Civilization: The West and the Rest (2 page)

43.
An American missionary’s map of South-east China (
British Library
)

44.
A scene of death and destruction from the Taiping Rebellion (
Getty
)

45.
The Nanjing Amity Bible Printing Company (
Reuters/Sean Yong
)

46.
Industrial China (
Dewald Aukema
)

47.
Barack Obama and Wen Jiabao, November 2009 (
Corbis
)

1.
Zheng He’s Seventh Voyage and da Gama’s First Voyage

2.
Ottoman Empire Disintegration from 1683

3.
Prussian Expansion from 1668

4.
United States Expansion from 1783

5.
Gran Colombia’s Disintegration

6.
The French and German Empires in Africa, 1914

7.
Protestant Missionaries in China, 1902

  
1.
Western Future Empires, 1500, and Western Empires, 1913

  
2.
UK/China per capita GDP Ratio, 1000–2008

  
3.
Military Labour Productivity in the French Army

  
4.
The Racial Structure of the New World, 1570–1935

  
5.
Life Expectancy at Birth: England, the United States, India and China, 1725–1990

  
6.
The Timing and Pace of Health Transitions in the French Empire

  
7.
Work Ethics: Hours Worked per Year in the West and the East, 1950–2009

  
8.
Religious Belief and Observance, Early 1980s and Mid-2000s

  
9.
Patents Granted by Country of Origin of Applicant, 1995–2008

10.
GDP of Greater China as a Percentage of US GDP, 1950–2009

11.
Average Mathematics Score of 8th Grade (~ 14-year-old) Students, 2007

12.
Europe, America, China and India, Estimated Shares of Global GDP, Selected Years, 1500–2008

I am trying to remember now where it was, and when it was, that it hit me. Was it during my first walk along the Bund in Shanghai in 2005? Was it amid the smog and dust of Chongqing, listening to a local Communist Party official describe a vast mound of rubble as the future financial centre of South-west China? That was in 2008, and somehow it impressed me more than all the synchronized razzamatazz of the Olympic opening ceremony in Beijing. Or was it at Carnegie Hall in 2009, as I sat mesmerized by the music of Angel Lam, the dazzlingly gifted young Chinese composer who personifies the Orientalization of classical music? I think maybe it was only then that I really got the point about the first decade of the twenty-first century, just as it was drawing to a close: that we are living through the end of 500 years of Western ascendancy.

The principal question addressed by this book increasingly seems to me the most interesting question a historian of the modern era can ask. Just why, beginning around 1500, did a few small polities on the western end of the Eurasian landmass come to dominate the rest of the world, including the more populous and in many ways more sophisticated societies of Eastern Eurasia? My subsidiary question is this: if we can come up with a good explanation for the West’s past ascendancy, can we then offer a prognosis for its future? Is this really the end of the West’s world and the advent of a new Eastern epoch? Put differently, are we witnessing the waning of an age when the greater part of humanity was more or less subordinated to the civilization that arose in Western Europe in the wake of the Renaissance and Reformation – the civilization that, propelled by the Scientific Revolution and the Enlightenment, spread across the Atlantic and as
far as the Antipodes, finally reaching its apogee during the Ages of Revolution, Industry and Empire?

The very fact that I want to pose such questions says something about the first decade of the twenty-first century. Born and raised in Scotland, educated at Glasgow Academy and Oxford University, I assumed throughout my twenties and thirties that I would spend my academic career at either Oxford or Cambridge. I first began to think of moving to the United States because an eminent benefactor of New York University’s Stern School of Business, the Wall Street veteran Henry Kaufman, had asked me why someone interested in the history of money and power did not come to where the money and power actually were. And where else could that be but downtown Manhattan? As the new millennium dawned, the New York Stock Exchange was self-evidently the hub of an immense global economic network that was American in design and largely American in ownership. The dotcom bubble was deflating, admittedly, and a nasty little recession ensured that the Democrats lost the White House just as their pledge to pay off the national debt began to sound almost plausible. But within just eight months of becoming president, George W. Bush was confronted by an event that emphatically underlined the centrality of Manhattan to the Western-dominated world. The destruction of the World Trade Center by al-Qaeda terrorists paid New York a hideous compliment. This was target number one for anyone serious about challenging Western predominance.

The subsequent events were heady with hubris. The Taliban overthrown in Afghanistan. An ‘axis of evil’ branded ripe for ‘regime change’. Saddam Hussein ousted in Iraq. The Toxic Texan riding high in the polls, on track for re-election. The US economy bouncing back thanks to tax cuts. ‘Old Europe’ – not to mention liberal America – fuming impotently. Fascinated, I found myself reading and writing more and more about empires, in particular the lessons of Britain’s for America’s; the result was
Empire: How Britain Made the Modern World
(2003). As I reflected on the rise, reign and probable fall of America’s empire, it became clear to me that there were three fatal deficits at the heart of American power: a manpower deficit (not enough boots on the ground in Afghanistan and Iraq), an attention deficit (not enough public enthusiasm for long-term occupation of
conquered countries) and above all a financial deficit (not enough savings relative to investment and not enough taxation relative to public expenditure).

