualism" evolved into a "Barbarian/Roman synthesis" which, in turn, evolved into Western society, so will the present period of "North/South dualism" evolve into a "North/South" synthesis which, in turn, will evolve, for better or worse, into a new global society. Because of the rapid pace of technical and demographic advance, this "synthesis" will take place on an enormous scale, and in decades rather than centuries, and its repercussions will impact business planning and decision-making everywhere.

To elucidate this in more detail, we will quote from ourselves:

"Let's look at human society, as it were, 'from outer space' with no preconceptions. What would we see? We would see human society as 'islands of development in a sea of underdevelopment'. The 'islands of development' would include the developed countries and the developed enclaves in the underdeveloped countries. The 'sea of underdevelopment' would contain approximately 80% of the world's population. ...We would see the primary social system on the planet, the system by which human activity is coordinated and regulated, namely the capitalist, free-market system, spreading into more and more areas of global society formerly not under its sway, into the service sectors through the industrialization and globalization of the financial sectors through the use of digital technology, into the eastern bloc through private sectors loans and internal structural reforms, and finally, and we believe most importantly, into the underdeveloped, pre-capitalist 'peripheral' areas of global society, namely the less developed countries, precipitating unprecedentedly rapid growth in some of them, turmoil and upheaval in others, collapse and catastrophe in still others, but transforming all of them. We would also see enormous social and institutional barriers to the worldwide geographical expansion of the capitalist system. In the less developed world, these barriers would include the lack of an entrepreneurial class, the lack of free, competitive markets, in land, labor and capital, the inequality of land and income distribution, the feudal, oligarchic and bureaucratic restrictions on economic development, the 'hollow' and dependent nature of the economies, the backwardness of agriculture, overpopulation and maldistribution of population (particularly in Africa), the unrepresentative nature of the political processes (particularly in the Middle East). In the West, these barriers would include the saturation of consumer markets in many countries, and hostility towards the less developed world and fear that it might repeat the Japanese success. In the Eastern bloc these barriers would include the firmly entrenched bureaucratic, black market and barter economies, and the antiquated, hopelessly uncompetitive nature of much of the capital stock. The 'shock waves and interference patterns' generated when the expansion of the global capitalist system runs up against the barriers to expansion mentioned above constitute nothing less than the economic and political history of the last 20 years, the oil shocks, the debt problems, the trade imbalances, the drug problems, the rise of the Israeli right, the Palestinian intifada, the rise of religious fundamentalisms, the spread of democracy, the upheavals in the Eastern bloc, Iran and China. To give a brief example of the above assertion, American and global economic policy over the past ten years has essentially consisted of responses to crises in 'North/South' economic relationships, crisis caused by the turbulent expansion of the capitalist system into the less developed world. For example, in 1979 at the IMF conference in Belgrade there were calls for long-term LDC development bonds to be issued to sop up excess 'petrodollars', relieve global inflation and convert short-term and rapidly growing LDC debt into long-term development bonds, Since the U.S. was not remotely ready for such a proposal, Paul Volcker flew back from Belgrade to Washington and imposed the tight money policy of 1979. When this began to precipitate an extremely serious LDC debt crisis in 1982, the Reagan administration politically, unable to deal with the situation directly (in was only in 1989 that the U.S, with the 'Brady plan') instituted a policy of using the U.S. deficit as an 'engine of growth' for the global economy and of tolerating a large trade imbalance to give the debtor LDC's a place to which to export in order to be able to make the interest payments on their debt. This began to precipitate a fairly sizable amount of 'industrial redployment' from the U.S. to the developing world (without solving the debt crisis). In the mid-80's this began to generate an intense upsurge of protectionist sentiment. This 'protectionist crisis' led to the 'G7 agreement' to force down the value of the dollar. This in turn precipitated a flood of dollars from abroad into the U.S. asset markets, leading to the wave of mergers, the 'junk bond' phenomenon, the upsurge in real estate prices, the 'homeless crisis' in the U.S. and the 1987 turbulence in the global stock markets." from a 1989, Cambridge Forecast Group paper, presented at the Symposium on Global Change held by the Energy Research Institute of the Japanese Ministry of International Trade and Investment.

We will explain this in more detail in chapter 5, but, for now, we now will turn our attention to the Eastern bloc. For purposes of brevity we will confine our attention to Russia, since Russia is the most economically, demographically and politically significant country of the region. We deal with Russia now, because, to some extent, Russia doesn't quite fit into the above formulation.

The Uniqueness of Russia

"No one denies that Russia is unique.", writes David Fairlamb of "Institutional Investor". Of course, every country is unique, but Russia is "more unique" than any other country. To be sure, Russia has a great many cultural similarities with the West; a very high literacy rate, a large skills base, an advanced scientific and technological sector, and an extensive common artistic heritage. However, Russia has a very different history from that of the West. Russia was never part of the civilization of antiquity. It was never part of the West European German-Roman synthesis. It was never colonized by the West, and it was never integrated into the Western global economic system to the extent that the rest of the world has been. From a social and institutional point of view, Asia and the Third World are actually closer to the West than is Russia. This is why Western descriptions of Russia tend to rely on metaphor; "the new Byzantium", "a Third World country with rockets", " an industrial Asiatic despotism", "an industrial feudalism", and so on.

"The idea that Russia's historical destiny was essentially different from that of Central and Western Europe had a considerable ancestry. It was the central theme in the famous debate between Slavophils and Westerners in the early nineteenth century; and it ran through the discussion as to whether feudalism in the Western sense had ever existed in Russia; or whether the system of land holding and of social obligations in earlier centuries represented something unique so far as European development was concerned." (M. Dobb, 1948). One of the debates between Slavophils and Westernizers concerned the significance of Russia's origins as a Scandinavian colony. Many Westernizers believed that such an origin made Russia an essentially Western country whose destiny lay with Europe. The Slavophiles believed that early Russian society evolved from indigenous Slavic society and that the Viking colonizers of the 9th century had a neglible impact. In fact, there isn't any episode of Russian history, from Viking colonization in the 9th century to IMF stabilization in the 1990's, that isn't the subject of intense debate. There are debates about the impact of Mongol occupation, about the vast peasant flights that occurred under Ivan IV, about the origins and significance of the village commune or Mir, about whether the agrarian reforms of 1861 left Russia with a capitalist or feudal agriculture, about whether the Stolypin reforms of 1906 could have averted revolution had the first world war not supervened, about whether the democratic provisional government could have survived had it ended the war and redistributed the land, about whether Russia could have survived the German onslaught of 1941 without the forced industrialization of the 1930's, about whether the slave labor camps aided or impeded this forced industrialization, about the reasons for the collapse of communism and the implications of this collapse for the future, and, finally, about whether the IMF/World Bank stabilization, privatization and structural adjustment programs designed for Western and Third World economies can work in Russia.

Perhaps one could say that Russian history contains a unique combination of Western and non-Western influences. As M. Cherniavsky (1971) points out, the whole debate over Russia's "Scandinavian origins" is largely beside the point. The Scandinavian (Norman) conquerers who installed England's feudal government were Danish settlers in France who had assimilated European social structures and institutions. In contrast, the Scandinavians (Varangian Swedes) who plied the north-south rivers of the Donetz basin to trade with Byzantium (and who supposedly started the early Russian state (the Kievan State)) were un-Christianized slave traders and not really "Western" in the Norman sense. The earliest Russian source materials are the Early Russian Chronicles, which were systematized at the beginning of the 11th century and record events going back to the 9th century. Prior to that, there is source material from non-Russian societies (such as Constantinople) and from archaelogical investigations. The recent tendency among historians is to stress the similarities between indigenous Celtic, Germanic and Slavic societies. It was only in the course of time that these societies diverged radically; the Celts and Germans were influenced by Western Roman society, and the eastern Slavs by Turkic steppe society. In the latter half of the last millennium, Russian society evolved a class structure, possibly under Varangian influence. At the top of the social hierarchy, was a sort of military caste, the Druzhina, and, at the bottom, were debt peons and slaves (Kholopy). The Druzhina devolved into two classes, a landed merchant nobility (Boyars) and a class of warrior princes (Knyazi). As this was taking place, Russian society was also under the influence of Byzantium, which was a large market for Russia's exports (furs, slaves, bees wax, wood and honey). When Byzantium went into decline, the political and demographic center of Russian society shifted to the Northeast. Possible causes for this shift were a flight of population to escape the political conflicts and peasant enserfments which followed the decline of trade with Byzantium: a demographic explosion in the northeast possibly caused by assimilation of the Finno-Ungrian people of the area; a flight of population to the forests to escape from the nomadic invasions that periodically swept over Russia and continously set back its economic development (the Pechenegs in the 11th century, the Kipchak Turks in the 12th century and finally the Mongols in the 13th century)

Russia was actually part of the Mongol empire for a time, and began its centralization process under the "Mongol yoke". In fact, some historians maintain that the Mongol state was the basis for the Tsarist autocracy. that the early Russian Tsars were successors to the Khans, but this has always been a matter of controversy. Suffice it to say that when Russia's centralization process began, under Mongol tutelage, the dense network of commercial, manufacturing, and scholastic autonomies, which had characterized western feudal Europe, didn't exist in Russia; Russia's economy had been devastated by the Mongol invasions and its recovery from the invasions "stunted" by Mongol enslavement of skilled craftman and Mongol monopolization of foreign commerce. Therefore, the centralization process, which, in Europe, was to lead to the "states system", was to take a very different path in Russia.

