Despite many important insights provided by the extant models and theories of development and international trade, they fail to answer these important questions, show many inconsistencies and are unevenly supported by data. This applies to the models within the neoclassical school of thought, focused on various factors of material production, such as labor, capital, rent, economy of scale, monopoly power etc (Ricardo, Heckscher-Ohlin improved by Paul Krugman; the 1946 Harrod-Domar model, further developed by Swan-Solow, 1956; Paul Romer, 1998; Robert Lucas, Jr., 1981, 1988; etc). This also applies to the modern institutional economics, from Thorstein Veblen (1898) and Ronald Coase (1937) to Douglass North (1990), who highlighted the importance of a country’s institutions in reducing its transaction costs and aiding its development. Somewhat aside is Joseph Schumpeter’s 1939 Theory of Business Cycles, which, as to this date, weren’t yet fully explained by his followers (Freeman, 2001, etc).

This paper adds a single new concept to all these deliberations – domestication of the next unique geoclimatic zone. The latter is seen as the ultimate source of any new wealth, which, after periodic severe crises/wars, was created as if “out-of-thin-air” to feed multiplying populations throughout history. This concept implies a need in a special adaptation in order to unlock the hitherto unavailable wealth of a new zone – production styles/systems developed elsewhere usually fail to work for it. Historically, adaptations of this sort first rose as institutional – feeding off the specifics of the local social framework. Then, this brand new institution served as a crystallizing point gradually forming an entire technological style of its time around itself. For example, in the 20^th century, the mass-production of Fordism rose from the need of utilizing the untrained workforce, the only one available in a young country. The resulting oil-based economy of mass producing standardized items, which could be cheaply transported using the mass car, generated immense amounts of new wealth by opening up easy access to the entire US territory. Such areas as the Great Plains, California and Florida, in the zone of extreme climate, previously were of little use both for farming or industry [2]. Within the oil-based economy pioneered in the US, they turned immensely productive, bankrolling the well-off US consumer society.

We show that the addition of this simple concept allows reconciliation of a large array of current theories of economic development and international trade. Inasmuch harsh their mutual disagreements, at least three schools of thought and, perhaps many more, may now be joined together as chips in a puzzle, explaining different aspects of economic development during its various stages.

1. In regards to the neoclassical model, its well-known problems with the law of diminishing returns, which works very well in some situations but not in others, can now be easily resolved, since this law would apply only after a country was developed using its unique adaptation. Applying it to still undeveloped territories would be misguiding, as factors of production, such as capital, labor etc would hardly be capable of producing predictable returns – the latter would be either negligible or oversized. Within the-then dominant economy, any under-developed territory tends to function as a sort of under-producing “wastelands”, with low expectations but huge potential. See, for example, how the US in the 19^th century underperformed within the steam-based economy pioneered by Britain, but shone in the 20^th century, after developing its oil-based economy and its unique infrastructure based on the mass car.

2. On the other hand, the concept of a geoclimatic zone underscores its uniqueness and the overwhelming need in special institutional solutions, custom tailored to its specific conditions. This is an area, where the institutionalists excel.

3. Meanwhile, the very process of domesticating a zone implies also the existence of its lifecycle. Since lifecycles tend to be fairly regular, evolving through a logically defined sequence of stages, from birth to maturity and forward to the loss of relevance, this would then help in explaining the mysterious regularity of the Schumpeterian long waves.

A known British scholar E. Hobsbawm wrote the following paragraph for the industrial Revolution in Britain, stressing the primacy of unique institutions in regard to technological advance. This quote, with its portion highlighted in bold by the authors, perfectly describes the rise of a specific cultural package for any new land use system.

After being formed, a specific cultural package, merging together technologies and social institutions, is then passed forth in its immutable form as a fixed technological style, a recognizable characteristic of its era.

As it happens, China possesses one of the largest pieces of rich agricultural lands in the world. Its rich loess soils, stretched along its two great rivers, the Yellow and the Yangtze, can support dense agrarian settlement. These conditions, though greatly expanded in size, are fairly reminiscent of the deltas of the great rivers, which became the cradle of the first civilizations five thousand years ago. In China, just as in the ancient Mesopotamia, manual labor was thus easily available, while there were few pastures for draught animals, especially, the horse.

This difference marks an important fork that separated the proverbial East and the West. Once started, during the medieval era, the European reliance on non-manual power sources only intensified during centuries, leading to the rise of ever more powerful machines dependent on fossil fuels. In contrast, the Chinese preference for manual labor survives until today, with tiny fields still toiled by barefoot peasants. The rich soil thus helped in preserving the old social institutions, based on the central authority, which wouldn’t be too much out of place in the ancient Mesopotamia. In no way would this mean that China wasn’t technologically adept. It truly was, often leading the world in important innovations which shaped the modernity. However, in China proper the worth of an innovation was often judged by the possibility of integrating it into the extant social fabric. Anything that didn’t fit-in was mercilessly expunged and suppressed.

Of course, there was an important difference if we compare China with the first civilizations of our ancient past. The latter occupied a truly tiny territory, thus could be minutely managed in every single detail by powerful bureaucracies doling out daily sustenance to each and every worker. Though bureaucracies were indeed powerful also in China and still are, its huge size led to the rise of a highly evolved market economy while Europe was still mired in the feudal era. Meanwhile, the size of rich agricultural lands in China was so immense that they had to be domesticated step by step. A succession of new agricultural staples, from “wet” rice to sericulture, potatoes and maize, brought by Columbus from the Americas, helped in a step-by-step unlocking of increasingly more difficult territories to traditional dense patterns of settlement. This gradual radiation out of the deltas was mostly peaceful. New territories were formerly wastelands, and, as such, were nearly unpopulated. Thus, facing little resistance, China was interested in keeping intruders out of its rich lands, rather than in intruding others’ territory.

