How does Europe still have a lot of money?

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SUMMARY

The discussion centers on the wealth of European nations, attributing it not solely to historical colonialism but also to factors such as industrialization, competition, and the establishment of democratic institutions. Historian Niall Ferguson's work, including his book "Civilization," argues that the West's wealth stems from a combination of the scientific revolution, rule of law, and a strong work ethic, rather than merely imperialism. The conversation highlights that while colonialism contributed to initial capital accumulation, the transition to modern industrial economies has been crucial for sustained wealth in Europe.

PREREQUISITES
  • Understanding of industrialization and its economic impacts
  • Familiarity with Niall Ferguson's theories on Western wealth
  • Knowledge of the historical context of European colonialism
  • Basic concepts of GDP and economic productivity
NEXT STEPS
  • Research Niall Ferguson's "Civilization" and its key arguments
  • Explore the economic impacts of industrialization in Europe
  • Study the relationship between democracy and economic prosperity
  • Investigate case studies of countries that transitioned from agriculture to industrial economies
USEFUL FOR

Economists, historians, policymakers, and anyone interested in understanding the complex factors contributing to the wealth of European nations beyond colonialism.

  • #31
vici10 said:
It worked in opposite direction. Colonialism started before industrialization and made industrialization possible, it provided people and capital for industrialization. Notice mheslep's graph above starts in 1500s, that is considered to be a beginning of European colonialism, for example colonial era in India starts in 1502 with Portuguese.
I don't really think this is true, the first industrial revolution occurred due to a series of technological and logistical developments that led to the mechanisation of the UK textile and metal work industry as well as the widespread deployment of steam power. This trend continued with the mechanisation of most industries, construction of mass transport systems (e.g. canals) and widespread emphasis on entrepreneurs and innovators leading to more sophisticated technologies.

The graph fits the time of the industrial revolutions quite well, not sure about Britain's continuing rise before that but IIRC the East India Company was one of the largest ever and was created around 1600. That might have something to do with it.
 

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