Why Britannica Created Why Britannica Created the Modern World.the Modern World.

Statement? True or FalseStatement? True or False

Every great period of advancement Every great period of advancement in civilization is preceded by in civilization is preceded by advancements in transportation advancements in transportation and/or communications.and/or communications.

Thomas Friedman:Thomas Friedman:

Postulates the world is getting Postulates the world is getting Hotter, Flatter and more crowded.Hotter, Flatter and more crowded.

By Flatter he means closer together By Flatter he means closer together in terms of communications and in terms of communications and transportation.transportation.

Adam Smith: Father of Modern Adam Smith: Father of Modern EconomicsEconomics

Wealth of NationsWealth of Nations Government interference in Government interference in

economic systems harm them.economic systems harm them. Looked at the relationship Between Looked at the relationship Between

Supply and Demand.Supply and Demand. The value of Outputs must exceed The value of Outputs must exceed

the cost of inputs to make production the cost of inputs to make production viable.viable.

Adam SmithAdam Smith PricePrice is a function of is a function of utilityutility (does it do (does it do

something people want/need) and something people want/need) and scarcityscarcity (how (how much of the stuff is there?). How much is an much of the stuff is there?). How much is an IPhone worth to enough people so that inputs are IPhone worth to enough people so that inputs are less outputs? At some point the price will rise to less outputs? At some point the price will rise to where demand will drop.where demand will drop.

Utility and price creates Utility and price creates demand leveldemand level.. Reduce the price of a product that has great Reduce the price of a product that has great

utility and people will beat a path to your door.utility and people will beat a path to your door. Monopolies and government interference hurt Monopolies and government interference hurt

that balance.that balance. ..

Adam SmithAdam Smith

Left to itself, economic forces Left to itself, economic forces will be guided by an “invisible will be guided by an “invisible hand” to make supply and hand” to make supply and demand seek stabilitydemand seek stability

Hopefully the price of the outputs Hopefully the price of the outputs exceeds the cost of your inputsexceeds the cost of your inputs

Inputs:Inputs: Capital (money)Capital (money) ManagementManagement LaborLabor Raw MaterialsRaw Materials MachinesMachines EnergyEnergy Transportation Transportation

(infrastructure)(infrastructure) Research and Research and

Development.Development. TAXESTAXES ProfitProfit

Outputs:ProductOutputs:Product Necessary Price is Necessary Price is

determined by the determined by the combined inputs. combined inputs. Outputs must equal Outputs must equal inputs (including inputs (including profit).profit).

PricePrice determined by determined by utility (demand),utility (demand), inputs and inputs and scarcity scarcity (supply)(supply)

Increased EfficienciesIncreased Efficiencies

Decrease the cost of inputs, which allows Decrease the cost of inputs, which allows price to decrease, increasing demand price to decrease, increasing demand (assuming utility).(assuming utility).

Efficiencies include:Efficiencies include:• Educated labor force.Educated labor force.• Machinery (reduces labor cost, better quality)Machinery (reduces labor cost, better quality)• InfrastructureInfrastructure• Economy of ScaleEconomy of Scale: the more you make of : the more you make of

something, the smaller the cost for each unit.something, the smaller the cost for each unit.-what if each item of clothes you wore -what if each item of clothes you wore

were hand made?were hand made?

18001800 Most people lived in one room, maybe Most people lived in one room, maybe

two.two. Cooked with wood or charcoal Cooked with wood or charcoal One or two suit of clothes, Sunday go to One or two suit of clothes, Sunday go to

meeting clothes and everyday.meeting clothes and everyday. Lived and died 20 miles from where born.Lived and died 20 miles from where born. Life expectancy at birth 40/50, same as Life expectancy at birth 40/50, same as

hunter gatherers. hunter gatherers. About a Billion people WorldwideAbout a Billion people Worldwide

In 1800In 1800

On Average, the average person in the On Average, the average person in the world was living at about the same level.world was living at about the same level.