In
Colossus: The Rise and Fall of America’s Empire
(2004), I warned that the United States had imperceptibly come to rely on East Asian capital to fund its unbalanced current and fiscal accounts. The decline and fall of America’s undeclared empire might therefore be due not to terrorists at the gates, nor to the rogue regimes that sponsored them, but to a financial crisis at the very heart of the empire itself. When, in late 2006, Moritz Schularick and I coined the word ‘Chimerica’ to describe what we saw as the dangerously unsustainable relationship – the word was a pun on ‘chimera’ – between parsimonious China and profligate America, we had identified one of the keys to the coming global financial crisis. For without the availability to the American consumer of both cheap Chinese labour and cheap Chinese capital, the bubble of the years 2002–7 would not have been so egregious.

The illusion of American ‘hyper-power’ was shattered not once but twice during the presidency of George W. Bush. Nemesis came first in the backstreets of Sadr City and the fields of Helmand, which exposed not only the limits of American military might but also, more importantly, the naivety of neo-conservative visions of a democratic wave in the Greater Middle East. It struck a second time with the escalation of the subprime mortgage crisis of 2007 into the credit crunch of 2008 and finally the ‘great recession’ of 2009. After the bankruptcy of Lehman Brothers, the sham verities of the ‘Washington Consensus’ and the ‘Great Moderation’ – the central bankers’ equivalent of the ‘End of History’ – were consigned to oblivion. A second Great Depression for a time seemed terrifyingly possible. What had gone wrong? In a series of articles and lectures beginning in mid-2006 and culminating in the publication of
The Ascent of Money
in November 2008 – when the financial crisis was at its worst – I argued that all the major components of the international financial system had been disastrously weakened by excessive short-term indebtedness on the balance sheets of banks, grossly mispriced and literally overrated mortgage-backed securities and other structured financial products, excessively lax monetary policy on the part of the Federal Reserve, a politically
engineered housing bubble and, finally, the unrestrained selling of bogus insurance policies (known as derivatives), offering fake protection against unknowable uncertainties, as opposed to quantifiable risks. The globalization of financial institutions that were of Western origin had been supposed to usher in a new era of reduced economic volatility. It took historical knowledge to foresee how an old-fashioned liquidity crisis might bring the whole shaky edifice of leveraged financial engineering crashing to the ground.

The danger of a second Depression receded after the summer of 2009, though it did not altogether disappear. But the world had nevertheless changed. The breathtaking collapse in global trade caused by the financial crisis, as credit to finance imports and exports suddenly dried up, might have been expected to devastate the big Asian economies, reliant as they were said to be on exports to the West. Thanks to a highly effective government stimulus programme based on massive credit expansion, however, China suffered only a slow-down in growth. This was a remarkable feat that few experts had anticipated. Despite the manifest difficulties of running a continental economy of 1.3 billion people as if it were a giant Singapore, the probability remains better than even at the time of writing (December 2010) that China will continue to forge ahead with its industrial revolution and that, within the decade, it will overtake the United States in terms of gross domestic product, just as (in 1963) Japan overtook the United Kingdom.

The West had patently enjoyed a real and sustained edge over the Rest for most of the previous 500 years. The gap between Western and Chinese incomes had begun to open up as long ago as the 1600s and had continued to widen until as recently as the late 1970s, if not later. But since then it had narrowed with astonishing speed. The financial crisis crystallized the next historical question I wanted to ask. Had that Western edge now gone? Only by working out what exactly it had consisted of could I hope to come up with an answer.

What follows is concerned with historical methodology; impatient readers can skip it and go straight to the introduction. I wrote this book because I had formed the strong impression that the people currently living were paying insufficient attention to the dead. Watching
my three children grow up, I had the uneasy feeling that they were learning less history than I had learned at their age, not because they had bad teachers but because they had bad history books and even worse examinations. Watching the financial crisis unfold, I realized that they were far from alone, for it seemed as if only a handful of people in the banks and treasuries of the Western world had more than the sketchiest information about the last Depression. For roughly thirty years, young people at Western schools and universities have been given the idea of a liberal education, without the substance of historical knowledge. They have been taught isolated ‘modules’, not narratives, much less chronologies. They have been trained in the formulaic analysis of document excerpts, not in the key skill of reading widely and fast. They have been encouraged to feel empathy with imagined Roman centurions or Holocaust victims, not to write essays about why and how their predicaments arose. In
The History Boys
, the playwright Alan Bennett posed a ‘trilemma’: should history be taught as a mode of contrarian argumentation, a communion with past Truth and Beauty, or just ‘one fucking thing after another’? He was evidently unaware that today’s sixth-formers are offered none of the above – at best, they get a handful of ‘fucking things’ in no particular order.

The former president of the university where I teach once confessed that, when he had been an undergraduate at the Massachusetts Institute of Technology, his mother had implored him to take at least one history course. The brilliant young economist replied cockily that he was more interested in the future than in the past. It is a preference he now knows to be illusory. There is in fact no such thing as the future, singular; only futures, plural. There are multiple interpretations of history, to be sure, none definitive – but there is only one past. And although the past is over, for two reasons it is indispensable to our understanding of what we experience today and what lies ahead of us tomorrow and thereafter. First, the current world population makes up approximately 7 per cent of all the human beings who have ever lived. The dead outnumber the living, in other words, fourteen to one, and we ignore the accumulated experience of such a huge majority of mankind at our peril. Second, the past is really our only reliable source of knowledge about the fleeting present and to the multiple
futures that lie before us, only one of which will actually happen. History is not just how we study the past; it is how we study time itself.