Meanwhile, European lands happened to be much less fertile, but it was much easier for the population to expand out of them, after its density exceeded supportable levels. Usually, they went to lands, already populated by others. This stimulated technologically/militarily heavy development. With a degree of generalization and oversimplification, it can be said that the West rose as a product of its technologies. Its social institutions, such as primogeniture, poor laws etc, served to support the leading technology of the time. This resource-and-energy-heavy mode of economic development depended on constant territorial expansion. New horizons were beckoning as soon as the territory under domestication was exhausted and could not feed the demographic growth anymore. As a consequence, the constantly evolving technological prowess of the West on the backgrounds of its need for ever more resources eventually led to its global economic and political dominance.

The persistent trend of using ever more power and mechanization favored large uniform fields, with the all-time peak achieved through mass production of standardized products in the US. In a stark contrast, the preeminence of social institutions on the backgrounds of labor-intensive-and-resource-saving economy became the trademark of the East. This mode of development showed its restrictions from the 1850s, with the start of Western dominance. Today, the restrictions of the Western approach are also becoming obvious, made painfully clear by the ongoing global warming and the lack of suitable territory for further expansion.

The laws of physics state that the need for more energy can be compensated for by an increase in the precision of its application. Thus, the new precise technologies of robotics and nanotechnology, developed on the West, may allow the resurgence of the resource- and labor-saving Eastern paradigm during a new stage of development, providing a way out of the current resource and energy trap. We show that already, there is an ongoing merging of the western and eastern paradigms. Taken together, they are forming a brand new economy of small series.

In the article, we describe the rise of a new mode of production, which is low-impact, resource saving and labor intensive, Chinese-style, but also technologically sophisticated and able to resolve the most important bottleneck of the modern manufacturing. While the modern machinery makes it easy to produce, the current mode of production leads to huge expenses at the design stage, as hundreds and thousands of standardized parts must be minutely designed, to the tiniest detail, thus producing volumes of technical specifications. Meanwhile, the new style of production, based on the revival of the traditional institution of communal cooperation, may form a nucleus for a new technological style for our future. It would be immensely simplified at the stage of design, as only modules must be specified, with minute details left to the discretion of their suppliers.

We describe this emerging style below in detail, tentatively naming it the Object-Oriented Design (OOD). We show that its roots can be traced both to West and East, as it merges their best and latest trends. Using OOD it became possible to greatly reduce costs of production by sidestepping the super expensive stage of a new product’s design. This is hardly an academic concept, as this method is already hard at work. Its possibilities are showcased by the success of Chongqing and its production of super-cheap motorcycles. We show that this new organizational model feeds on the communal traditions of the densely populated East. Also, it requires substantial technological sophistication, related to the Internet and the ongoing miniaturization of technologies through the use of the chip, developed on the West. Thus, it marries the latest trends of West and East into a new line of development, which carries the latent potential reminding one of the Model T of Ford. Just like the latter, it may become essential for unlocking the hitherto underdeveloped territories by providing cheap means of access to them. The affordable mass motorcycle comes along with the Internet, cell phone, alternative sources of energy etc, which, in turn, are reminiscent of the telegraph, the radio and the lightbulb a century ago.

Starting from the 1850s, when the Industrial revolution came to its age, difference in cultural traditions between the Western economy, labor-saving and resource-intensive, and the Eastern, labor-intensive and resource-saving, contributed to the technological dominance of the West (Clark, 2007; Findlay, O’Rourke, 2008). We show that the upper limits of westernized development may have been reached. A brand new wave of development, surging both in west and east, starts with institutional changes, first of all, with the rise of a new business model (Object-Oriented Design, further OOD), both in China and on the Internet. Eastern cultural traditions were rethought for the current conditions of resource shortages, growing unemployment and global warming, and help in using western-style technologies, in a totally different context.

This process has its clear homologues in the past. For example, the wealth generated during the 20^th century came from the rise of Fordism (mass production and the conveyor), with Taylorism as its institutional foundation (a workflow optimization system). Today, in a similar fashion, the OOD is a new production and organizational model for the firm, which greatly reduces the final cost of its products. It could be a harbinger of a totally new economy of “small series”, allowing immense cost savings by using non-standard parts made by numerous small producers.

Just as it happened in the 20^th century, where the switch from coal to oil, was marred by two world wars and a global depression, this ongoing convergence would hardly bring us joy and happiness at once. If history is any guide, domestication of a new territory usually starts with unwitting overexploitation, environmental disaster and economic catastrophe – witness, for example, the Dust Bowl of the 1930s. The latter is usually associated with the mass tilling of the virginal lands in the US, made possible by the emerging technology of the tractor (Egan, 2006). Only after evolving all aspects of oil-based agriculture, including irrigation and fertilizers, the Great Prairies turned into the breadbasket out of the zone of the catastrophe. Similarly, the easy access using the cheap motorcycle to every cranny and nook of the developing world may greatly contribute to the unfolding environmental problems. However, after a truly difficult period of adjustment and forming a full-fledged technological style, it also may help in unlocking the great wealth, still hidden in the faraway periphery of the developing world – currently, just under-producing wastelands within the oil-based economy.