Briefly, the Russian Tsarist autocracy was created by Ivan III, Vassily III and Ivan IV (Ivan the Terrible). Ivan III refused tribute to the Mongol Khans, conquered the northestern Principality of Novgorod and used the lands aquired thereby to finance (by means of small land grants called "knights fees" or pomesti) a new class of military retainers (called pomestchiki) as a counterweight to the Boyars. Ivan IV expropriated lands from the Boyars and use them to finance the creation of a royal guard corps known as the oprichniki which became an instrument of state terror. He also created a permanent infantry and broke the military power of the Mongol Khanates. Starting from a radius of 250 miles around Moscow, the Russian Tsarist state, partly because of its acquisistion of heavy artillery and partly because of the internal disintegration of the Khanates, was eventually to become heir to the vast Mongol Empire, thus achieiving its enormous size.

The decades immediately following the liberation from the "Mongol Yoke" were a period of rapid economic, agricultural, and commercial advance. However, this was not to last. Starting with the disastrous Livonian wars, under Ivan IV, the exactions of the Tsarist autocracy on Russian society were accompanied by (and contributed to) a series of catastrophies, which, over the next two centuries, were to strengthen the Russian autocracy, and weaken all other sectors of society, to a degree which was unprecedented in European history. After a long period of disastrous wars, epidemics, crop failures, famines, outside invasions, civil chaos, massive peasant flights and massive peasant uprisings, the upper strata of Russian society banded together under the aegis of the central state, and against the peasantry. The peasants were bound to the land and then to their lords; the landed nobility, the towns, the merchants and the clergy were all bound to the autocracy. Entrepreneurial energies were diverted away from commerce and into climbing the bureaucratic and military hierarchies, so that when Russia began to industrialize in the 19th century, it was under the impetus of the Tsarist state rather than the bourgeosie.

In short, even after Russia's successful assimilation of western science, technology and commercial techniques and, even after the agrarian reforms and industrialization of the 19th and early 20th century, Russia was still closer, in many ways, to a pre-European "tributory form", than to a western European state. By the early 20th century, Russia "was both a major industrial country and a technologically backward medieval peasant economy; an imperial power and a semi-colony; a society whose intellectual and cultural achievements were more than a match for the most advanced culture and intellect of the western world, and one whose peasant soldiers in 1904-1905 gaped at the modernity of their Japanese captors." (E. Hobsbawm, 1987).

Both Russia and Japan represent "borderline cases" in the history of industrialization. Feudal Japan was culturally non-western but socially western, whereas Russia was culturally western but socially non-western, (features which have enormous imnplications for present day Japan and Russia).

To sum up, immediately prior to the outbreak of World War I, Russian economic growth was impressive. However, this economic growth was taking place in the context of an increasingly antiquated and decrepid socio-political structure, similar in many (though not in all) respects to a pre-capitalist "tributory form". What would have happened had World War I not supervened is a question that we will leave to one side. Suffice it to say that when Rusian entered the "on ramp" to industrialization, the external environmental was uniquely unfavorable. The world capitalist system was undergoing a period of severe and catastrophic contraction, a breakdown in international trade, severe depressions, the rise of anti-capitalist ideologies such as communism and fascism, and the two world wars. This had a drastic impact on the form Russian development was to take; an autarkic, forced industrialization "superimposed" on a collapsed, largely pre-capitalist, bureaucratic, "tributory" structure. The Soviet economy, prior to Gorbachev, consisted, first of all, of a centralized, bureaucratic sector, a sort of industrial version of the Czarist agrarian economy. This sector consisted of isolated, uncoordinated, (but very vertically integrated) industrial units dependent on distant bureaucracies for management and coordination, This "official sector" was complemented by a complex, partially market-driven, "off the books" sector, the dynamics of which no one, to this day, really understands. The Gobachev reforms led to the partial collapse of the former economy and the expansion of the latter.

So much has been written about the reasons for the collapse of communism and the end of the cold war that there is us to dwell on it. Certainly, the causes of these events were, to a large extent, internal to the Soviet Union. None the less, their timing was not unrelated to the general global trends that we discussed earlier. To illustrate this point, we will quote from the same source as before.

"There are many indirect ways that overall global trends affect the Soviet Union. For example, the upheavals caused by the turbulent and uneven capitalist expansion into the Islamic world, the Islamic resurgence, the Iranian upheaval, the rise of a militarily aggressive Israeli right in response to Palestinian diplomatic successes, all of these occuring close to Russia's southern border, led, at first, to an increase in superpower tensions in the early 80's, and then put enormous pressure on both superpowers to end the cold war. It is no accident, for example, that the sudden 'arms reduction' summit in Reykjavik Iceland occurred during the same week that the Israeli Prime Ministerhip passed from Labor's Shimon Peres to the right-wing Shamir. One can be sure that the Middle East was discussed at that summit (and that both Russia and the U.S. are engaged in 'behind the scenes' coordination in the Middle East and Eastern Europe.) In addition, the rapid advances in digital technology precipitated by the industrialization and globalization of the financial and service economies and by the intense competition in global markets confronted Russia with the specter of an unwinnable arms race in the application of digital techniques to weapons, and with the specter of its industrial products falling more and more behind world standards. Also, Lenin's theory of 'imperialism', while not absolutely disproved by the post-war prosperity in West, was absolutely disproved by instances of successful capitalist development in the Third World. One can imagine that, not only the reformers, but also many of the conservatives within the nomenklatura must have taken note of the increased Western pre-occupation with the Third World as a source of new markets. They must have been thinking, 'We're white, we're European. If the West needs new areas of capitalist growth why not us? And if the Asians can do it, why can't we?'" from a 1989, Cambridge Forecast Group paper, presented at the Symposium on Global Change held by the Energy Research Institute of the Japanese Ministry of International Trade and Investment.

What about the future? From the same source as above:

"The Japanese fears of a self-sufficient, 'white' sector of the global economy, which is able to dispense with Asia and the Third World, are illusory. Obviously, the Eastern bloc, because of its proximity to the Common Market countries in the west and to Japan in the East, because of its close cultural of some of its member countries to Western Europe,...will offer a large number of opportunities for profitable joint ventures and industrial redeployment. However, the 'white centrist' image of the Eastern bloc as a long-term 'white' engine of growth for the global capitalist economy as a whole, is, in our opinion, mistaken. To exaplain briefly, the 'marketization' of the Eastern bloc (to an extent large enought to be a global engince of growth) raises an 'infinite complexity' of social, economic, institutional and legal questions, questions which, in practise can only be answered by the penetration of outside capital, i.e. by the integration of the eastern bloc into the global capitalist market. Thus, the successful 'marketization' of the eastern bloc requires its successful integration into the global market. And, the amount of outside capital and aid that would be required to bring the bulk of eastern bloc industry up to the very competitive standards of the global capitalist market, without, at the same time, precipitating an unsustainable drop in the real standard of living, would be astronomical, unless this global market is expanded. Thus, the successful integration of the eastern bloc into the global capitalist market will ultimately require the expansion of the markets in the less developed world. And the looming issues of east/west economic integration will again bring to the fore the overriding question of North/South relations." from a 1989, Cambridge Forecast Group paper, presented at the Symposium on Global Change held by the Energy Research Institute of the Japanese Ministry of International Trade and Investment.

