From Silk to Silicon – A Connected World

Let me start with two different stories, about two books with different meanings, about globalization in two different eras, fifteen hundred years apart.

A few months back, I read William Dalrymple’s latest book, “The Golden Road – How Ancient India Transformed the World”. It is a history of the trade routes that linked a civilisation’s wealth and wisdom to the world beyond. Like all of Dalrymple’s books, it is an excellent read and it can serve as an important backdrop to understanding current debates about globalization, through the lens of history. The book covers a period that lasted from around 250 BC until roughly the eighth century CE, when India was globally connected to the known world, from China to Mediterranean, through trade routes. Indian goods flowed west and in certain periods, India was Rome’s largest trading partner. While trade was the primary function, it was also a conduit for ideas and culture. The influence of Indian art, religion and architecture can be found in Southeast Asia and one of the grandest Hindu monuments, Angkor Vat is located in Cambodia. Buddhism, which originated in India, travelled to China and other East Asian countries through the Silk Road. India’s influence can be seen in the sciences and especially in mathematics, where the ten-digit numeral system spread west through the Middle East to Europe. Reading the book, one cannot escape the implicit message of it being a globalized world, where goods and ideas flowed freely and this was a world that was open to trade, tolerant, scientific, creative, and universalist.

Cut to the present, a millennium and half later, we are seeing a rancorous debate about benefits and perils of globalization and free trade. The two poster boys of this debate are Apple and China, and the escalating rhetoric is about supply chains, technology and trust. I came across a very interesting book by Patrick McGee, published a few days earlier, “Apple in China – The Capture of the Worlds Greatest Company”, which ironically sums up what has transpired between the US and China over the past decade or so. McGee chronicles how Apple’s decades-long investment in China fuelled its spectacular success and, in turn, accelerated China’s rise as a technology superpower. What began as Steve Job’s search for a solution to scale the production of his new products, starting with iMac, the relationship stands at a crossroads today, with Apple looking for options to relocate their supply chains. This is also a story about China transforming its initial completive advantage of low wages into a high-tech workshop capable of high-end research, manufacturing and innovation. As Apple entrenched itself in China, it became beholden to the Communist Party and China’s decades long effort to gain technology superiority over the United States through knowledge transfer and best practices. Apple’s China strategy spawned a huge ecosystem of technology companies, including brands like BYD, which began as an Apple contractor assembling iPads, and is now building cutting-edge electric cars. Huawei, an Apple competitor that benefited from Apple’s decades long China strategy, is leapfrogging Apple in design and technology. Over the decades, Apple estimates it has trained 28 million workers, more than California’s entire labour force, contributing to China’s path to being a hi-tech superpower. The book essentially highlights the interdependencies of today’s hyper globalized world and the Geopolitical realities that can pose existential risks to any company.

Two different eras, different countries and depending on who you are, two different messages. Today, the second case is most often quoted about the perils of globalization and its dark side. There seems to be a consensus that we are entering a period of deglobalization or Reglobalization. After decades of increasing global economic integration, the world is facing the risk of fragmentation, signs and stresses which emerged after the global financial crisis and followed by Brexit, US-China trade tensions, Covid and Russia’s invasion of Ukraine. The post-GFC era has seen a levelling-off of global flows of goods and capital, and a surge in trade restrictions and there is a growing and vociferous scepticism about the benefits of globalization, leading to rise of populism and nationalism.

For the history buff in me, It brings out a broader and more fundamental question, “What is Globalization?” When did it begin, if we can identify a starting point and how did we arrive at today’s hyper globalized world?

While everyone throws around the word globalization, we still have not figured out the right definition. Since the time it has entered the dictionary, its meaning has undergone a massive transformation. According to the Encyclopaedia Britannica, globalization iis defined in cultural terms - as “the process by which the experience of everyday life, marked by the diffusion of commodities and ideas, can foster a standardization of cultural expressions around the world.” The official World Bank definition of globalization is as expected stated in purely economic terms, as the “freedom and ability of individuals and firms to initiate voluntary economic transactions with residents of other countries”.

If we just sit back and observe what is around us, it becomes obvious that what we call Globalization is not something new, but has been in motion for centuries, if not millennia. As Nayan Chanda points out in his book, Bound Together - How Traders, Preachers, Adventurers, and Warriors Shaped Globalization:

“The term globalization emerged because the visibility of our globally connected life called for a word to sum up the phenomenon of this interconnectedness. But if one looked under the hood of our daily existence, one could see a multitude of threads that connect us to faraway places from an ancient time. Without looking into the past, how does one explain that almost everything, from the cells in our bodies to everyday objects in our lives, carry within themselves the imprints of a long journey? Why in that first instance did human beings leave Africa and become a globalized species? Most of what we eat, drink, or use originated somewhere else than where we find these objects today. Almost everything we associate with a nation or take pride in as our own is connected with another part of the world, however remotely.”

So, let us begin by asking a few questions!

· We take our morning cup of coffee for granted. But how did the coffee bean, grown first only in remote part of Ethiopia conquer the world? Why is Cappuccino named after a family of monkeys found in Central and South America?

· How did the Romans end up spending a fortune to acquire Silk form a place they did not know anything about, China or Seres as it was called? How did Silk reach the Roman empire traversing thousands of miles across land and sea?

· The Phoenicians and the Greeks had created maritime trading empires in the Mediterranean and Black Sea. Why was Grain the most important commodity and what were the Geographic factors that made trading an imperative for them?

· How did the Dollar, which today rules the world of global finance, get its name from a German silver mining town of Joachimsthal?

· How did the ninth-century Arab mathematician Al-Khwarizmi lend his name to the algorithms that now run the world of information?