Historically, both East and West evolved to solve the same problem – feeding their respective demographic growth. However, their solutions differed, perhaps, with geoclimatic specifics accounting for the major part of their divergence (Diamond, 1996). Thus, successive western societies were shaped around the dominant technology of the time – witness, for example, the dissimilarity between the modern consumer society, US-style, an offshoot of the oil-based economy; and the industrial Britain, where King Coal ruled. Meanwhile, the eastern-style societies tended to be fairly conservative, oftentimes sacrificing the technological advance for the sake of social stability. Thus, the Mughal India easily coexisted with the earlier caste-system.

Up to the 16^th century the Eastern-style development led to a generally higher degree of evolutionary success – as it could support considerably higher levels of demographic density. However, as shown by a number of authors (Clark, 2007, Findlay, O’Rourke, 2008), starting from the 1850s, the Western-style development proved to be more successful. After a leap in labor productivity achieved through higher energy expenditures, the industrial society managed to break through Malthusian constraints. This was accomplished via significant efficiencies of scale and the growing use of non-renewable resources, often procured from colonial and post colonial territories of East.

Today, the amazing success of China attracts renewed interest in the Eastern model stressing its profound differences from West.

1. Power versus precision. Historically, instead of increasing its energy expenditures western-style, East relied on its ample resources of manpower. Thus, any new need for increasing mechanical power was traded for more precision in energy applications.

2. Big versus small. Since the demographic growth was not channeled away via primogeniture [3], the size of land holdings in the East tended to get smaller with time. This contrasts the prevailing Western trend towards reaping scale efficiencies by increasing the size of an average enterprise. In China, its tiny holdings led to remarkable nimbleness in using peculiar features of any natural niche.

3. King of nature versus its temporary servant. East and West differed also in their attitude towards their environments. It is a sad fact that any known type of economic activity leads to irretrievable ecological changes. For example, deforestation and the resulting erosion were typical both in West and East. However, the eastern-style reliance on growing a variety of interdependent cultures proved to be more preservation minded than the monoculture-based agricultural style of West. In China, the erosion from initial deforestation was in fact gradually reduced via terracing and other forms of accommodation to minute peculiarities of their environment.

4. Staying put versus territorial expansion. In accordance with Confucian values, in China, expenditures in labor were never spared if they helped in improving one’s plot for handing it down to the next generation. Meanwhile, in the West, uniformity of terrain was urgently needed for more efficient mechanical applications, while tilling its larger plots. Within the governing paradigm of the man as the king of the nature, there was always more open land beckoning on the horizon after exhausting the older holdings.

5. Monoculture economy versus a carefully selected blend of multi-cultures. The monoculture-reliant large scale western economy presents thus a striking contrast to the eastern multicultural small-scale model, which thrived on the cultivation of many mutually complementing cultures within its highly specialized economy on tiny plots.

One would argue that standardization, machines and reliance on monocultures opened the way to much higher productivity, needed to feed the surging population of the planet. As shown by Clark (2008), starting from the 1850s, the western economy broke through Malthusian constraints, increasing its wages faster than the accompanying rent. However, on the background of global warming and pollution, the mounting resource shortages are already pointing at the exogenous limit for the Western-style development. We show that switching back to the mode of small scale production may lead away from monocultures, with their heavy demand on land, energy and resources. This may prove feasible again in our near future by merging the western and eastern styles of development. Modern precision tools, nanotechnology and robotics, these newest creations of the western technological evolution, may be opening up an innovative option for a brand new economy of super-productive small series. It may lead to domestication of the currently under-populated lands, unsuitable for horticulture. Eerily resembling eastern-style production, but on a much higher technological and organizational level, usually associated with the West, this new economy of small series may lead to considerable gains in productivity through increase in precision compensating for lesser expenditure of power. We argue that this may put a renewed stress on the importance of social stability, which is currently taking a hit from the mounting imbalances of globalization.

In this context, it needs to be noted that this situation is hardly unique. In the West, there were at least 5 other instances of similarly dire shortages of the dominant resource of the time.

The latter ranged from:

The authors (Badalian and Krivorotov, 2006, 2007) showed that, up to our days, in the West, resource related pressures were always resolved via territorial expansion. After a considerable turmoil and bloodletting, a new, much more productive economy, complete with its unique, more powerful technologies, social/power institutions, types of property, forms of ownership etc, was created in a new location. The virgin resources of the new space under domestication fueled a jump to a much higher level of energy consumption. This opened up, for innovative productive uses, the unique features of a new geoclimatic zone, which previously could be used only barely.

Historically, in the West, there was a well defined progression of energy sources, which, by supplying more power, helped in domesticating ever larger and less hospitable territories.

They ranged from:

The historic rise in energy consumption levels enabled considerable gains in efficiency, mostly achieved through labor saving – the size of an average landholding generally grew throughout eras. This promoted the drive towards uniform, monoculture style large scale cultivation [4].

Today, however, this tried and true path to resolving resource shortages seems to be hitting a snag. A leap to the next energy consumption level along with an increase in monoculture-style efficiencies of scale seem to be closed – the ongoing global warming puts strict exogenous limits both on future energy expenditures and the further expansion into the remaining wilderness.

1. It is a well known fact that China eschewed notable increases in levels of energy, characteristic for the western lineage. For example, in agriculture, China never adopted the horse, which remained confined mostly to military applications [5]. Of course, possessing the extremely productive “wet rice” culture it made no sense to support the horse at the cost of 5-6 laborers [6]. Instead, the Chinese economy was run mostly on its widely available manpower and oxen. Indeed, the Chinese levels of demographic density achieved on large territories were unprecedented in history [7]. They can be only compared to densities at the time of first civilizations, albeit the latter were attained in the much tinier area of super-productive deltas of the great rivers. Thus, in a notable contrast with the energy-thirsty West, the eastern economy could extend into wilderness, turned productive by increasing the level of precision in its power applications.