Or to explain this in another way:

"The Soviet Union's attempts to transform itself into a market economy can be compared to an organism trying to grow a new nervous system. It's not that easy to do. The alternative is to link up with the nervous system that already exists, namely the global capitalist market. But, in order for that to happen, the global capitalist market itself has to be geographically expanded by means of successful economic expansion in Asia and other parts of the Third World. Thus, the opinion that the events in the eastern bloc will somehow render the less developed world irrelevant could not be further from the truth." from a talk given by the Cambridge Forecast Group at the Other Economic Summit at Houston, Texas, July 1990.



[1]With the exception of parts of South East Asia and the south tip of India.

[2]Quote taken from P. Anderson, 1974.

[3]Quote taken from B. Moore, 1968.

[4]Quote taken from P. Anderson, 1974.

During the 18th century, there was also a great deal of "Sinophilia" among certain European intellectuals, such as Voltaire and Leibnitz, as well as a vogue of "Chinoiserie" in art and household furnishings. (J. K. Fairbank 1983:157)

Chinese mathematics was primarily algebraic rather than geometrical. During the Song and Yuan periods, the Chinese led the world in the solution of algebraic equations. (J. Needham 1981:10)

The drought resistant rice was a fast growing breed of Vietnamese Champa rice. Aquaculture provided soil fertility and opened up large areas for agricultural cultivation by controlling malaria, although the Chinese didn't make the connection. (W. Eberhard 1985:255)

J. L. Abu-Lughod suggests that, had the Ming court supported the maritime activities of South China, Portuquese colonization of the East-West maritime trade routes could have been blocked by China. (J. L. Abu-Lughod 1989:322)

The Su Song astronomical clock was destroyed or abandoned, the use of pound locks was relinquished, (M. Elvin 1973:179) and the water-powered spinning machines were given up. (E. L. Jones et. al 1993:31) In fact, from the 15th century onwards, (M. Elvin 1988:103) most of the major technological progress in pre-modern China was due primarily to "a flow of ..improvements and importations from outside". Examples of the latter are wind-driven pumps, the flywheel cotton gin and reading glasses. One cannot conclude from this, however, that major technological and scientific advance would not have resumed in China, at some point, even in the absence of Western influence.

This was marked by an increase in regional economic specialization, and a widespread growth of "market towns" in the countryside. (M. Elvin 1973:269-284)

including the introduction of new crops such as sweet potatoes and maize from America.

One of the reasons for the enormous growth of population in the Qing dynasty was the relative absence of civil and military conflict during the Qing period.

W. McNeill (1963) maintains that the initial Arab conquests were "a reassertion of very ancient lines of cultural demarcation", that they essentially "stayed within ...territories that had once belonged to ..ancient..Persia and Carthage."

The Islamic world came close to a "scientific revolution" at the end of the last millenium, and China came very close to an "industrial revolution" at the beginning of this one. Both civilizations seemed to draw back, however, "at the last minute", as though afraid of crossing some sort of threshold. This has raised the question of "why?". Most histories of these regions take a stab at this question, usually offering an "Asiatic despotism" type of analysis.

with population and economic output "spiraling ever upward" over time.

and to concentrate on the region between the Nile and the Oxus, the so-called "Islamic heartland".

A. G. Frank and B. K. Gills 1993:158

The authors call them "world-historical" cycles.

These empires, the Roman, Parthian Persian, Central Asian Kushan and Han Chinese empires, comprising the "center" of the civilized world, formed a broad "strip" (called the oekumene) extending along the silk route from the Pacific to the Mediterranean, and from there to the Atlantic. Interestingly enough, it was the "outliers" of this strip (Europe and Japan) which first advanced to industrial capitalism.

Political structures are sometimes divided into city states, nation states and universal empires (such as China or the Ottoman, Persian or Byzantine empires). In Amin's, terminology, a tributory form would be an advanced universal empire, and the modern nation state would be characteristic of the capitalist form, the successor to the tributory form. If we were to divide the pre-modern

civilized world into three parts; (1) Asia, (2) the Indian subcontinent, and (3) the Hellenistic world (Alexander's empire) plus Europe, then (1) the primary world-view of Asia would be Confucianism, (2) the primary world view of the Indian subcontinent would be Hinduism, and (3) the primary world view of the Hellenistic world plus Europe would be the "medieval construct".

See M. Lombard, 1975.

For two contrasting views on the role of technology in the evolution of feudal society see L. White (1962, 1969) and R. H. Hilton and P. H. Sawyer (1963).

The failure of a large Eurasian empire, such as Rome, to reconstitute itself, in some form or another, after a barbarian invasion was the exception and not the norm (See C. Wickham, 1985 and E. L. Jones, 1988) and, thus, seems to require an explantion.

a system of production, moreover, which had been superimposed on a very backward geographical region.

In contrast to the eastern Roman empire which had been superimposed on a preexisting Hellenistic society.

During the 12th century, Europe experienced an "educational revolution" which saw the formation of autonomous universities modeled after the craft guilds.

Or, in other words, looked at from the point of view of a tributory society, Europe's development has yet to be completed. (P. Crone 1989:169)

As early as 1268, Roger Bacon wrote about experiments by Robert Grosseste to use lenses for magnification. He also speculated about using mirrors to "cause the sun, moon and stars, in appearance, to descend here below". (R. Bacon, The Opus Majus).

There are accounts of the 13th century German emperor, Frederick II, locking a man in a wine cask to prove the non-existence of the soul (i.e. that the cask didn't lose weight when the man died) and bringing children up in isolation to see if language ability was innate, and, if so, which language; Hebrew, Greek, Latin or German? (C. H. Haskins 1927:334)

Nor did Copernicus's theory make much sense on scriptural grounds, since, after all, Joshua had "ordered the sun, not the earth, to stand still".

This crisis was of concern mainly to scholars and theologians. Most of the people in 16th and 17th century Europe had other things to worry about.

Although Newton himself continued to believe that divine action might be necessary to correct minor perturbations in the orbits of planets. (H. Kearney 1971: 192)

Much of it influenced by the same Hermetic corpus that played so important a role in the western scientific revolution. (M. G. S. Hodgeson 1977:239)

Discrepancies and anomalies which were uncovered because the Western Christian version of the "medieval construct" had less resistance to empiricism.

In fact, Andrew Tanzer ("The Bamboo Network", Forbes, 7/18/94) does both things in one and the same article .

Some historians (P. Crone 1989:172) maintain that cultural developments, the caste system, Confucian values, Sunni orthodoxy, etc., are, to a large extent, the "solutions" to the problem of "civilization building". Because the non-Western civilizations, in contrast to the West, developed "stable solutions" to these problems, they had no incentive to undergo an industrial and scientific revolution. Other historians maintain that there are no permanent "stable solutions" to the problems of civilization building. There are always disequilibria which eventually lead to economic and scientific advance.

For example, Islamic science and Chinese technology might have come together somewhere other than in Europe, in Japan perhaps, (or in the Americas, once they were colonized by old world societies) with the same fortuitous results.

"will impact" could be changed to "is impacting".


The role of nomadic steppe society in world history is hard to evaluate because there is no modern analogue. Because of their mobility, the nomadic steppe tribes could, under the guidance of talented chieftains, form enormous tribal confederations quickly, confederations which, until the advent of modern weaponry, formed the most effective fighting forces the world had ever seen. Because of their ability to live off the land and off plunder, they could put most of the male population on horseback, could communicate rapidly across continents, and could coordinate military maneuvers across hundreds of miles. This gave them an advantage over the settled agricultural societies, which could only provision an army to the extent that they could generate an economic surplus, and usually dealt with the nomadic tribes by a combination of military suppression, tribute, diplomacy and cultural conversion. Economic weakness obviously made a society more vulnerable to nomadic invasions, but a large enough invasion, which had absorbed the latest military technology, was literally unstoppable. The Mongol invasions of the 13th century came very close to conquering the entire eastern hemisphere, against opponents that were by no means weak. The Mongols assimilated the military use of iron, and then went on to master the use of siege technology and naval technology as well. There is no intention here to suggest a "nomad theory of history". With the possible exception of Persia, the nomadic invasions were only one in a very large number of factors influencing the long term development of the different regions of the globe. Nonetheless, nomadic steppe society played a very important role in the political centralization process of most of Eurasia, either by direct conquest, or by external military pressure, or by the internal "coup d etat's" of military slave castes. Two exceptions to this pattern, interestly enough, are the West and Japan, where it was the commercial sectors (merchants, pirates, bankers) that played the critical roles in the centralization process.