That level was the same standard of living That level was the same standard of living as they were living at 6000 years before.as they were living at 6000 years before.• Calories consumedCalories consumed• Health care/knowledgeHealth care/knowledge• Work for calories actually greater than hunter Work for calories actually greater than hunter

gathersgathers• clothingclothing• Living conditionsLiving conditions

Mondern Hunter Gather37a.b. 57 at 20England: 38birth 54 at 20

China 26 50N. Africa 24 41

1800 Brits were less efficient than 1800 Brits were less efficient than Hunger/Gathers at obtaining Hunger/Gathers at obtaining

caloriescalories

Thomas MalthusThomas Malthus Postulated that there was a direct relationship Postulated that there was a direct relationship

between Population, death rate and standard of living.between Population, death rate and standard of living. Given a population with a high standard of living (food, Given a population with a high standard of living (food,

high survival rate), you would have population growth.high survival rate), you would have population growth. As the population grows beyond the ability to support As the population grows beyond the ability to support

it with food, the standard of living would drop.it with food, the standard of living would drop. Then, eventually, particularly under pressure, people Then, eventually, particularly under pressure, people

would die off, until the population was low enough to would die off, until the population was low enough to raise standard of living.raise standard of living.

For instance: The net effect of the plague was a raise For instance: The net effect of the plague was a raise in living standard.in living standard.

This model worked well for the world until 1800.This model worked well for the world until 1800.

Between 1800 and nowBetween 1800 and now

World population has grown from 1 World population has grown from 1 billion to about 6.5 billion and billion to about 6.5 billion and continues to grow rapidly.continues to grow rapidly.

What would Malthus predict?What would Malthus predict?

Malthusian TrapMalthusian Trap

Production will increase population Production will increase population and living standard until BAM, and living standard until BAM, population will exceed the ability of population will exceed the ability of the resources to sustain it, the resources to sustain it, regardless of efficiencies, living regardless of efficiencies, living standards will drop, people will die. standards will drop, people will die.

When enough people die (eg Plague), When enough people die (eg Plague), resources will be enough, population resources will be enough, population will rise.will rise.

IronyIrony

What Malthus didn’t think about: What Malthus didn’t think about: What would happen if you injected What would happen if you injected

modern medicine into this modern medicine into this equation?equation?

If people were saved from dying, If people were saved from dying, standard of living would drop, but standard of living would drop, but there wouldn’t be the ensuing mass there wouldn’t be the ensuing mass death.death.

Britain breaks the moldBritain breaks the mold

In England, Everything changed:In England, Everything changed:• Population increasedPopulation increased• Standard of living went way up.Standard of living went way up.• Life expectancy began to rise.Life expectancy began to rise.

• What happened? And Why there?What happened? And Why there?

Gun, Germs and Steel?Gun, Germs and Steel? Diamond suggest geography was the Diamond suggest geography was the

chief determinant in European chief determinant in European ascendency.ascendency.• People living on the same latitude could People living on the same latitude could

benefit by similar climates, animal life benefit by similar climates, animal life and information sharing.and information sharing.

Guns, Germs…Guns, Germs…

People, who left Africa, first settled in People, who left Africa, first settled in Central Asia/Middle East, and Central Asia/Middle East, and domesticated large animals for grains domesticated large animals for grains and labor.and labor.• These plants and animals flourished These plants and animals flourished

along that latitude, allowing civilizations along that latitude, allowing civilizations to expand.to expand.

• Domestication freed up time and people Domestication freed up time and people to diversify occupations and expand to diversify occupations and expand civilizations.civilizations.

Guns, Germs, etc.…Guns, Germs, etc.…

The constant interaction of man and The constant interaction of man and animals allowed germs, small pox, animals allowed germs, small pox, flu, etc to spread back and force and flu, etc to spread back and force and eventually people along that latitude eventually people along that latitude built immunities, that those in their built immunities, that those in their future colonies didn’t have.future colonies didn’t have.• Its estimated that as many as 90 of the Its estimated that as many as 90 of the

Native American population died of Native American population died of small pox.small pox.

Guns..Guns..

In addition metallurgical technology In addition metallurgical technology spread along that latitude and people spread along that latitude and people got better and better and producing got better and better and producing strong steel swords and the like, strong steel swords and the like, which later led to industrial uses of which later led to industrial uses of metals.metals.

Guns…Guns…

Then gunpowder from China was Then gunpowder from China was matched with missile technology matched with missile technology from Europe (why do you think from Europe (why do you think Galileo went to Pisa?) creating guns Galileo went to Pisa?) creating guns and canons that people along that and canons that people along that latitude never developed.latitude never developed.

Europe dominated.Europe dominated. But why Britain?But why Britain?

Contrary to today, the Wealthy had a population boom. These people Contrary to today, the Wealthy had a population boom. These people made money off the land, so their extra sons joined the army, went to made money off the land, so their extra sons joined the army, went to

school, studied scientifically and invented cool stuff.school, studied scientifically and invented cool stuff.Provided England with an educated middle class.Provided England with an educated middle class.