2. Also, there were other notable outcomes of relying on the increase in the level of precision. Thus, instead of pursuing western style monocultures by incessantly increasing the size of land holdings, in China we see its direct opposite. With the growth of population came ever smaller holdings, promoting the evolution of highly specialized, small scale enterprises. As the time went, their diminishing size made them nimble. Uses were found for many dissimilar small geoclimatic niches in the richly varied Chinese territory. Thus, terraced rice paddies were used for aquaculture. The mulberry trees for sericulture, where mostly females were employed, were grown on their embankments.

3. It needs to be stressed that this highly specialized economy placed specific demands on its society. The tiny plots couldn’t satisfy the full range of needs of their owners, thus, the functioning of the entire economy depended on its ability to maintain advanced levels of exchange and trade. And indeed, this trade, mostly carried by the mighty Yangtze, evolved during the era, nearly synchronous to the European age of explorations [8]. The related increase in land productivity added to efficiencies of specialization led to a great population surge – the Chinese population trebled within two centuries (1650-1850). Obviously, such an extensive level of trade was quite demanding and could be supported only through a significant degree of political unification. Thus, China of multiculture economy prospered, when unified, and suffered during the times of disunity. Notably, communication between distant parts, which evolved their mutually incomprehensible dialects, could be maintained seamlessly, using a unique Chinese adaptation. Its writing system was unrelated to the sound of speech and could be shared across the region.

4. While both models of development caused significant deforestation in the territories under cultivation, both for agricultural needs and for fuel, the Eastern approach, which found a way to benefit from any minute peculiarity of its environment by finding an appropriate plant benefiting from it, proved to be much more conservation minded. For example, the deforested hills in Southern China would have been much more erosion-prone if cultivated in the western mode as uniform monoculture fields. In China, at a great cost in labor, they were elaborately terraced, mostly for rice paddies. The embankments were strengthened by planting mulberry trees and other beneficial cultures. Such preservation is, in fact, a trademark feature of multicultural labor-extensive approach as the opposite of its monocultural labor-saving counterpart typical for technologically minded West. Among examples, the cultivation of the “three sisters” (mutually supportive cultures of maize, squash and climbing beans) by Native Americans or “terra preta do indios”, the artificially enriched and extremely productive soil of Mesoamerica. According to recent research, it could have provided sustenance to around 50 million people on the extremely poor soils of the Amazon. Amazingly, it preserved its fertility up to this day, a contrast to the easy leaching of the artificially fertilized fields.

5. We need to stress that, despite its considerable sophistication, the Chinese economy never advanced past manually tended gardens, classical-antiquity-style. I.e., it never found appropriate uses for lands unsuitable for horticulture. Thus, it substituted its scarce animal proteins with plant proteins, mostly derived from soybeans. Meanwhile, in the case of West, domestication of the marginal “wastelands” pushed to technological advance, which indirectly led to its current dominance. First, it was the Atlantic coast, with its animal husbandry as the base for early industrial applications fueling the large scale bulk trade. Then, starting from the Industrial Revolution, there were found uses for the landlocked areas in the temperate climate all over the globe. They could now be connected via railroads and steamships to the rest of the world economy, which led to the global spread of white settlements. Finally, the modern oil-based economy further improved the access to remote areas, such as California, the Great Plains and Florida, mostly in the zone of extreme climate, making them economically important. As a side effect, its spread abroad during the ongoing globalization also increased the level of consumption worldwide – many peoples, including the Chinese, are now switching from grain-based consumption to a more varied diet [9]. Clearly, the time has come for domesticating the huge wilderness, still abundant in China and elsewhere, by using environmentally friendly, technologically advanced means for producing more proteins.

As we see, both the western and eastern ways are currently facing strong headwinds and may be in need for a totally new style merging their diverse approaches in a mutually beneficial way.

In this paper we argue that these notable features – namely, substitution of power with precision of power applications and the high sensitivity to natural surroundings, with productive uses for any smallish geoclimatic niche suitable for cultivation – may be the underlying cause of the current Chinese success. Meanwhile, up to this date, they managed to escape the attention of researchers. Also, further development of these features, perhaps, by blending the beneficial traits both characteristic for West and for East, may provide a suitable way out of our current predicament. It may involve both trading more power for an increase in precision and finding novel ways of using territories inhospitable for horticultures, both in China and elsewhere.

It can hardly be coincidental that China, feeding on its historic strengths, managed to develop the most successful economy of our days. However, it never managed to domesticate the areas inhospitable for horticulture, perhaps because of its failure to accommodate the pastoral peoples inhabiting them. Today, the country walks a difficult tightrope between adopting western industrial technologies, which already showed their limitations, and preserving its competitive advantage of production of “small series” within its specialized and richly varied traditional economy. The latter was its trademark in the past and, perhaps, is currently pointing to the future, promoting both the conservation of the environment and social stability through fuller employment of population. Meanwhile, currently China is considered one of the worse pollutants, as it eagerly acquires western technologies greedy for resources and energy.

Within the European line of development, most historians distinguish at least six grand periods, each of which evolved in its own distinct geoclimatic zone. They were on the scale of:

Each of them was unique, with a notable break of continuity in-between – more or less prolonged and destructive “dark ages”. While there was no shortage of wars in history, events between these periods were so extraordinary and accompanied by such great upheavals and mass migrations on the scale of a Völkswanderung that they stuck in the memory of generations.