To given an interesting example of the "power of history", C. Keydar (1987) outlines the economic differences between the western Roman empire and the eastern Roman empire (Byzantium), and shows how those differences are still present in contemporary Latin America and Turkey.

To give some more recent examples, P. A. David discusses the role of individual entrepreneurs in the the evolution of technology. He addresses the following question: "When do specific actions, taken purposively and implemented by identifiable agents (say entrepreneurs), have the power to significantly alter the course of technological history?" (P. A. David 1991:52)

D. H. Fischer (1970) discusses the topic of historical fallacies. Two such fallacies are the metaphysical fallacy and the Baconian fallacy. The metaphysical fallacy is asking the question "why". A "why" question is ultimately unanswerable, and it distracts a historian's attention from more managable and productive questions such as "what was the standard of living in such and such a region at such and such a time."

The Baconian fallacy consists in learning as many details as possible in an attempt to discern an overall pattern in the details. It consists of "gathering facts like nuts and berries, until (one) has enough to make a general truth".

This is a doomed effort because there are an infinite number of facts. It's impossible to learn them all. A historical scholar needs a hypothesis, a paradigm, a presumption, or a preconception that is potentially refutable by the available facts, in order to know how to go about gathering facts. (In other words, the attempt to know "everything about everything" or even "something about everything" is a doomed attempt.)

As is evidenced by out introduction to this chapter, we agree with Fischer's analysis. Thus, the reader of this book might be surprised to find that a much of our argumentation turns out to make a heavy use of both of the above two fallacies. The reason for this is that we are not interested in learning scholarly truths about the past, but in making inspired quesses about the future. There are two procedures that we have found useful in that regard. One of these procedures is to learn a mind-numbing number of facts about a mind-numbing number of subjects, to put all of these facts onto the oija board, and to stare at them, clearing from one's mind (to the greatest extent possible) all hypotheses, paradigms, prejudices, preconceptions and presumptions, in order to try to discern some sort of "macro-pattern" in the confused jumble of information. Another procedure is to ask the question "why" about the past even if the question has no objective answer.

Quote taken from P. Anderson, 1974.

K. A. Witfogel (1957) maintains that Chinese civilization arose in response to the problems of flood control, as opposed to the ancient civilizations in middle east which arose in response to the problems of irrigation in an environment which was getting dryer.

The White Lotus rebellion.

Pronounced "Soong".

W. Eberhard speculates that the far ranging Chinese naval expeditions of the early 15th century were sponsored by the Muslim eunuch Zheng He with the intention of forming an alliance between China and the Middle Eastern Muslims against the Mongol leader Timur who was planning to invade China at the time. After Timur died and his empire disintegrated, according to this theory, the Chinese naval expeditions were stopped because they were no longer needed. (W. Eberhard 1977:268) E. J. Jones says that trade by sea was banned in order to stop Japanese smuggling, piracy and bribing of Chinese officials. (E. L. Jones 1981:204) J. L. Abu-Lughod suggests that an economic slump together with widespread epidemics caused the Ming empire to turn inward. (J. L. Abu-Lughod 1989:344). It has also been suggested (A. Cotterell 1990:197) that the restoration of the Grand Canal, and the relocation of the capital from Nanjing to Beijing, reduced the need for sea transport of the grain tribute and, thus, reduced interest in naval technology.

Pronounced "Ching".

The dark ages, the agricultural revolution of 900 - 1300, the crisis of the 14th and early 15th centuries, the discoveries, the commercial revolution, the religious wars, the scientific revolution, a second agricultural revolution in the 18th century, and the industrial revolution of the 18th and 19th centuries.

An important claim to political legitimacy during the Caliphate period was a claim to genealogical descent from a relative of Muhammad.

The concept of property in the medieval Islamic world was different than the modern western concept and, thus, so was the concept of slavery. Mamluk would be better translated as "permanent military servile retainer." The Eqyptian Mamluks were a military slave caste whose members were recruited as boys outside the empire, often from the nomadic tribes of Central Asia. One of them would be chosen as Sultan and the rest would remain slaves. This institution was developed further developed under the Ottoman empire, into the devshirme or "child tax", imposed on Christian Balkan subjects of the empire. In the Ottoman empire, these slaves were called Janissaries and formed an administrative and military caste. Being a slave to the Sultan didn't necessarily imply a low social status because, theoretically, the Sultan "owned" everything.

In contrast to China, where the ancient agricultural infrastructure has been maintained over the centuries, the Middle Eastern agricultural infrastructures, in Mesopotamia and Persia, despite periods of recovery under the Arab Abbassid dynasty and Mongol Ilkhanid dynasty, were eroded through tax farming, nomadic invasions and neglect.

For a description of Eqypt's abortive early 19th century attempt to industrialize, see D. S. Landes, 1980, and P. Gran, 1979.

This survey of the theory of "Asiatic despotism" and the history of the various regions of the world essentially follows P. Anderson (1974), although it also has material and quotes from other authors. For a comparative survey of the history of the various regions of the world, (together with inspired speculation as to "underlying causes") it's hard to do better than P. Anderson (1974). The only problem with Anderson's survey is that it's very difficult reading. For a more readable survey of the same history, with conjectures as to causal explanations, see E. L. Jones (1981) and (1988). See also J. Baechler et al (1988) for an analysis of the different "trajectories" of Europe, China, the Islamic world and India. For a long term history of the world global trade routes, see J. A. Abu-Lughod (1989). And, of course the two classics in the field of comparative long term history are Arnold Toynbee's "A Study of History" (1946) and William McNeill's, "The Rise of The West" (1963).

E. I. Jones (1988) approaches this problem from a different angle. He divides the European transformation from 1600 - 1900 into its "constituent parts"; namely the scientific revolution, the industrial revolution, the development of capitalism, and initiation of intensive economic growth (growth in per capita economic output by means of technical, agricultural, organizational and commercial innovation). Jones (1988) concentrates on the latter. He postulates three (and possibly four) independently occurring instances of intensive growth; in Europe during the industrial revolution, in Song China, in Tokogawa Japan (and possibly in the Abbasid Caliphate). This yields three "data points" to study rather than one. Jones postulates that all societies have an innate potential for rapid intensive growth. This is because human beings everywhere have a natural propensity for innovation, tinkering, learning, and cooperation with others for mutual gain and a natural desire to escape from poverty. The question then becomes: if the vast majority of people everywhere, and at all times, want to escape from griding poverty, then "what's stopping them?" (See E. L. Jones, 1992.) Why hasn't this natural human desire to be rich translated intself into a rising standard of living in more places, and at more times, during the course of human history. The answer to this question is that a certain level of technical development, and a certain configuration of political, social and institutional forces, must be present in order for this innate propensity for intensive growth to manifest itself. Jones (1988) studies Europe, Song China and Tokugawa Japan in order to analyze and generalize about the political and social factors that enable and inhibit intensive growth. He speculates that in China a continuous progress in technological innvovation might have led to a "scientific revolution" based on empirical observation, and from there to an independent discovery of Western mathematics and deductive logic. The basic point that Jones makes is that there were periods of intense, "European-like" economic dynamism in both China and Japan prior to the European industrial revolution. There is a considerable degree of overlap between Jones (1988) and the S. Amin approach that we present in this chapter.

For an analysis of the impact of changing world trading patterns on Europe's rise to dominance over the rest of the world, see I. Wallerstein (1974), J. L. Abu-Lughod (1989) and A. G. Frank (1993).

Amin's approach to historical theorizing, by embracing all history, avoids the problem of an "infinite regression of prior causes". For example, in his fascinating book, The Medieval Machine, J. Gimpel (1977) attributes Europe's industrial revolution to an earlier European industrial revolution in the Middle Ages (which saw spectacular advances in the construction of clockwork mechanisms). This however immediately leads to the question of what caused the earlier industrial revolution, and so on.