The Dissenters: Puritan The Dissenters: Puritan Work ethicWork ethic

Had no problem with exploring the Had no problem with exploring the natural world.natural world.

No problem making money in No problem making money in manufacturingmanufacturing

Hated play/fun, after all, “idleness is Hated play/fun, after all, “idleness is the devil’s workshop”the devil’s workshop”

Children were little adult, no Children were little adult, no adolescents.adolescents.

““a penny saved is a penny earned.”a penny saved is a penny earned.”

Why Britain?Why Britain? The Enlightenment and Reformation increased scientific The Enlightenment and Reformation increased scientific

thought and literacy.thought and literacy. They had a large increase in population of educated upper They had a large increase in population of educated upper

and middle class people, freed from the land.and middle class people, freed from the land. Dissidents were funneled into mining and manufacturing Dissidents were funneled into mining and manufacturing

with profit as motivation. (Not snobby with profit as motivation. (Not snobby landed aristocratslanded aristocrats). ). Banks funneled capital from aristocrats (sugar, tea Banks funneled capital from aristocrats (sugar, tea plantations) to dissidents.plantations) to dissidents.

Puritan academies taught math, science and engineering, Puritan academies taught math, science and engineering, studied the natural world.studied the natural world.

The non-nobles slowly began to gain political power, The non-nobles slowly began to gain political power, creating more of a meritocracy.creating more of a meritocracy.

Coal mining and dissidents led to the Steam Engines and Coal mining and dissidents led to the Steam Engines and massive changes in efficiencies, the world got flatter.massive changes in efficiencies, the world got flatter.

Britain’s Advantages by 1800Britain’s Advantages by 1800

Stable governmentStable government, where power , where power was shifting to money from birth. was shifting to money from birth. (Magna Carta)(Magna Carta)

No WarsNo Wars on Home Turf to disrupt on Home Turf to disrupt production.production.

A population boom in wealthy and A population boom in wealthy and business classes, provided business classes, provided literateliterate middle class to run your business.middle class to run your business.

Three Big InventionsThree Big Inventions James Watt’s Steam engineJames Watt’s Steam engine, originally , originally

to pump water out of coal mines, to pump water out of coal mines, eventually to power everything until the eventually to power everything until the internal combustion engine.internal combustion engine.

The RailroadThe Railroad which began in the early which began in the early 1800s in England bringing raw materials to 1800s in England bringing raw materials to centralized factories and manufactured centralized factories and manufactured goods to shore for export.goods to shore for export.

Eventually moving armies and people, no Eventually moving armies and people, no more only living and dying 20 miles from more only living and dying 20 miles from home. home.

Steam Ships,Steam Ships, see above see above

Agricultural revolution of the 18Agricultural revolution of the 18thth century provided food to defeat century provided food to defeat Malthusian trapMalthusian trap. Freed up farm . Freed up farm labor to become city labor.labor to become city labor.

Established trading posts became Established trading posts became foothold for colonialist.foothold for colonialist.

Efficiencies of inputsEfficiencies of inputs Inputs: Inputs: Capital Capital (money): (money): Banks, Barklays, Lloyds, joint-stocks, insurance..Banks, Barklays, Lloyds, joint-stocks, insurance.. Management:Management: Literate dissenters, population boom in educated classes.Literate dissenters, population boom in educated classes. Labor:Labor: mostly mostly literate protestantsliterate protestants, work ethic (dour dissenters), schools, work ethic (dour dissenters), schools Raw MaterialsRaw Materials: : taken, forced trade, no tariffstaken, forced trade, no tariffs.. MachinesMachines:: steam powered, mass produced (economy of scale), steam powered, mass produced (economy of scale),

machined, interchangeable parts: some 1000:1 in efficiency.machined, interchangeable parts: some 1000:1 in efficiency. EnergyEnergy:: Coal Coal, lots of it, lots of it TransportationTransportation ( (infrastructure): infrastructure): canals, roads, trains, steamships canals, roads, trains, steamships Research and DevelopmentResearch and Development:: literate, amateur scientists literate, amateur scientists

(enlightenment)(enlightenment) TAXES:TAXES: None None Profit:Profit: Tons. Tons.