1. The historic accounts and archaeological data testify of the fury unleashed during the Catastrophe of the Bronze Ages between the 13-12^th centuries BC [10].

2. Its devastation was amply matched by the one wrought by the immense tide of barbaric invasions, surging in destructive waves from the fall of Rome in the 4^th century and up, until the Normans settled in Europe following their raids of the late 8^th-9^th centuries.

3. Then, there stands out the lengthy tumultuous period between the 1348 Black Death and the end of the wars of Reformation, which are known as the religious wars of the 16^th Century. The latter redrew the map of the Atlantic coastal regions, previously considered of little use.

4. The French and British competition in the 18^th century, oftentimes carried out far away, by proxy, in the North America [11], was an important, often overlooked factor of the American Revolution. It was followed by the bloody French Revolution, helped along by overextension and famine. It ended with the Napoleonic wars, often called the world war of the 19^th century. With the loss of their American colonies, the British hopes on obtaining timber etc from overseas were extinguished, pushing them instead towards industrialization

5. The rise of the mass society of the 20^th century was announced by a series of great revolutions and two world wars

6. Most recently, we are facing a wave of terrorism that may be announcing the start of another period of insecurity on the background of massive human movements, with entire countries supported by cash sent home by migrant-workers.

Amazingly enough, the successor society was usually effectively weaned off the stranglehold of this formerly inelastic and exceptionally dear/scarce item. I.e., from the 1950s, after the debacle of two world wars, the prosperous consumer society US-style still used significant amounts of coal, but only as one of the many substitutes of its own main inelastic resource, which was and still is oil. Similarly, the industrial society lessened its dependence on timber, previously grown in the so called coppice woods. Or, the classical antiquity of Greece and Rome thrived on its olive and vine, grown in the arid Mediterranean, mostly unsuitable for irrigation style grain farming. Grain, meanwhile, was procured from Egypt, rich with alluvial mudsoils. This area was suitable for irrigation agriculture, still worked in the fashion of the first civilizations. There were also other striking examples of similar switches of dominant inelastic resources between eras. Here it was – the dominant resource of a fading era, the most dear and wanted thing – causing inflation and wars. Soon, after a fortnight of huge suffering, while a brand new economy was being formed around an altogether different resource, it would end up out of limelight and mostly forgotten.

For example, at the start of the 14^th century, practically all suitable lands in Europe and even a good deal of barely producing wastelands were already cleared off from forests and placed under cultivation at a great cost to ecology. Then, there came the sad moment, when, in the situation of acute shortages of productive lands, the medieval subsistence economy failed to support any additional demographic growth. The latter was somewhat channeled away during the territorial expansion from the 10^th to the 13^th centuries: to the Palestine; conquest of the Slavic lands; the Albigoan crusade, which placed the lands on the south of France, previously part of the earlier olive/vine economy of the Mediterranean, under the French king’s rule, as the newest addition to the medieval grain-based subsistence economy etc. Nevertheless, due to severe overpopulation, famines became more acute and damaging.

At the start of the 14^th century, the recent prosperity, still fresh in people’s memories, was replaced by lingering suffering. An ecological disaster of a prolonged bout of cold weather accompanied by a decades-long rain led to widespread hunger and thoroughly weakened the population immunologically. This might have increased its susceptibility to the 1348 Black Death, which, according to some estimates, killed from one third to one half of all people living in Europe.

The landscape of Europe was thus totally changed – it shifted from dense forests typical up to the 9^th century to open grasslands that prevailed after the 14^th century. Animal husbandry, wool production and other value-added occupations more than filled the need for nourishment, which couldn’t be obtained anymore at a reasonable cost in labor in the subsistence economy of the medieval era. Meanwhile, the disappearance of forests, cleared off from the 10^th century, created new needs. Fish, meat and timber, which previously could be obtained in the neighboring forest or creek, turned into valuable commodities to be bought and sold. Starting from as early as the 12^th-13^th century, the rise of markets fueled the shipping lanes of the so called bulk trade. This caused a dramatic power-shift – including, for example, the formation of the modern nation-state and the early forms of banking. The Genoese merchants participating in the annual Champagne market in France could operate so far of their home-base due to revolving lines of annual credit operated by the rising global financial system of the Latin Christendom, stretching from France to the Palestine.

Thus, it was perhaps only fitting, though, no doubt, controversial, that Eleanor Carus-Wilson (1941) considered the 13^th century as the starting point of the early industrial revolution. She justified her conclusion by pointing to a dramatic increase in commercial uses of the mill. The ongoing switch in energy sources was especially visible in the Atlantic. This area was on the far periphery of the medieval economy, being mostly unsuitable for its subsistence-style grain production. During this immense technological and social transformation, the Atlantic acquired new economic importance as the center of the rising early modern economy and its long distance bulk shipping. The products of animal husbandry, first and foremost, wool, gave rise to the early modern manufacturing, powered by the mill, gainfully absorbing a large labor force dependent on grain coming from elsewhere, mostly from the Eastern Europe. This new economy, in its infancy, was serviced by the Hanseatic League, starting from the 13^th century. Perhaps, not surprisingly, the halcyon years of this monopoly from the start of the 13^th century ended with the killing rampage of the 1348 Black Death in Europe [12].