It is important to stress that a modern European nation-state, even a pre-industrial nation-state, was a much stronger entity than a non-Western "tributory form" (a form of government which E. L. Jones referred to as a "lethargic state"). (E. L. Jones 1988:130-146) For example, the bureaucracies of the advanced "tributary forms" were very thin layers on the surface of peasant societies. It is wrong to think of them as analogous to modern bureaucracies. In Manchu China, for example, there were approximately 40,000 men of "geniune official status....ruling over a country of 200 million which grew to 400 million by the middle of the nineteenth century" (J. K. Fairbank 1983:115). In fact, one could say, that, as the West advanced towards the industrial revolution and world domination, non-Western society was evolving political structures, which, although geographically large, were nonetheless easily manipulable and controllable by Western colonial powers. In India, the British took over much of the revenue collection system of the defunct Mughal empire. In China, the British inserted themselves into the Chinese "imperial tribute system" that had historically been used by Chinese dynasties to deal with the "barbarians", and then, after the Opium Wars, the British expanded their priviledges into the "treaty port system", a form of "joint Sino-foreign administration" similar to that used by the previous Mongol and Manchu conquerers of China. (J. K. Fairbank, 1967:204-231). It was only after it had assimilated western technology, western weaponry and western political forms (nationalism) that the non-Western world was able to throw off its Western colonizers.

Hellenistic thought (sometimes called Neo-Platonism) is more than just Greek geometry and Aristotle's physics. It is a complete, all embracing system of thought encompassing the afterlife, the soul, the supreme being, the origin of space and time, and so on. It was systematized in the 3rd century AD by the Egyptian philosopher Plotinus. Plotinus's thought had an enormous influence on the Christian worldview, the Islamic worldview, and on the modern scientific worldview as well. S. Amin (!987:21-22) sums it up as follows:

"(Plotinus) asserted that it was possible to attain to absolute truth through exclusive reliance on deductive reason, without falling back upon particularist mythologies..Secondly he held that this absolute truth necessarily implied the recognition of the soul as an individualized, immortal entity, the subject and object of moral activism universal in its nature. Thirdly, he urged that search for truth through dialectical reasoning be supplemented with an adherence to ascetic practices. Such an appeal to intuitive feelings, an import brought from distant India by the Persians in the time of Alexander, might have cast doubt on the supposedly infinite power of human reason. Plotinus, however, merely gave it a supplementary status. He argued that the ascetic exercises would help the soul to liberate itself from corporal and mundane encumbrances thus purifying reason and rendering it more lucid....Fourthly, Plotinus bowed to the fashionable attachment to Chaldean cosmogonic systems, making do with the borrowed Chaldean cosmogony...It's hard to judge whether this grand synthesis represented an advance on the thinking of antiquity, or a backward slide therefrom.."

Whether an advance or a retrogression, Plotinus's "grand synthesis" represents the way in which a "tributory world view" tends to evolve; i.e, in the direction of completeness and universality. Plotinus's synthesis also continues to have a strong influence on contemporary Western thinking. Both contemporary, popular astrology and contemporary accounts of "near death experiences" derive from ideas presented in Plotinus's Enneads. The Neoplatonic belief that reality is describable mathematically (there has always been a very close relation between mathematics and mysticism) is one of the inspirations for modern economics, particularly the neoclassical and "new classical" varieties.

A "world view" has three aspects; (1) an explanation of "final causes" and "ultimate meanings" (i.e. "Why does anything exist?"); an explanation of nature; (3) and an explanation of social relations between people (i.e., kinship, "mandate of heaven" of imperial rule, primogeniture, etc.). In contrast to the "tributory world view", the modern world view addresses these three aspects separately. The first is dealt with by religion, the second by the scientific method, and the third by economics. If you were to ask someone in America to name the most important long-term determinants of their life in society, the answer would most likely be "supply and demand", "economics" (the job market and/or the housing market, etc.)

The Merovingian dynasty (named after a Frankish king Merovech) was started by Clovis I (465-511AD) , a Frankish king who united the Franks by force, took over the Roman tax collection system, and converted from Arianism (a Christian heresy which postulated Christ as a lesser deity than God) to Catholicism, thus getting the backing of the Catholic Church. The Carolingian dynasty (named after Charles Martel the man who supposedly "invented feudalism" ) was started by administrators (Mayors of the Palace) to the Merovingians kings. These administrators, in alliance with the landed magnates, eventually came to rule in their own name. The first such ruler was Peppin III who deposed the last Merovingian king in 751AD. His son, the emperor Charlemagne (Carolus Magnus or Charles the Elder), was coronated by Pope Leo in 800AD. Charlemagne's abortive attempt to construct a European central government, in alliance with the Papacy, devolved into the Holy Roman Empire, a line of German emperors, which was finally ended by Napoleon in 1806.

Thus, the development of feudalism was also influenced by two technological factors, the stirrup and a larger, more powerful, breed of horse, both of which made mounted armor possible.

See above.

For a compendium of the meager source material on Mediterranean trade in early medieval times see Medieval Trade in the Mediterranean World, 1970, W. T. H. Jackson editor. The Jews were an extremely important factor in early medieval European trade, having almost a trade monopoly in the interior provinces of France and Germany. A. Leon (1970) uses this fact to extend the Pirenne thesis into a theory of European anti-Semitism. According to Leon, the indispensable commercial role of European Jewry offered them some degree of protection against the exterminist attitude, adopted, after the Crusades, by Christian Europe towards non-Christians (Pagans) and Christian heretics (Albigensians). When the European commercial revolution rendered their commercial role redundant, the European Jews were swept successively from one western European country after another into Turkey, Eastern Europe and Russia.

M. Cipolla dates the diffusion of the water mill from the 6th century, the heavy plough from the 7th century, the three field system from the 8th century, and the horseshoe and the tandem harness from the 9th century. (C. M. Cipolla 1976:168) By the 13th century, at the latest, these innovations were having a decisive impact on European agricultural productivity, although what happened in the interim is not clear. (G. Duby 1976:103) For an analysis of the chronological and geographic distribution of source material about feudal European agriculture (estate records, farming leases, farming manuals, written settlements of land disputes, land contour patterns) see G. Duby 1976. In any case, most scholars agree that the period from 900 - 1300 constitutes a genuine "agricultural revolution" the surplus of which made the rapid growth of commerce and manufacturing possible. Gimpel (1976) maintains that feudal Europe underwent a sort of "industrial revolution" as well. "The Middle Ages introduced machinery into Europe on scale no civilization had previously known. This was to be one of the main factors that led to the dominance of the Western hemisphere over the rest of the world. Machines were known in the classical world, of course, but their use in industry was limited. Cogs and gears were employed only for creating toys or automata. In medieval society, however, machinery was made to do what previously had been done only by manual, and often, hard labor." The motives behind feudal European agricultural innovation are unclear. P. Anderson (1979) following K. Marx (Capital, Volume I) maintains that the long term stability of feudal rents gave the peasants an incentive to maximize output on their plots. A great deal of land reclamation was done by the Cistercian monks who had a longer "time horizon" than estate owners. These monks also advocated the application of scholarly learning to agricultural improvements. Of course, ecclesiastical institutions were far more likely than other land owners to keep records of their activities, so it's impossible to identify them as the main driving force behind agricultural innovation and extension. Some historians (See R. S. Lopez, 1976) identify the underpopulation of early feudal Europe as a spur to the utilization of labor saving technologies, such as wind mills, water mills, the tandem harness, and so on.

In non-European "tributory forms", political power could be fragmented and decentralized for long periods of time. Nonetheless there was always a sort of economic, political, institutional or cultural "template", so to speak, on which centralized power could be reconstituted, or on which competition between centralized and regionalized power structures could take place. To take a very extreme example, pre-colonial India was a country of enormous geographical, linguistic and ethnic diversity. For much of its history, it was very politically fragmented; an enormous array of rapidly shifting "states" and "micro-states". India's diverse geography made centralized empire building very difficult. To some extent, the caste system and local village organization substituted for centralized power (R. Thapar 1968:91). Despite India's geographical diversity, it did not develop a system of stable regional states along European lines (E. L. Jones 1981:194). Instead it tended to oscillate between periods of centralization and longer periods of extreme fagmentation. Three times the tendency towards a centralized tributory form asserted itself over India's geographical diversity; the Maurya dynasty, 321BC - 185BC, (a period in which the principles of Indian government were codified), the Gupta dynasty, 340AD - 520AD (a period of cultural and intellectual development, which included the crystallization of Hindu metaphysics, advances in astronomy, and the invention of decimal arithmetic), and the Mughal dynasty, 1526AD - 1707AD.

