Networking Origins of the Global Economy: East vs. West in a Complex Systems Perspective

The upheavals of recent decades show us that traditional models of understanding processes of social and economic change are failing to capture real-world risk and volatility. This has resulted in flawed policy that seeks to capture change in terms of the rise or decline of regimes or regions. In order to comprehend current events, understand future risks and decide how to prepare for them, we need to consider economies and social orders as open, complex networks. This highly original work uses the tools of network analysis to understand great transitions in history, particularly those concerning economic development and globalisation. Hilton L. Root shifts attention away from particular agents - whether individuals, groups, nations or policy interventions - and toward their dynamic interactions. Applying insights from complexity science to often overlooked variables across European and Chinese history, he explores the implications of China's unique trajectory and ascendency, as a competitor and counterexample to the West. • Demonstrates how to apply complexity theory to history and the social sciences • Draws out patterns from economic history that can help us understand the risks arising from transitions in current global political economy • Uses case studies from European and Chinese history Contents 8 List of Figures 12 List of Tables 13 List of Contributors 14 Preface by W. Brian Arthur 16 Overview 20 Acknowledgments 31 PART I POLITICAL ECONOMY AND COMPLEX SYSTEMS 34 1 Great Transitions in Economic History 36 1.1 Networks in Economic Transitions 39 1.2 A Complexity Transition that May Reshape the World 43 2 Growth, Form, and Self-Organization in the Economy 48 2.1 The Economy Has the Global Properties of a Complex System 48 2.2 Change Processes in Complex Systems 53 2.3 Network Representations of Complex Systems 66 2.4 Differences in the Network Structure of China and the West 73 2.5 Change Thresholds and Phase Transitions 74 2.6 Transformative Change and Networks in World History 82 3 Human Evolutionary Behavior and Political Economy 90 3.1 Later Is Different 91 3.2 Evolving Properties of Global Connectivity 92 3.3 Evolutionary Social Psychology Applied to Agent Behavior 98 3.4 Preventative Chaos: Economic Opportunities Hide in Global Fractures 105 PART II AN ANALYSIS OF HISTORICAL REGIMES 110 4 Network Assemblage of Regime Stability and Resilience in Europe and China 112 4.1 Identifying Hypernetworks in Europe and China 114 4.2 Resilience and Stability Trade-Offs in China and Europe 120 4.3 The Endurance of Dynastic Lordship in Europe 122 4.4 Decay and Renewal of Chinese Dynasties 131 4.5 Technological Progress and Network Resilience 137 4.6 Social Systems As Multilevel Systems 138 5 Network Formation and the Emergence of Law: From Feudalism to Small-World Connectivity 145 5.1 Increasing Returns and the West’s Legal System 146 5.2 The Origins of Strong but Limited Government 147 5.3 Communitarian and Rationalist Law: Four Reconciliations 148 5.4 What the West Still Has to Offer 165 5.5 China’s Legal Tradition: Legalist versus Confucian 171 6 The Network Foundations of the Great Divergence 181 6.1 Network Structure and Innovation in Europe 183 6.2 The Confucian State and the Stifling of Innovation 192 6.3 Disruptive Innovation, Network Structure, and the Great Divergence 203 6.4 A Modern Role Reversal in Global Innovation 207 PART III THE COMING INSTABILITY 212 7 Has the Baton Passed to China? 214 7.1 China’s Unique Development Path 215 7.2 A Great Lesson of Economic History, Not Learned 228 8 China’s Ambitions and the Future of the Global Economy 233 8.1 China’s Search for Soft Power 234 8.2 The Hub-and-Spoke Resurfaces, As It Has for Millennia 241 8.3 Different Outlooks on Markets, and Why It Matters for Globalization 243 8.4 Possible Scenarios of China’s Role in the Global Economy 252 9 Global Networks over Time 260 with kevin comer, jack goldstone, and david masad 10 9.1 Network Structure in International Relations 260 9.2 End-of-Power Measures in the International Network Structure 267 9.3 Network Properties and Power in International Relations 282 9.4 A Tangled Web in the Global Economy 284 9.5 A Post-Hegemonic Transition Unfolds 285 10 A Future of Diminishing Returns or Massive Transformation? 289 10.1 Death by Diminishing Returns Is Not Without Precedent 289 10.2 Where Will New Rules of Global Governance Originate? 293 10.3 An Age of Uncertainty Calls for Revised Expectations 294 11 Network Structure and Economic Change: East vs. West 299 11.1 Flow and Structure: Communication and Connection 300 11.2 Network Resilience and Revolution in the West 301 11.3 Network Structure and Stability in Europe and China 302 11.4 Network Analysis of Global Systems in Economic History 309 References 312 Index 328 "The analytical challenge in such constantly shifting environments, explained Friedrich Hayek in his 1974 Nobel acceptance speech, is to understand an economy as an 'organized complexity.' Although the term 'complex systems' wasn't yet well established, Hayek recognized structures of 'essential complexity' whose characteristics depend 'not only on the properties of the individual elements of which they are composed, and the relative frequency with which they occur, but also on the manner in which the individual elements are connected with each other'"-- Provided by publisher Applying network theory to economic history, this work reinterprets five historical transitions: the rise of dynastic lordships in China and Europe; the law's formation; industrialisation and the Great Divergence; China's ascendancy; and globalisation's hyper-connectivity. Root reveals the hidden patterns of regime variation, transition and decay.