The happy outcome of feeding and gainfully employing many more people on the Atlantic coast would only come much later, after other, much more pressing concerns were successfully resolved. First among them, was, of course, the question of ownership over the newly valuable land! The new importance of the previously marginal Atlantic territories led to substantial social and political tensions as these lands were carved up in the course of desperate and prolonged wars. Amazingly, the warring sides of the so called religious wars of the 16^th century were obsessed with dividing the property rights around the Atlantic coast [13], and rather lax and accommodating regarding their faiths. Among notable examples, Cardinal Richelieu was the fundraiser and the supporter of protestant armies, aimed against the all-Catholic Habsburgs [14].

The growth of population in France was resumed only after 1715, after all questions of ownership of the newly rich and important lands were duly resolved. The rising early modern economy was based on a newly built infrastructure for large distance trade, whose centerpiece was an extended system of water based transportation. Water bodies, ranging from rivers to seas and oceans, were joined by manmade canals into a sophisticated, fully navigable network. These were amazing engineering feats, built at a great cost [15]. They were supported by an extensive system of taxation, which would make a modern state proud, and served as the foundation for the sophisticated production of luxury goods at royal manufactures etc. The king served as a marketer and promoter-in-chief for the French made goods, de rigueur for any discerning noble.

There are more examples of a dramatic shift between economies. The most recent was much closer to our times. It is a well known fact that the inflationary peak of prices on coal was reached in 1913. In the grip of an inflationary spiral, eerily resembling our times, there was a desperate search for coal as the chief inelastic resource of the time. People had to reach deeper and/or extract thin shallow coal deposits that, only recently, weren’t considered worthy of the effort. This created new needs, such as ventilation for deep shafts, and lifts and conveyor belts for moving people and coal [16]. Open fire and coal-powered steam were used at the start, but had to be replaced, as too dangerous in the depth of the mine. New sources of power were urgently needed, which, in time, led to electric generators ran on diesel. Meanwhile, in strip coal mining it was necessary to expose the thin shallow layers of coal. This greatly exceeded the capacity of steam, which was inflexible and couldn’t be used without costly railroad tracks [17]. Thus, it was necessary to develop diesel-powered excavators and bulldozers and also powerful explosives, while greatly increasing both the reach and the might of mechanically applied power.

Along with run-up prices on coal there was also a rampant inflation on food fueled by the migration to cities during industrialization. Even though the rise in food prices was quite steep, it, similarly to our times, was singularly outmatched by a parallel rise in the cost of fertilizers. Just as today, fertilizers were badly needed for increasing the land’s productivity [18].

Both these daunting needs, in cheap fertilizers and explosives, were resolved by a single brilliant invention that earned F. Haber a well deserved Nobel Prize. The first commercial production of nitrates out of air started working in 1913 and changed the course of the 20^th century. First and foremost, the sudden easy availability of this chief component of explosives broke the British control over the trade in nitrates. Regardless of the underlying reasons for WWI, its prolonged battles would hardly be possible without this new abundant source of cheap gunpowder. Everything that followed may have been a mere consequence. Powerful, long-range cannons required aerial observation. After an ill-fated attempt to use dirigibles, there was a furious evolution of planes – 4-6 generations in the course of the five years of the war. Britain entered the war with 600 Lorries, ended it with 60,000. Thus, WWI led to the mass entrance of the internal combustion engine and its speedy refinement to commercial prototypes. This placed an indelible mark on the world, first in the West, then, gradually, elsewhere.

John Roberts (1989), a noted historian of the 20^th century, once famously observed that the most daunting legacy of wars may be not the ruins, which are comparatively easy to clear and rebuild, but rather the rise of wartime industries. They can’t be shut off at one’s will. What must follow after the war is their long and painful assimilation to peace. Thus, he described the period between the two world wars as a difficult wholesale shift from coal to oil, building a brand new society around the winning technology of the internal combustion engine and its dominant resource, oil. The political system dominated by Britain was replaced by the post WWII Pax Americana. A great deal of new wealth was created, as California, the Great Plains, Florida and other territories of the extreme climate, previously out of the reach of the farmer, were successfully domesticated within the heavily mechanized agriculture based on petrochemicals and long range transportation of mass produced standard goods, US-style.

This parallelism becomes especially clear, if we compare accomplishments of particular periods both in China and West. It seems that in both cases development occurred similarly, by domesticating new territories. Only, in West, these were opened up by applying new, more powerful sources of energy. Meanwhile, in China new land was made sufficiently productive by the next horticultural staple, which could support great levels of human density in a new place [19].

1. The first spurt of growth in the delta of the Yellow River mostly followed the familiar Mesopotamian patterns [20].

2. Gradually, more arid areas were developed, due to the spread of vegetable gardening. Better techniques of hoeing, water management etc can be attributed to the spread of mass iron. The timing is very close to the spread of Roman-style farming of orchards [21].

3. Then, from the 8^th century AD upward, the next demographic burst correlates to the new culture of “wet rice”. The development was shifted south, gradually domesticating the difficult, forested, swampy and hilly, but also incredibly productive valley of the Yangtze River. This process, in full force after the 10^th century, resembled synchronous great forest clearances of the medieval Europe.

4. This was followed by the wholesale drainage of swamps and water management projects, which also had its parallels in Europe, starting from the Netherlands in the 16^th century. The much slower but steadier pace of domestication of the Yangtze valley can be attributed both to its more difficult terrain and the absence of the horse in economy.