To take an another example, closer to the West, let's compare the feudal European fief with the Arab Abbasid military land grant known as the Iqta (which was to evolve into the Timar in the Ottoman empire and the Jagir in the Mughal empire). Iqta's were not automatically inheritable. They could be revoked or altered by the ruler at will. Peasants were not subjects of the iqta-holder, but of the state. Political decentralization in the Middle East "entailed no fundamental institutional changes and could, in changed circumstances, be reversed." (I. M. Lapidus 1988:151)

In the collapsed Western Roman empire, on the other hand, there was no "template" on which centralized power could quickly reconstitute itself. The Western Roman slave system was superimposed on, what from a social point of view, was "virgin territory". There was no pre-existing social system and no pre-existing economy to undergird it. The collapse of the western Roman empire was more than a dynastic collapse, it was the collapse of an entire "system of economic production". There was no way to reconstitute it, because, without the Roman empire, the slave economy was not viable. A new economic and political system had to be built "ex nihilo". When political centralization took place, it was forced to take place "from the ground up" so to speak, and it led to a totally new "organism", the western nation-state.

It has been said that, in Germany, all the constituent parts of the European nation-state came into being, but in the wrong way, at the wrong times, and in the wrong sequence, with results that were disappointing in some cases, such as German unification, and catastrophic in others, such as the investiture wars, the 30 years war, and the world wars. This is probably a better explanation than Rosa Luxemburg's for the catastrophies of the 20th century. Tribal elements were very strong in early Germany, together with the overlay of the abortive Carolingian empire. German feudalism developed belatedly under the impact of the investiture wars between the empire and the Papacy. Unlike France, where feudalism developed first, and was then gradually brought under the control of a centralizing monarchy, or England, where a monarchy and a feudal system were installed "whole cloth" by the Norman conquerers, German feudalism developed in opposition to the German monarchs. The advent of firearms accelerated the centralization process in Europe in the 17th century, but, at this point, Germany was rent by the 30 years war. In Italy, the vestiges of urban Roman society were strong, and the emergence of strong city-states suppressed the centralization process (even though the Italian city-states developed many of the techniques of European statecraft). Nation-building required the right balance between urban dynamism and (in an era when most wealth was still agricultural) feudal, rural power.

This crisis began with population pressure on the land, then there was exploitation of marginal lands, soil exhaustion, soil erosion and flooding, famines, the bubonic plague, depopulation, the hundred years war, civil wars, labor shortages, seignoral brigandage, plunder and greater pressure on peasants to make up for these shortages, the flight of peasants to the towns, violent peasant upheavals such as the Jaquerie, the decline in the terms of trade against agriculture (the "so-called agricultural depression"), and, in general, the weakening of the "manorial system" and the increased dependence of the landed nobility on the monarchies. See B.H.S. Van Bath, (1963), P. Anderson (1971).

J. L. Abu-Lughod (1989) describes the European crisis of the 14th century as part of a "world crisis". This "world crisis" involved the spread of the plague to China, the Islamic world and Europe, the collapse of the overland Mongol trading routes, and an economic contraction in all three areas. In later centuries, the world "recovered" from the crisis. The Middle East and China saw the growth of militarily stronger, more extensive, more stable, more effectively administered (and more ossified) "tributory forms", namely the Ottoman empire, the Mughal empire and the Qing dynasty. The Ottoman Turks and the Tungusic Manchu's promoted a return to orthodox Islamic and Confucian belief systems and embarked on a program of geographical expansion, colliding at certain points with an expanding Russia. For its part, Europe also recovered from the crisis of the 14th century. However, Europe's recovery gave rise to capitalism, the nation-state system, the industrial and scientific revolutions and, ultimately, the "Europeanization" of the rest of the world. The 15th century is identified as the period in which Europe decisively overtook the rest of the world, if not in standard of living, or military stength, then at least in dynamism and expansiveness.

For a comparison with China's transition from feudalism to "absolutism", see W. Eberhard (1987:47-59). As in Europe, competition between the Chinese "warring states" (500-250BC) led to rapid technological and economic advance, and also led to geographical expansion via colonization (because of an outflow of refugees from the wars). The critical difference between Europe and China was this: Europe's period of centralization, occurred 2000 years later than China's. Europe was heir to an additional 2000 years of global technological and social advance. Thus, whereas China's "late start" (its iron age began in 500BC) enabled it to develop a particularly successful and durable form of the "tributory mode", Europe's "late start", 2000 years later, enabled it to transcend the "tributory mode" altogether.

The way in which this happened is, of course, the history of Western society. It was a bewilderingly complex process, different in every part of Europe. In many cases, the drop in the terms of trade against agriculture induced landed nobles to turn serfs into rent paying tenants, or to convert to cash crops, such as wool or industrial crops. Thus, agriculture was significantly monetized. The monarchs broke the power of the guilds, restricted the activity of highwaymen and robber barons, and instituted the right of inalienable private property, thus strengthening the bourgeosie. This is because, promotion of trade and commerce and the strengthening of the bourgeosie, allowed monarchs to maintain armies not dependent on the loyalties of the nobility or the peasantry. The reappropriation of Greek and Roman knowledge, idea systems, and institutions during the renaissance also played an important role in the commercial, industrial and scientific revolutions which followed. In the Italy and some parts of Germany the strength of the urban sectors, blocked the centralization process entirely, while in Russia the weakness of the urban sectors led to Europe's most rigid autocracy, one which had many features in comman with a classical "tributory form". (See P. Anderson, 1978, 1979, R. Bendix, 1980, E. I. Jones, 1981, 1988). It has been suggested (E. L. Jones 1981:105) that the decentralized geographical distribution within Europe of regions of "high arable potential under plough agriculture" played a role in the subsequent evolution of the decentralized European "states system". It has also been suggested that the location of Europe (and Japan) on the "periphery" of Eurasia allowed these societies to remain decentralized while an autonomous commercial and artisanal sector evolved. In the Eurasian heartland, in contrast, the enormous and continual warfare between the nomadic societies of the north and the settled agricultural societies of the south led to the centralization, rigidification and ossification of the latter, so that the emergence of an autonomous commercial sector was suppressed. (E. L. Jones 1988:110-115; P. Anderson 1978:214-216) In fact, one could say that the "nomadic element" played as important a role - either as direct conquerers, sources of external pressure or as military slaves (Mamluks, Janisseries) - in the centralization process of China, India and the Islamic world, as did the "commercial element" - merchants, artisans, bankers, pirates - in the centralization process of Western Europe and Japan.

In assessing the impact of nomadic invasions on China, M. Elvin (1973:91-110) discusses the military incentives and disincentives for technical innovation in late medieval Europe and post-Mongol China. The Song period in China was a period of rapid techological and industrial advance. However, this era of "industrial revolution" was followed by nomadic invasions which mobilized China's spectacular technological advances against it. The Jurchen conquerers of the Northern Song mastered the use of mounted armor and siege warfare, and the Mongol conquerers of the Southern Song mastered the use of gunpowder and naval warfare. One

suspects that the attitude of the succeeding Ming-Qing dynasties towards technological innovation must have been affected by this trauma. According to M. Elvin (1973:91-110), the Ming dynasty preferred to rely on logistical superiority in its military confrontations, rather than on technical superiority, which could always be appropriated by the enemy (invading nomads (barbarians) or internal insurrectionists (bandits)). Medieval China, like contemporary America, was faced, not with the threat of technological competition, but with the threat of technological proliferation. Nobody in Ming China, or anywhere else in the world, for that matter, could possibly have foreseen Europe's industrial revolution and its subsequent colonization of the world. The main danger of European technology had to be seen, therefore, as its destabilizing effects within China, which could be warded off by keeping European influence at arms length. As late as the 19th century a Qing official expressed these fears about European technology to an English diplomat.

