Historical capitalism, east and west

East– West relations over the past 500 years present two main puzzles. The first concerns the extraordinary geographical expansion of the European system of states. By 1850 or shortly thereafter, that system had come to encompass the entire globe, thereby reducing the China-centered tributetrade system to a regional subsystem of a now European-centered global economy. What is most puzzling about this tendency – which is what we shall understand by “the rise of the West” – are its modest origins. On the eve of its first major expansion across the Atlantic and around the Cape in the late fifteenth century, the European system of states was a peripheral and chaotic component of a global economy that had long been centered on Asia. In spite of this first expansion, two centuries later no European or American state had managed to create within its domains a national economy that could match the size, complexity and prosperity of the Chinese economy. And yet, within the short span of another century, tiny “Great” Britain was poised to incorporate within its domains the entire Indian subcontinent, and then, in cooperation and competition with other Western powers, to turn China from the center into a peripheral component of the global economy. How can we explain this turnaround?

The second puzzle concerns the extraordinary vitality of the East Asian region in the 150 years since its subordinate incorporation in the European- and later North American-centered global economy. By 1970 or shortly thereafter, this vitality translated into a crisis of Western hegemony that has yet to be resolved. Integral to this crisis has been an acceleration of economic growth in the East Asian region that has made a re-centering of the global economy on East Asia a distinct historical possibility, recent setbacks notwithstanding. This tendency – which is what we shall understand by “the rise of East Asia” – is no less puzzling than the first. The peripherality and chaos that had been emblematic of Europe on the eve of its overseas expansion came to characterize East Asia throughout the last half of the nineteenth and first half of the twentieth century. The results were devastating. By 1950, China had become one of the world’s poorest countries; Japan had been reduced to a vassal state of the United States; and the Cold War was creating a seemingly unbridgeable gulf between maritime East Asia and Mainland China. And yet, less than half a century later the gulf was bridged by a dense web of commercial exchanges; Japan and other lesser “islands” of East Asia’s “capitalist archipelago” had replaced the United States as the world’s leading creditor nations; and Mainland China’s weight in the global economy was increasing far more rapidly than that of any other entity of comparable demographic size. Whether this turnaround is the preamble to a re-centering of the global economy on East Asia is too early to tell. But whether it will or not, explaining the dynamic of the turnaround and how the turnaround relates, if at all, to the legacy of the China-centered tribute-trade system and the East Asian regional economy constitutes a major challenge for the historical social sciences.
In seeking at least partial solutions to these puzzles, we shall begin by recasting the contentions of previous chapters in an analytical framework that focuses on the dynamic of systems of states. Next, we use this framework to seek a solution to the first puzzle through a comparative analysis of the still distinct but related dynamics of the East Asian and European inter-state systems in early modern times. Then, we analyze the dynamic and contradictions of the single global system that emerged out of the nineteenth-century globalization of the European system of states. Finally, we seek a solution to the second puzzle by investigating the relationship between the economic vitality of East Asia under US hegemony and the historical legacy of the China-centered tribute-trade system.