There it is:There it is: Early colonizationEarly colonization provided raw materials (g,g,s) provided raw materials (g,g,s) BanksBanks to move capital from colonies to move capital from colonies DissentersDissenters the work ethic, incentives, scientific inquiry, the work ethic, incentives, scientific inquiry,

literacy.literacy. Britain the safe governmentBritain the safe government: Adam Smith Laissez : Adam Smith Laissez

faire economics.faire economics. Raising middle classRaising middle class of workers/mgmt: consumerism and of workers/mgmt: consumerism and

markets, keeping up with the .markets, keeping up with the . GSS, the easyGSS, the easyexchange of knowledgeexchange of knowledge, metallurgy, , metallurgy, Agricultural advancementAgricultural advancement. Interchange of crops, No . Interchange of crops, No

MalthusMalthus The steam engineThe steam engine, precise machine tools, interchangeable , precise machine tools, interchangeable

parts, coal:parts, coal:• the power, mass production (economy of scale, massive the power, mass production (economy of scale, massive

efficiency), infrastructure, Transportation and communications.efficiency), infrastructure, Transportation and communications.

Children were used to pull the coal Children were used to pull the coal from the minesfrom the mines

New Inventions meant a massive New Inventions meant a massive shift in efficiency: more outputs with shift in efficiency: more outputs with

less inputs.less inputs.

With efficiency income followed.With efficiency income followed.

WWMS?WWMS?

1836 to 1862: repeating, breech 1836 to 1862: repeating, breech loaded guns changed the face ofloaded guns changed the face ofwar. Required interchangeable, war. Required interchangeable, machined parts.machined parts.

By the late 19 centuryBy the late 19 century

England had expanded its colonies England had expanded its colonies and economy to the point where it and economy to the point where it dominated the entire world.dominated the entire world.

Britain ruled with an iron hand, Britain ruled with an iron hand, justified by justified by Social Darwinism.Social Darwinism.

Ad extolling White Men to help Ad extolling White Men to help natives get cleannatives get clean

The U.S. Philippines WarThe U.S. Philippines War

White Man’s BurdenWhite Man’s Burden

Politically,Politically, Workers’ conditions and the expansion of crowded cities Workers’ conditions and the expansion of crowded cities

and the problems they brought led to:and the problems they brought led to: Progressive movementProgressive movement: Modern liberalism: Modern liberalism Socialism: Socialism: government responsibility to all the people.government responsibility to all the people. CommunismCommunism (Marx and Engel): extreme socialism, all (Marx and Engel): extreme socialism, all

goods and services equally shared. Government control of goods and services equally shared. Government control of the means of production/the means of production/

Modern ConservatismModern Conservatism and laissez faire economics. and laissez faire economics. Economic Darwinism.Economic Darwinism.

Social DarwinismSocial Darwinism to justify it all. Superior countries to justify it all. Superior countries were”meant” to rule the rest. Those countries were on top were”meant” to rule the rest. Those countries were on top for a reason.for a reason.

1801 Britain makes Ireland part of a 1801 Britain makes Ireland part of a single British kingdom. Parliament in single British kingdom. Parliament in Dublin is abolished. The Anglican Dublin is abolished. The Anglican Church is to be recognized as the Church is to be recognized as the official church in Ireland. No official church in Ireland. No Catholics are to be allowed to hold Catholics are to be allowed to hold public office. public office.

To keep away from France/Napoleon To keep away from France/Napoleon the British formally take control of the British formally take control of Cape Town, South Africa and begin Cape Town, South Africa and begin movement up the East Coast of movement up the East Coast of Africa.Africa.

Britain Dissolves the East Indian Company, Britain Dissolves the East Indian Company, and establishes formal political control of and establishes formal political control of India (Pakistan)India (Pakistan)

In 1875 Britain takes control of the Suez In 1875 Britain takes control of the Suez Canal, and establishes their economic Canal, and establishes their economic interest there.interest there.

In the late 19In the late 19thth c. the British force the c. the British force the “capitulations” on the weak Ottoman “capitulations” on the weak Ottoman Empire, taking control of choke points Empire, taking control of choke points along their trade route: Egypt, Yemen, along their trade route: Egypt, Yemen, Iraq, the emirates.Iraq, the emirates.

British Empire at WWI (1/4 of the British Empire at WWI (1/4 of the World’s Population falls under World’s Population falls under

British controlBritish control

World in 1900World in 1900

China was attempting to form a China was attempting to form a democracy after fall of the Manchus, democracy after fall of the Manchus, but was carved up in the Open Door but was carved up in the Open Door Policy and two Opium wars with Policy and two Opium wars with Britain. The U.S., Japan and major Britain. The U.S., Japan and major European powers glommed on.European powers glommed on.

Korea was a Japanese colony.Korea was a Japanese colony. Taiwan too.Taiwan too.

The division of ChinaThe division of China

Spheres of Influence.Spheres of Influence.