"I asked him what we ought to do if bandits use the trains to invade us. (He) answered that....while the bandits can take the trains, they cannot occupy the whole railway. If the railway is cut, the train cannot run. I said that ..(barring the total destruction of the railway).... the bandits could easily fix things up to transport their own soldiers." (R. W. Huenemann 1984:40)

Post-feudal Europe, on the other hand, was faced with an entirely different configuration of military pressures. The chances of a European peasant somewhere declaring himself head of the Holy Roman Empire and taking over Europe (ala Zhu Yuanzhang's rebellion against the Yuan dynasty) were remote to say the least. Equally remote was the conquest of Europe by Mongol horsemen. European governments faced the pressures of competitive military innovation from adjacent states more or less equally able to innovate. Suppression or neglect of technological advance was obviously not an appropriate response to this situation.

This is not to say that inter-state military rivalry was the demiurge of Western technological progress. Nor is it to say that post-Mongol China had settled into a pattern of permanent technological stagnation that could only have been ended by Europe's influence. It is to say that the reason why feudal Europe's technological advances perpetuated themselves, while Song China's petered out, was that Europe's technological advances occurred during Europe's period of formation, before European society had "crystallized" into a "tributory form". Therefore, the logic of technical advance became "embedded" in Europe's development process, and interacted with it in a way that fostered technological innovation and ultimately debouched into capitalism.

The Hermetica was wrongly believed to be very ancient. It was attributed to a mysterious Eqyptian writer, Hermes Trismegistus, who was alledged to have been the recipient of a divine revelation about the physical world, in the same way that Moses was the recipient of a divine revelation of about the moral world. The Hermetica became available to the West after the fall of Constantinople in 1453. Later on, the classic scholar Isaac Casaubon (1559-1614) proved that the Hermetica was Neo-Platonist in origin. Another mystical text, with Neo-Platonic influences, which influenced Renaissance thinking was the Jewish Cabbala. (H. Kearney 1971:37)

In formulating his program of discovering a larger and larger body of partial truths about nature through scientific experimentation, Francis Bacon made two mistakes. First of all, he drastically underestimated the amount of time it would take to do this. Secondly, he discouraged purely mental speculation as the kind of mental wool gathering that led nowhere and that modern researchers should avoid. In this, he underestimated the role of purely mental constructs in the formation of the hypotheses needed to design experiments in the first place. One of the most important of these purely mental constructs was the concept of "rectilinear motion in a vacuum", a construct which played a critical role in the development of Newtonian-Galilean mechanics, and a concept which, to some extent, was a Western Christian addition to Aristotelian cosmology, though it also had some Stoic origins. (D. C. Lindberg 1992:248). The notion of rectilinear motion in a vacuum was necessary in order to allow God to take a planet and move it beyond the periphery of the spherical Aristotelian universe, should he choose to do so. Aristotle himself assumed that there was nothing, not even empty space, outside the universe, an assumption which limited God's ability to push heavenly bodies out of the universe. Many of the theories and hypotheses which led to the scientific revolution had their origin in Hellenistic thought. H. Kearny divides these notions into three "traditions"; the organic, mechanistic and magical traditions. (H. Kearney 1971:22) In the organic tradition, nature was explained by analogy to a living organism. The chief inspiration behind this tradition was Aristotle. According to Aristotle, for example, a falling stone moved towards the earth, because this was the "natural" thing for it to do; it had an "affinity" for the earth because it had a lot of "earth" in its makeup. In the mechanistic tradition, the natural world was compared to an elaborate machine. This tradition had its origin in the speculations of Hellenistic philosophers known as "atomists" and in the work of Archimedes. A scientist in the mechanist tradition was Descartes, who, believed, for example, that animals were machines and that the universe was filled with a swirling substance whose motions drove the movable heavenly bodies. Another scientist in the mechanistic tradition was Galileo. The magical tradition was essentially Neo-Platonism. The key feature of this tradition (leaving aside the mystical elements) was the belief that God had given the natural world a mathematical structure. Examples of scientists in the magical tradition are Copernicus, Kepler and Newton. (Gravity or "action at a distance" was regarded by many contemporary scholars as an "occult force".) The important point is that the conflicts between these traditions were decided not simply by decree or by argumentation but, ultimately, by controlled, reproducible experiments. For example, the significance of Galileo's experiment of dropping two unequal weights and timing their descent was not that he was the first scholar to do this. In fact, it had been done a thousand years before by a Byzantine scholar, John Philoponus, who came to much the same conclusions. The significance of Galileo's experiment was that it was performed over and over by different researchers "in a battle between two

paradigms, the organic (which held that the heavier weight should fall faster) and the mechanistic". (H. Kearney 1971:69)

Quote taken from D. C. Lindberg (1992)

Both Islamic and Western Christian thought eventually encountered "the limits of rational metaphysics". At this point they diverged. Western Christian thought evolved into modern science. Modern science is the discovery that natural phenomena can be "taken out of context" and forced to behave in the same way over and over again in response to the same initial conditions (experiments), and that this can be done in order to prove or disprove purely mental speculations about nature (theories). This makes it possible to design a scientific experiment in such a way that everything -- everything either known or unknown, everything in this world or in some other, entirely supernatural, totally unimaginable world -- everything, in short, external to the experiment can be "left to one side". It is not necessary, for example, to worry that the experiment is being affected by the improper performance of some religious rite somewhere, or by some totally unknown phenomenon in some totally unknown realm. In the natural sciences, at least, it is not necessary (as it sometimes seems to be in the social sciences) to know everything about everything in order to know something about something. It is not necessary to have the final, ultimate truth about everything, nor is it necessary to apprehend everything "at one fell swoop", as in some mystical vision. A larger and larger body of partial truths can be built up, partial truths which will be universally acccepted, because they are demonstrable and useful. This, essentially, is the key addition of Western thought to Hellenistic thought. It's important to stress that this insight was not logically self-evident, given the evidence at the time, and was essentially a "discovery". It was this "discovery" that formed the basis for the "modern world view".

Thus, there are essentially two outgrowths from Hellenistic rational metaphysics. They are (1) modern science, and (2) theosophy. In modern science, a (sometimes private) mental construct (a theory) is tested by publicly observable, controlled, reproducible experiments. In theosophy, "ultimate reality" is apprehended directly and personally (dhawq) by meditation, but this meditation has to be controlled and disciplined by a public metaphysics (faylsafah). (M. G. S. Hodgeson 1977:237) One notion, of Neo-Platonic origin, that occurs again and again in medieval thought, is the notion that the basis of everything is light. The 11th century Sufi philosopher, Yahya Sukrawardi, developed this notion into an elaborate "theory of everything" called illuminationism (Ishraqi). Suhrawardi's treatise, Hikmat Al-Ishraqi (The Wisdom of Illumination) covers such diverse topics as natural science, physics, optics, deductive logic, space, time, consciousness, and eternity. According to Suhrawardi, "the divine essence was pure light, and the reality of all other things was derived from the supreme light. Degrees of light were associated with degrees of knowledge and self-awareness.....the emanation of light from the primary being established a hierarchy of angelic substances standing between God and the world. ..the vertical order of angels gave rise to the celestial spheres; the horizontal order

of angels constituted the world of Platonic forms and archtypes, and gave rise to the angels that governed human souls.. The hierarchy of being was a ladder of illumination along which the purified soul could return from the material world to the world of archtypes." (I. M. Lapidus 1988:213) Both Suhrawardi and later Sufi philosophers, such as Ibn Al-Arabi, designed extremely sophisticated mental constructs somewhat reminiscent of modern set theory. The 13th century English theologian, Robert Grosseteste, also accepted the notion that light was the basis of everything. He developed a metaphysics which was, in some respects, a more primitive version of illuminationism, and had the same Neo-Platonic inspirations. According to Grosseteste, in the beginning, God created a single, dimensionless point of matter, and a single dimensionless point of light. The light expanded outward into a large sphere drawing the matter with it. Matter provided the "substance" of the universe. Light provided the "dimensions" and "corporeal forms". Grosseteste accepted the idea of a "world soul", but then retreated from it. He believed that the study of optics was the key to understanding the world. He suggested the use of a magnifying lens to aid in the observation of objects that were far away or very small. (J. Gimpel 1976:185)

"For (the study of optics) shows us how to make things very far off seem very close at make distant objects appear as large as we choose..or to count sand, or grain, or grass, or any other minute object."

