3.7. about the center of gravity of the economy-world
The last post in this series was What’s going on here ? (6) and it addressed the following:
3. determinant factors driving the ‘governance-world’
3.1. Societal atomization
3.2. Creeping totalitarianism
3.3. Western illusions
3.4. The West has no clue about China's strategy
3.5. The West is setting itself up for a rude awakening
3.6. The empire loses its clients
The present post is a continuation and addresses the following 2 realities:
- how the center of gravity of the economy-world shifted multiple times along its history,
- how it is presently shifting from the West (Washington) to East Asia (Beijing).
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The preceding posts in this series showed how a bunch of determinant factors, that are active within the borders of nations, are weakening Western countries while strengthening China and East-Asia. This internal reset within nations is directly impacting what happens between nations like in - trade - economic might - Geo-political power. This will force the nations of the world, through bargaining and conflict, to negotiate a new global balance of the governance-world that will recognize the shift of the center of gravity of the economy-world from the West (Washington) to East Asia (Beijing).
Such a shift of the center of gravity of the economy-world is nothing exceptional in itself. It happened 6 times already during the past development of Modernity. Here is a summary sketch of how the center of gravity in the modern capitalist economy-world has shifted to this day :
1. the long distance trade, that emerged out of the contact between Western Europe and the Middle-East during the crusades, saw Northern Italy city states assume the central role in the new exchanges (Venice, Florence, Genoa, Pisa, … ).
In a first step they acted as an obliged transit area for Middle-Eastern goods on their way to Western Europe and so they became international trading hubs that started to attract not only merchants but also intellectuals and artists.
In a second stage these city-states copied these middle-Eastern goods and produced them locally for export to France. This added banking and manufacturing to their activities and their populations grew rapidly. Their geographic location between the Middle-East and Western Europe gained Northern Italy’s city-states enormous economic and financial advantages which positioned them as the center of gravity of the newly emerging capitalist economy-world system and its new worldview Modernity.
2. by the 15th century exchanges between - Britain (export of raw wool to Flanders, import of wine from Bordeaux), - Flanders (manufacturing of wool textiles for sale in all Europe) and - France (exports of wine from Bordeaux and of luxury goods) established a core trade triangle with Flanders at the core as an industrial and financial hub that displaced the center of gravity of the young capitalist economy-world from the Northern Italian city states to Bruges and later to Antwerp (1). Artists followed the money and, because Flanders was growing flax for weaving linen textile, they soon started to use Flax-seed oil as the binding element of their pigments :
“Before the 15th century CE, fresco, mosaic and tempera were the three media that dominated art making. All three media make matte, flat opaque surfaces. A new knowledge emerged about how single point perspective can be used to create a sense of depth on a 2D surface. By using a transparent binder to slow down the trajectory of light waves as they penetrate through the layers, painters can make paintings glow. As light waves struggles out of the painting, they leave behind enough energy to make layers alight. Layer upon light filled layer makes deep, luminous surfaces.“(2)
3. In the first part of the 16th century Portuguese and Spanish voyages of discovery started to return cargoes of gold, silver and precious stones from South America. Portugal furthermore specialized in importing spices from South-East Asia for distribution in all of Europe. All this exploded the mass of money in circulation in these countries.
But this money was not converted into productive capital. It was used partly to pay for the extravagant consumption of the aristocracy and partly to resist the growing wave of Protestantism in the beating heart of the center of gravity of the economy-world in Flanders. As a consequence the gold, silver, and precious stones accumulated by Portugal and Spain slipped out their borders and these countries rapidly fell at the margins of the newly developing capitalist economy.
4. By 1556 Flanders was removed from the territory of the Kingdom of France and came under the rule of the Habsburg kings of Spain. With the consecutive waves of the Christian reformation many wealthy industrialists, traders and bankers, artists and intellectuals converted to Calvinism.
Spanish troops were sent to fight the protestants and conquered the cities of Bruges, Ghent, and Antwerp which was the most important port at the time.
The fall of Antwerp to the Spanish and the burning of the city caused a considerable emigration of people to Amsterdam which at the time was a small port.
This wave of emigration from Flanders transformed Amsterdam into “a new Antwerp" and the city rapidly transformed into the 4th center of gravity of the capitalist economy-world. The city took over, the spices business, from the Portuguese ( import from South-East Asia and distribution to all of Europe). The Netherlands dominated the economy-world until sometime around 1700.
5. the triangular trade between Flanders, Bordeaux, and England transformed the North Sea into the leading economic center of Europe. This helped the maritime development of England which the country sized as an opportunity to loot Spanish and Portuguese ships that transported large quantities of silver and gold from their South American colonies back home.
That looting boosted England’s money supply and helped to pay for its first phase of economic expansion through colonial conquest. In the process England transformed into the British empire.
Its second phase of economic expansion was financed by looting of its newly acquired colonies. With the revolution of 1688 the Dutch William of Orange became king of Britain and the two nations agreed that the spice trade would be the exclusivity of the Netherlands while the textile trade with India would be the exclusivity of England. By 1720 the financial volumes of trade in textiles was larger than the volume of trade in spices by the Dutch.
Protectionist policies against the imports of textiles soon incentivized capital holders and early scientists to spin and weave textiles in Britain as import substitutes. The India textile industry was outlawed and the country was forced to export its raw cotton to Britain… while the cotton grown by US Southern colonists was purchased at a forced low price. For a few decades Britain became the factory of the world.