By WWIBy WWI WinnersWinners in the Industrialization game. in the Industrialization game. Britain Britain dominated the seas and most of the rest of the worlddominated the seas and most of the rest of the world Germany Germany had formed under Bismark, began to expand, had formed under Bismark, began to expand,

industrialized.industrialized. FranceFrance had finally established some political stability, had finally established some political stability,

colonized, industrialized.colonized, industrialized. JapanJapan had become a major force in Asia, colonizing Northern had become a major force in Asia, colonizing Northern

China, Korea, Taiwan and China, Korea, Taiwan and beating Russia in a warbeating Russia in a war. . U.S.U.S. dominated South America and the Caribbean and other dominated South America and the Caribbean and other

Spanish colonies (Phillipines, Puerto Rico, Virgin Islands).Spanish colonies (Phillipines, Puerto Rico, Virgin Islands). Neutral:Neutral: Russia had expanded, but not industrialized.Russia had expanded, but not industrialized.

Losers:Losers: The Netherlands (Dutch), Portugal, Spain, the Ottoman Empire The Netherlands (Dutch), Portugal, Spain, the Ottoman Empire

and Austria-Hungary were slipping away into the dust bin of and Austria-Hungary were slipping away into the dust bin of history.history.

Britain: all dates Circa, it’s a Britain: all dates Circa, it’s a process.process.

Canada (18Canada (18thth c.) c.) Australia (1788)Australia (1788) IrelandIreland (1801) (1801) South AfricaSouth Africa (1805)(1805) India/Burma/Pakistan (1857)India/Burma/Pakistan (1857) Singapore (1819)Singapore (1819) Yemen (Cap)Yemen (Cap) Hong Kong/China (latter 19Hong Kong/China (latter 19thth c.) c.) Palestine (Cap)Palestine (Cap) Iraq (Cap)Iraq (Cap) (Iran kind of, BP, 1913)(Iran kind of, BP, 1913) KenyaKenya Canada (18Canada (18thth c.) c.) Zimbabwe (Rhodesia, 1880)Zimbabwe (Rhodesia, 1880) Tanzania (Tanganyika, Germany 1840, Britain after WWI)Tanzania (Tanganyika, Germany 1840, Britain after WWI) Kenya (1890)Kenya (1890)

FranceFrance

Northwest AfricaNorthwest Africa SyriaSyria LebanonLebanon Indochina (Vietnam, Cambodia)Indochina (Vietnam, Cambodia)

U.S.U.S.

Puerto RicoPuerto Rico Virgin IslandsVirgin Islands PhilippinesPhilippines Economically dominated all of Economically dominated all of

Central America, some of South Central America, some of South America.America.

HawaiiHawaii

JapanJapan

KoreaKorea TaiwanTaiwan Parts of Northern China (Manchuria)Parts of Northern China (Manchuria)

OthersOthers

PortugalPortugal• AngolaAngola• Mozambique, TanzaniaMozambique, Tanzania

NetherlandsNetherlands• IndonesiaIndonesia

Italy: Libya, SomaliaItaly: Libya, Somalia Germany: Namibia, Rwanda, UgandaGermany: Namibia, Rwanda, Uganda Belgium: CongoBelgium: Congo

By WWIBy WWI

Ottoman Empire had been divided Ottoman Empire had been divided between Russia (the Caucuses), between Russia (the Caucuses), Britain (Egypt, Palestine, Iraq, Saudi Britain (Egypt, Palestine, Iraq, Saudi Penn.) and France (Lebanon, Syria) Penn.) and France (Lebanon, Syria) by the by the CapitulationsCapitulations (forced (forced “interests” in those areas).“interests” in those areas).

Finally finished off after WWI.Finally finished off after WWI. Choose the wrong side to back.Choose the wrong side to back.

The CapitulationsThe Capitulations

Ottoman EmpireOttoman Empire From the 16th Century to the early 20From the 16th Century to the early 20thth

Century, ethnic Turks (who were Sunni Century, ethnic Turks (who were Sunni Muslims) from Anatolia, or modern day Muslims) from Anatolia, or modern day Turkey, invadedTurkey, invaded

Syria, Syria, Palestine/Israel/Lebanon, Palestine/Israel/Lebanon, Saudi Arabia, Saudi Arabia, Egypt/Sudan, Egypt/Sudan, Greece, Greece, Albania, Albania, Vienna( which they failed, to conquer).Vienna( which they failed, to conquer).

European Domination 1914European Domination 1914