J. Gimpel (1976) speculates that the invention of eyeglasses in Italy in 1280 may have been stimulated by Grosseteste's writings. In any case, it is easy to see how his writings presage the invention of the telescope and microscope. Thus, it was the "underdeveloped nature" of Western scholasticism which permitted it to develop in the direction of empiricism and, ultimately, in the direction of modern, reductivist science.

Much of pre-modern Western cosmology derives, in essence, from Babylonian (Chaldean) astrology. This astrology held that "predictable celestial events foreshadowed terrestrial occurrences". (W. McNeill 1963:292). In particular, it held that the exact position of the movable heavenly bodies at the moment of a person's birth determined the course of the person's life. This made it tremendously important to be able to calculate and forecast the exact movements of the heavenly bodies. Even minor anomalies became very significant. For example, the astronomical observations of Tycho Brahe (which led to Kepler's discoveries) were motivated by precisely this type of astrology. (H. Kearney 1971:133) Kepler, in turn, persisted in spite of repeated failures, in his attempt to discover the mathematical rules of planetary motion, because of his intense faith (derived ultimately from Chaldean cosmogony) that such rules existed. (Ibid) Chinese cosmology, on the other hand, held that the "driving force" of all phenomena, whether terrestrial or celestial, was, not celestial mechanics, but human social activity. (J. K. Fairbank 1967:39) Natural anomalies, including celestial anomalies, could be symptoms of maladministration by the state. ("Our experience in governing has been (brief), so that we (have made mistakes), hence on January 5,..there was an eclipse of the sun...We are dismayed." Han Shu.) (S. Nakayama 69:45) In other words, "the Mandate of Heaven" did not depend on mathematical rules, but on the behavior of the dynasty. This necessarily implied a certain amount of indeterminacy in the mechanics of celestial motion. This, in turn, tended to make less likely the linking of mathematical model building with empirical observation, and thus to disccourage a "scientific revolution" of the Newtonian-Galilean type. Neo-Confucian cosmology attempted at one point to construct a crude theory of three dimensional planetary motion. However, "the most striking characteristic (of Chinese astronomy) is the lack of conceptual schemes" (S. Nakayama 1969:151). As Nakayama points out, the advantage of a conceptual scheme is "that discrepancies between it and actual observations can be clearly recognized. Such recognition isolates variations of a smaller magnitude, which call for a more complex scheme based on more accurate observations." Thus, the importance of astronomical conceptual schemes to the Western world view tended to promote astronomical advances, and the lack of Chinese "scheme consciousness" tended to retard them. A description of the ways in which the pre-modern Chinese world view influenced the development of Chinese science and mathematics is way beyond the scope of this book. For those who are interested, Mark Elvin's book The Pattern of the Chinese Past (1973) and Joseph Needham's book Science in Traditional China (1981), both give a readable introduction to this question. We'll give a very brief synopsis of this topic here. The Chinese Daoists had a "theory of nature", albeit a mystical one, and J. Needham suggests that Daoist cosmology played an important role in the development of Chinese chemistry, including the development of gunpowder. (J. Needham 1981:54) In northern Chinea, during the Yuan (Mongol) dynasty and the preceding Jin (Jurchen) dynasty, the Chinese made impressive advances in univariate and multivariate polynomial algrebra, and

the driving force behind these advances was likewise Daoist mysticism. Polynomials were represented by a positional array. Powers of x were represented by position in the array and coefficients were represented by the number of counting rods placed at each position. Up to four unknowns, designated "heaven", "earth", "man" and "things" were handled. However these mathematical advances did not penetrate into the mainstream Chinese world view, and, by Ming times "there was no one left who could understand the more advanced positional algebra". (M. Elvin 1973:193) The 17th century Chinese scientist Fang I-Zhi (1611-1671) developed a scientific research methodology somewhat similar to the process of learning a motor skill until it becomes "second nature". The point, according to Fang I-Zhi, was to investigate all "the objects of existence" in the natural world, whatever they might be, and to build up an "intuitive feel " for how nature, as a whole, works. The human mind and senses are structured to perceive things in a certain way, so that there's no point in asking what's "really" out there. One can, at most, perceive only "shadows and echoes". In effect, the "laws of nature are simply another way of referring to the laws of the mind", knowable by introspection. There is no question here of combining rigorous conceptual schema with empirical observations, but rather of combining empirical observations with a form of "holistic awareness" of the patterns of natural phenomena. (M. Elvin 1973:230) During Song times, Chinese Confucian scholars did attempt to construct a cosmological scheme which stressed the reality and knowability of the external, natural world. They attempted to look at society as part of a larger natural cosmos, and to locate, within this cosmos, the source of human "social morality" (finally the most important issue in the Chinese world view). The cosmos was divided into li ("principle" which included -among other things - those qualities, such as benevolence, sacrificial spirit, righteousness, and so on, which make for social cohesion), material force (qi) and raw matter (zhi). Inanimate objects admitted no principle. Lower life forms, such as animals, "are born with material force containing an extremely dense level of blockage and there are places where no principle can penetrate it. Even the cases of the benevolence of the tiger and wolf, the sacrificial spirit of the wild dog, and the righteousness of the bee and ant are ones in which there has been only a small amount of penetration, comparable to ..a single shaft of light entering a crack." Virtuous individuals were very "clear" and admitted a great deal of "light". (D. J. Wyatt 1990:53). In the Ming period, however, philosophers sought morality solely within human thought, a point of view known as "moral intuitionism". (M. Elvin 1973:226) To be sure, a great deal of Chinese metaphysics (perhaps all of it) is lost in translation (A. C. Graham 1964:55), but our brief description of it should demonstrate the profound differences between the Chinese world view, on the one hand, and the Western/Byzantine/Islamic world view on the other. All of which is not to imply that industrial progress in pre-modern China was blocked by deficiencies in scientific theory. By Song times, Chinese industry had all the science it needed to advance much

further than it actually did. (M. Elvin 1973:298).

This is the standard Confucian four class structure, scholars, farmers, artisans and merchants.

C. Totman (1981) maintains that late Tokugawa Japan was approaching Malthusian limits because of population growth and the prohibition of foreign trade. S. Hanley (1983) maintains that the economy of late Tokugawa Japan had a high standard of living by pre-modern standards. Susan B. Hanley (1983).

Obviously, these quotes from ourselves represent our own opinion, and are not necessarily the viewpoint of any of the other authors quoted in this book.

This does not necessarily imply a stable functional relationship between exchange rates and foreign investment. (See V. G. Stevens 1993.)

By which we mean the former Russian empire.

Two years later, President Bush was to say that all the money in the world couldn't solve the problems of Russia.

"Literally, since the imposition of the 'Tartar Yoke', the political economy of the CIS has been a centralized one, a feature which of course was vastly intensified by the 70 years of communist rule. For a region as centralized as the CIS to develop an internal private sector market is like an organism trying to grow a new nervous system. It's not that easy to do. The alternative is to link up with the nervous system that already exists, namely the global market, i.e. integration with the global market. But the global market which now exists is simply too tight and competitive to accommodate the CIS. This market has to be expanded It has to be expanded by addressing the problems of Third World development. To elaborate, take the problem of bringing the CIS into the world monetary and financial system. One way to do this is to expand the world financial system to accommodate the CIS, the 'Marshall Plan' or 'grand bargain' approach of massive Western financial and monetary aid. But the CIS is simply too big for this, the world financial system would be strained to the breaking point (the so-called 'global capital shortage'.) Another approach would be to shrink the economy of the CIS to accommodate a 'hard ruble'. But this would involve shutting down much of the CIS.

One way to get around this dilemma would be aid in the form of facilitating computerized barter and countertrade among the republics of the CIS and between the republics of the CIS and the debt-burdened NIC's (newly industrializing countries). The usual objections to barter are (1) it is oligopolistic, and (2) that the transaction costs are high. However, barter on a global scale need not be that oligopolistic and the new techniques of communication and information storage and processing would certainly lower the transaction costs. Furthermore, aid in this form would not send shock waves through the financial systems of the G7 countries as would a 'Marshall Plan' or 'grand bargain'."

from Cambridge Forecast Report, February, 1992.