6. the low prices paid for the cotton of US Southern colonists and the high prices the US had to pay for British finished textiles became a strong incentive to produce import substitutes locally. To make this possible the US simply stole British technologies. Yes the US knows everything about stealing and now that it is being overtaken by China it simply accuses that country of doing what itself practiced on a grand scale along the whole 19th century and further into the 20th century …
The competition between the US and Britain and later with the other European countries was largely driven by one dominant factor. I mean the size of their population. See for yourself (3)
US Britain
1700 250,888 5,200,000
1800 5,308,483 7,754,875
1850 23,191,876 15,288,885
1900 76,212,168 30,072,180
2020 332,639,000 55,977,000
But when did the US GDP overtake the GDP of the British empire ?
“According to Angus Maddison’s database, it was in 1916, during the First World War. The US GDP pulled a little ahead of the British Empire in subsequent years, but the gap didn’t widen significantly until the late 1930s. Then during the Second World War US GDP doubled and Britain’s didn’t.
1900 : Britain : $395 billion, US: $312 billion
1916 : Britain : $554 billion, US: $559 billion
1938 : Britain : $678 billion, US: $799 billion
1944 : Britain : $804 billion, US: $1714 billion
All values in 1990 US$. “ (4)
7. Following what I just said, about population numbers, the country with the largest population automatically becomes the largest economy if that country’s economic policies are conducive to economic development, comparatively to the other, … Now check the relative economic size of the 5 largest economies on earth along the last 2 centuries (5).
These graphs confirm that, when different countries’ economic policies are equally conducive to economic development, their population size is determinant. And following this metric it is logical that China would be number one at 1400 million heads versus the US at 332 million heads.
Having said that I think that the future, comparatively speaking, will demonstrate that the Chinese governance system has no equivalent. And if my analysis is correct China’s GDP will then dwarf the GDP of all other countries … But this observation has to be tempered by the fact that the side-effects of Modernity will indeed bring havoc in human affairs (Chapter 4).
The present 7th shift of the center of gravity of the economy-world is very special. The last 6 shifts were internal to the Western world. This last one drives the center of gravity of the economy world outside of the Western world.
Let’s now visualize how this 7th shift transforms the Geo-economic picture of the world. The following graph comes from “How Much’s” “Visualizing The World Economy When Purchasing Power is Taken into Account” and here is what the team says about its visualization :
“ Measuring GDP by PPP takes into account the cost of living around the world, rather than relying on market exchange rates to compare the economies of different countries.
• In 2018, the world economy by PPP was $136.48 trillion.
• Asian countries represent more than 40% of the world’s GDP by PPP.
• The U.S. and China represent a third of the world’s GDP by PPP. The information from this visualization comes from World Bank, and the most recent numbers are from 2018. “
Let’s now visualize what is projected to be the reality in 2030. This graph is a still from a video visualization by Visual Capitalist based on the data from "a recent forecast from Standard Chartered".
The graph by “How Much” here above, about the world’s 2018 GDP, clearly visualizes that Asia has already overtaken the West (US + Europe). It also shows that China is at the forefront of Asia’s development. The last graph by Visual Capitalist furthermore visualizes a world that radically changes with China as the front runner …
President Macron of France recently indicated as much to his diplomatic staff : “we are living the end of Western hegemony in the world, in part as a result of Western 'errors' over past centuries. He named the rise of Beijing and Moscow as signs of a shift on the world scene. It’s being shaken because of errors made by the West in certain crises, but also by the choices made by the United States in the past few years – and not just by the current administration." (6)
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In light of my analysis of “culture in the large sense”(7) I think that the Western world is going to resist this 7th shift. As I wrote here above “this last shift drives the center of gravity of the economy world outside of the Western world”. The US under Trump started precisely such a move of resistance threatening to break up the present globalized world into a 2 poles world :
- the West + its clients on one side
- China and its clients on the other side.
Inertia being what it is we should not expect that such a re-alignment of Europe will be completed tomorrow morning. This is a process that will take years but its direction is unmistakable. And once the Eurasia continental unification is completed the world will look like another place. The United States is presently playing like the kid on the block who wants to spoil the party. But the others are committed to keep the party going. One day, soon, the people of the United States will unfortunately awake to a new multilateral world order in which international transactions are paid for with a new world currency. That day the cost of life for Americans will shoot up to the stratosphere and then what ?
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Notes
1. this trade triangle consisted of exchanges of goods and maritime transportation between :
- Britain : export of raw wool to Flanders, import of wine from Bordeaux,
- Flanders : manufacturing of wool textiles for sale in all Europe.
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France
: exports of wine from Bordeaux and of luxury goods to the
aristocrats and new rich merchants all over Europe.
2. See «How Linseed Oil has been used as a binder in European Painting History»
3. The figures for the US are given by the US Census Bureau. Its census took place every ten years on the year ending with 0. See « Demographic history of the United States ». The figures for Britain are given by the decennial national census taking place every ten years on the year ending with 1. See “Demography of England”.
4. Answer by Stephen Tempest, in Quora. 2016-10-29.
5. "500 Years of GDP: A Tale of Two Countries" by Wendell Cox. 09/21/2015. These GDP figures are calculated per PPP method.
6. "Macron calls for a new global order” in EuroPost
7. Culture in the large sense = (axioms of civilization + worldviews + daily behaviors and beliefs). See the introduction of 2. the cultural context forces human thinking and actions
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