· How did Potato and Tomato, two vegetables native to Andes become the staple across the cuisines around the world?

· Wines from France and California are consumed all over the world. But how did Grape, a fruit that was first cultivated in the Transcaucasian region between Black Sea and Iran 8000 years ago spread far and wide? And why were the grapes that yielded the first barrel of wine in California called “Mission Grapes”?

· How did the Chinese paper-making technology reach the West and end up revolutionize our world by spreading knowledge and ideas?

· Sugar started its life as a crop in South Asia. How did it end up becoming one of the most consumed products, but also end up being associated with harmful health effects world over? How did it end-up giving rise to horrific slave trade?

· The humble Horse! Domesticated on the vast Eurasian steppes a few thousand years ago, it changed the course of humanity and civilizations. In many ways, out history is a “Galloping History of Trade and Civilization”.

· How did Chocolate, The Food of the Gods, travel from the jungles deep in Mexico to being a cultural icon sought after around the globe?

The term globalization grew out of the very process it describes - a process that has worked silently for millennia without having been given a name. Today's conventional wisdom has it that the communications and transportation revolutions of the nineteenth and twentieth century have for the first time brought nations around the world into direct economic contact and competition with each other. We tend to consider the period between 1870 to the first World War as the first era of Globalization and the past few decades as the time when it peaked in its second era.

Technically one cannot talk of global connections as we understand them today until the first circumnavigation of the globe by Ferdinand Magellan in 1519. However, the word global is relative and one has to consider it in a broad sense of the known world, which the Greeks called oikumene. Globalization as a trend, linking the fortunes of geographically separated communities, has been with us since the beginning of history. While William Dalrymple called it the Golden Road to highlight Indias global connections two millennia ago, there have been other key trade routes that have shaped and defined economic and cultural history, providing wealth and cultural exchange, but also causing war and repression. Here are some of the trade routes traversed by traders, preachers, adventurers, and warriors over the centuries:

· The Silk Road

· The Amber Road

· The Tin Route

· The Tea Horse Road

· The Spice Route

· The Incense Route

· The Trans-Saharan Trade Route

· The Persian Royal Road

· The Inca Road

· The Slave Routes

As William Bernstein points out in his book, A Splendid Exchange – How Trade Shaped the World:

"Globalization," it turns out, was not one event or even a sequence of events; it is a process that has been slowly evolving for a very, very long time. The world did not abruptly become "flat" with the invention of the Internet, and commerce did not suddenly, at the end of the twentieth century, become dominated by large corporations with worldwide reach. Beginning at the dawn of recorded history with high-value cargoes, then slowly expanding into less precious and more bulky and perishable goods, the markets of the Old World have gradually become more integrated. With the first European voyages to the New World, this process of global integration accelerated. Today's massive container ships, jet planes, the Internet, and an increasingly globalized supply and manufacturing network are just further evolutionary steps in a process that has been going on for the past five thousand years. If we wish to understand today's rapidly shifting patterns of global trade, it serves us very well indeed to examine what came before.”

The patterns of global trade over the past millennium can only be understood through the mutual interaction between “Power” and “Plenty”. It has always been an outcome of some military or political equilibrium between contending powers and trade has been tethered to war and peace.

Silk Road is probably the most famous of ancient trade routes and has inspired thousands of people. Conventional wisdom dates the beginning of Silk Road to first century BC, when Han emperor Wudi sent emissaries west to find celestial horses for his cavalry. While it is true that this opened up the eastern part of the Silk Road, what the Chinese found and joined were existing trading networks of Central Asia and Middle East which were already deeply connected to the Mediterranean and were in operation for centuries. This Graeco-Bactrian and Indo-Greek networks were an extension of previous Persian trading networks that developed along “The Kings Road”, which further connected to networks of the Mediterranean that were centuries old themselves and which were used by the Phoenicians and Greeks. Traders from Sogdiana, Bactria, India, Persia, Arabia and Syria have been active on these routes for a long time and what the Chinese did was integrate into existing trading communities. Silk took the prominence, but these were routes where precious metals, minerals, crafts, fabrics and ideas had been traded for hundreds of years. The rise and fall of prosperity of the silk road trades was dependent on the stability and security provided by the empires that ruled over it. The two most prosperous periods were, Pax Romana and Pax Mongolica and when there was no strong central power to command resources and provide stability, trade descended into chaos.

Final Words

Why did I write this article? I have an honest confession! I have been writing this blog for a little over two years now. While I have written about financial and economic history, geopolitics and Geoeconomics, my focus has been history, which is an ocean by itself. The temptation to write about many topics and cover a wide spectrum is very strong and that has made me wander a bit. In the past few months, I have been feeling the need to take a more focussed approach, and this is the beginning of it. One area would be history of trade in a broader sense. But where trade goes, there goes money. So, the second related area I chose is history of money.

History of Trade, Globalization and Money is a fascinating subject, and I personally feel, given the acidic, divisive and acrimonious nature of current discourse on these topics, a bit of historic perspective is the order of the day. My strong belief is that that you cannot make sense of today’s world economy, without understanding the history that produced it. Today’s globalization, with its inherent economic and political inequalities and consequences did not arrive like a fully formed Athena from Zeus’s forehead. They are a stage and an outcome of a worldwide process of uneven economic development that has been centuries in the making and are a product of how different regions of the world have interacted with each other and furthered their interests over time. It helps to understand these patterns and evolution of trade and investments and the associated politics, which will help us stay prepared for what is to come next.

The first of the articles next Thursday is going to be about the brew many of you probably can’t do without in the morning – Coffee!!