This early-modern development fueled the huge demographic growth of the 16^th-early 18^th centuries, trebling the population. This is usually attributed to the effects of globalization of the 13^th-17^th Centuries [22] (Findlay, O’Rourke, 2008), and the corresponding great increases in the volume of trade. Females could now be employed almost exclusively in sericulture and other semi- or early-industrial occupations within the family farm, leaving the agrarian tasks to men. Even more importantly, the additional hands producing luxury silks, tea, cotton and sugar for exports found abundant new sources of food. Globalization brought important new cultures, especially the maize and the potato, from the Americas. This allowed domestication of the hilly terrain in the inner provinces, previously of little use.

Financially, the Chinese version of the early modern era, with its much greater specialization of households on tiny family plots was enabled by a surge in the universal means of exchange. Silver came from Japan and from the Spanish possessions in the Americas, through the Manila trade. The switch to the negative balance in the global trade starting from 1825 was caused by the European (mostly British) effort to staunch the debilitating loss of silver by selling opium from India. This ruined the Chinese exchange balance, which was finalized by the infamous Opium wars. After the 1850s, China was in visible decline. This is vividly shown by numbers. From 1741 to 1840 population rose from 143 million to 430 million, “… a gain of around 200 per cent while the amount of arable land grew by only 35 per cent.” [23]

The massive outflow of silver after the Opium wars triggered a decline in the demand for Chinese exports of silk, porcelain and tea, which also faced stiff competition from the European industrial-scale factories. The non-agricultural sources of employment were severely diminished. Having no cultures which would allow domestication of territories unsuitable for the traditional horticulture, China was hemmed-in and ruined, with no outlets for its excess labor. It missed the stage of industrialization, as Europe evolved its technologies further. What followed was a long and painful adjustment to the world dominated by West and its technologies.

Today, despite its considerable industrial advance, Chinese agrarian shortcomings and land shortages contribute to worldwide inflation. Since the terrain of the greater China is mostly inhospitable to horticulture, “six sevenths of the population have to live on the one third of the land that is cultivable. The inhabited part of China is roughly half as large as the inhabited part of the United States, yet it supports five times as many people … crowding some 2,000 human beings into each square mile of cultivated earth in the valleys and floodplains [24] … In short, China must feed about 23 percent of the world’s population from about 7 percent of the world’s arable land.” (Fairbank, Goldman, 2006, p.5) Meanwhile, the shift from a mostly grain-based diet to a more westernized lifestyle, with its heavier demands on resources, put a great strain on global supplies. Obviously enough, China is facing the need to domesticate its vast desert-like territories. It must produce a breakthrough, comparable with the agricultural revolution of wet rice which enabled the move to the valley of the Yangtze River.

Meanwhile, in the West technological development was driven forth by the need in territorial expansion, which led to military applications. This especially concerns the trend towards increasing energy expenditures, noticeable from the medieval Europe. The horse, for example, was first used by the knight. Pushed by the laws of primogeniture out of their ancestral lands, the young sons had to gain holdings elsewhere by the strength of their arms. The military technologies gradually were funneled into agricultural applications improving productivity. See the example of the baron’s stallion and his blacksmith – important factors in the manor’s economy. in the same manner, the early manufacturing of the European age of exploration wouldn’t be possible without the ocean-going ship, with its substantial firepower. This technological marvel withstood the ocean gale, the hostile fire and the recoil of its own cannons.

Cannons became the crucial technology at the heart of industrialization. At around the 1750s, advances in line-shaft driven machinery and better cutting tools of the early modern era led to the appearance of cast bronze muzzle-loading cannons. The skills learned in the production of its successor, the carronade, the cast iron gun, preferred by Nelson, were later used in boring the tight-fitting cylinder for the steam engine of James Watt. As Bessemer invented a new, more powerful firing shell, it led to the demand for stronger cannon-barrels, eventually satisfied by his own invention of cheap steel. (Merson, 1990, 193). Further development brought-in steel cannons produced by Krupp. Similarly to the Watt’s steam engine, the internal combustion engine, with its thin uniform walls, benefited from steel-working technologies, first developed for military uses.

The dichotomy between West and China was well understood by the Japanese. “In the sixteenth century, when contact was first made with the Europeans, the Tokugawa clan were keen to use western military technology and advisers to help them win control of the country. However, to manage the peace, they turned, as Japanese rulers had always done, to the model of Confucian China. [27]” (Merson, 1990, 166)

As shown by this analysis, the early modern era presents the fork, where Chinese and Western differences became sufficiently pronounced to stop their up-to-that-point parallel development. The Western Europe staked its future on energy-heavy technologies refined through military applications, while China perfected its manual labor techniques of early manufactures.

If indeed the modern development is about to switch to East as it seems to be happening, then there must be a sufficient new territory for domestication and food production. China in particular and East in general seem to be rich with territories unsuitable for horticulture, which remain mostly under-populated. In West such territories found their innovative productive uses starting from the early modern era, from the 16^th century, the point of the initial divergence between the East and the West.

As shown above, the economy of the European early modern era was based on animal husbandry as opposed to horticulture, prevalent up to the 1348 Black Death, which showed its exogenous limits. It would thus seem that domestication of under-populated territories within the multiculture-based eastern economy may hinge on finding or developing a mix of suitable, profitable and mutually beneficial animals, possibly, adding aquaculture etc to the mix. In a similar fashion to mutually enhancing packages of horticultures, this may further extend the eastern tradition of small series, now merging it with the western-style animal husbandry [28].

