The Innovations that made Western Civilisation Dominate the World for 500 Years

What do I think of Western civilisation? I think it would be a very good idea.
– Mahatma Gandhi

Western CivilizationAs I have written about in another article on this blog, in 2013, for the first time since the the industrial revolution, emerging economies will produce the majority of the world’s goods and services.

This implies a paradigm shift. For 500 years western civilisation dominated the world, with imposed military power, imposed religion, and since colonization and the industrial revolution also the world economy.

But how did the West overtake its rivals? And has the zenith of Western power now passed?

I was working in South Africa in the past two weeks. I usually work in Africa when it is summer and holiday time in Europe, and winter and high season for business in southern Africa.

Charles OkeahalamI had lunch in Johannesburg last Monday with my friend Dr. Charles Okeahalam, co-founder and Chief Executive of the investment and private equity firm AGH Capital Group. Prior to co–founding AGH in 2002, he was a professor of Banking and Finance at the University of the Witwatersrand in Johannesburg and he has been working across Africa in various top-level advisory and consulting assignments.

During the lunch, Charles said that he had left the field of consulting to focus on financial transactions, as there is now a generation of highly intelligent and self-confident business and public sector leaders in Africa,  with Harvard education and access to capital, who no longer needs general consulting advice. Africa is becoming self-sufficient on know-how and unless a consultant is highly specialised, there will be no market for him.

Charles statement made me think. For a very long time, the West has dominated consulting and advisory in the world. In the fields of science, scholars come from all cultures nowadays, but in business, the vast experience of Western firms have dominated most professional services industries. Well, not any more.

To understand the current power shifts in the world, it is important to understand what brought us to the hegemony of the west, that is now eroding.

Niall FergusonThe Harvard University history professor Niall Ferguson argues that beginning in the fifteenth century, the West developed six powerful new concepts that allowed western civilization to reach its dominant position.

The six innovations were competition, modern science, institutions and the rule of law, modern medicine, consumerism, and work ethic, allowing it to surge past all other competitors.

In 2011 Ferguson wrote a book and made a television series documenting the history of the west and the rest. I read the book and I can highly recommend it. No matter if you, dear reader, is in Europe, USA, Africa or Asia, this book will make you think.

Civilization - the six killer appsIn 1500 Europe’s future imperial powers had about 15% of the world population, 80 million people out of 500 million in the world. They controlled 10% of the world’s territories and generated just over 40% of its wealth.

By 1913, at the height of empire, Europe had 471 million people, United States 97 million and the world total was 1,65 billion. Thus the Western countries had 35% of the world population and controlled almost 60% of the territories, which together generated almost 80% of the wealth.

The six innovations had allowed the west to leap ahead of the rest; opening global trade routes, exploiting new scientific knowledge, evolving representative government, more than doubling life expectancy, unleashing the industrial revolution, and hugely increasing human productivity.

The book devotes a chapter to each of the six innovations. Science, medicine and the protestant work ethic are familiar characters in this drama. More unusual are the grubby commercial trio that Marxist historians often underestimate: competition, property rights and the consumer society.

imageFerguson presents an hypothesis that the West risks collapse. As a highly complex system, civilisation has a “tendency to move quite suddenly from stability to instability.” That, he argues, was what happened to Ancient Rome, the Ming dynasty in 17th-century China, the Bourbons in 18th-century France, 20th-century Britain and, most recently, the Soviet Union. The West’s present fiscal crisis might yet prove to be a symptom of the rot within.

The days of Western predominance are numbered, Ferguson argues, because the Rest have finally downloaded the six killer apps the West once monopolized. However unless Asia has any exclusive “killer apps” of its own, it is hard to see how such a triumph could alone make Asia surge. Whereas a handful of Western countries were once at it, a whole planet has started to join in.

More likely than the end of civilisation is that the West will just cease to be privileged in a globalised world of hyper competitive markets, where specialisation is the path to success for talented individuals and companies as well as for places, cities and regions.

imageWe also need to understand that the west no longer dominates the world population. Due to the population growth in emerging economies, the West is back to the same share as in 1500, about 15%, as can be seen in the table on the right.

Not only are the rest of the world catching up in standards of living and innovations, they are now also a dominant proportion of the world population. This means that there is now much larger numbers of talented people coming from non-western countries.

It is interesting to see how this plays out in the field of global politics. Until the second world war, the west maintained its dominance using military innovations. Now in 2013 the United States has about 4,4% of the World population but makes about 40% of the world military spending, according to SIPRI Yearbook 2013. In the post-cold-war world, this does not make sense, as it is no longer possible for any nation in the world arena to use the military as a tool to achieve power. The United States GDP proportion of military spending will just accelerate the nations decline as a great power.

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