There are other examples of similarly “old-fashioned” business solutions, which, in fact, are pointing to the future, representing a merge of Western and Eastern approaches. For example, it is a well known fact that, currently, the bottleneck in innovation isn’t in production per se, but rather in costs and delays related to the process of design. Surprisingly enough, this significant hurdle may be cleared off by using an important new business model, which was first developed in Chongqing and is now being spread to other regions in China [29]. In Chongqing, the current world capital of cheap motorcycles, cost savings were achieved by a significant simplification. There are no detailed specifications for a part other than inputs and outputs that allow it to be compatible with other parts of the end-product. In fact, any wheel will do, as long as it has appropriate coupling, and acceptable weight and quality. The same applies to any other part of a given motorcycle. This unorthodox approach appeared as a product of tight initial financing, which was resolved by the mutual cooperation of artisans, who lived close together and trusted each other. Chongqing grew into an important business and finance center.

Meanwhile, this practice also eerily resembles the most advanced techniques in computer code writing, the Object-Oriented Programming (OOP). The entire code is a collection of largely independent modules, which may be reused at one’s will. Only inputs and outputs of these independent modules may be controlled, everything else is “hidden” inside the module. This approach enhances both the flexibility and reliability of the code and shortens the time of its development. By extension, the Chongqing business model, which lowered costs dramatically and enabled the mass production of cheap motorcycles, may be rightfully called the Object-Oriented Product Design (OOPD). In China, it is being actively deployed also in other industries, including such as the production of advanced solar-cells. The main principle is a town devoted to a single product, with all suppliers housed close-by, within each other’s reach. It closely resembles medieval artisan guilds while being embraced by other industries and other towns.

Fortunately, there is an alternative, recently rewarded by the 2006 Nobel Prize for Peace to Muhammad Yunus and the Grameen Bank. The prize was a milestone, because it specifically linked economic development to the peace process. It also recognized the high efficiency of microloans for developing an impoverished community. It needs to be stressed that such loans aren’t anything new, but rather a revival of the ages-old concept of communal self-help. Among its many examples, the success of the Korean community in the US can be traced to providing non- or little interest bearing loans from the communal stash. In the USSR, which didn’t have a working credit system, large purchases were instead financed through self-help communities on workplaces and neighborhoods. Such self-help societies also operate in many faraway areas of the developing world, financing small, but incredibly important purchases: a single cow, several chickens, a sewing machine etc [30].

Thus, they provide a way to economic independence to households, often placing women into the position of leadership. Surprisingly and most encouragingly, they also have nearly zero defaults. Instead of a loan officer from a remote bank, the debtors are carefully screened by their coworkers and neighbors, who know them intimately and are well equipped to judge their trustworthiness. On a larger scale, such self-help financing may also become possible, if governments find democratic ways of using their sovereign funds. Being created to serve their constituents, they can provide project-oriented financing aimed at increasing the public good.

These examples show that, despite the absence of working financial institutions and business law western-style, the emerging world may be equipped for business entrepreneurship, at least up to some extent, both on small and a larger scale. The example of the motorcycle-producing town shows that many smaller enterprises may in fact add-up contributing to the rise of a large industry without the huge startup costs. This underscores the promise of cooperative behaviors as opposed to cutthroat competition.

The significant amount of money amassed by the sovereign funds may be put to work in domesticating the inhospitable areas and contributing to the overall sum of the public good. Among examples, the ability of the government of Saudi Arabia to work its own oilfields may be reducing the flow of oil for sale, while increasing the wealth of its citizens, both by raising the price and accumulating funds. Thus, we can conclude that while the business practices of sovereign funds and similar enterprises seem as yet undefined, they may gradually morph into a novel investing body servicing the development of their territories. Meanwhile, the West experiences a spread of communality traditionally associated with the East, for example, in the Internet (Wikipedia, the open-source community, social sites, etc).

All pieces seem to be in place, ready for a breakthrough in the fashion of F. Haber’s invention of cheap nitrates, so the next agricultural revolution can be started. Meanwhile, there is precarious balance between aforementioned beneficial developments and many dangerous and synchronous negative trends.

Historic experience shows that, in order to advance into the happier days of a budding era, people had to survive the carnage during the transition. The West is currently deeply in recession, in no small part reflecting the collapse of the leading economy. Also, there are few doubts left that East in general and China in particular are capable of absorbing western technological expertise and evolve it further. The problem rather is whether it is possible to avoid the wholesale destruction of environment, as China takes on itself the industrial production for the remaining world, polluting its own environment and depriving other peoples of manufacturing jobs. Also, what would come to enhance or, possibly, even replace the current oil-based economy, as its external limits become painfully clear?

Perhaps, it is the right time to start shifting to the Chinese old tradition of relying on enhancing precision technologies. Far from being machine-phobic, China led in developing its unique power tools. These machines weren’t designed for applying power, as it was the case in the West, but rather for precision. For example, the seed drill was in wide use at the time of the Han dynasty (as early as 206 BCE-220 CE). Its version in the 18^th century Britain introduced by the famous agricultural innovator, Jethro Tull, may well have been an adaptation of the Chinese much earlier invention. (Merson, 1990, 23) Also, during Han dynasty “the widespread use of the iron-tipped plow and the mould board, which turned the earth, allowed for deep plowing, which significantly increased the productivity of the land.” This was synchronous with the classical antiquity in the West, where iron was much scarcer in non-military applications [31]”.

In China machines always served pragmatic needs, as they do also now. Now may be an opportune time to resurrect this historic adaptation to multicultural, small series economy by adapting to it modern technologies of precision tools, from nanotechnology to robotics, developed in the West. The current rise of resource shortages and the related tensions along with growing mutual suspicions between East and West can only be mitigated by gaining mutual benefits from their cross-cultural cooperation.