The Penguin History of the World

After the establishment of Communism in China, a division appearing worldwide was that between what we may call capitalist and command (or would-be command) economies. Commercial relations between the Soviet Union and other countries had been encumbered by politics from the October revolution onwards. In the huge disruption of world trade after 1931 the capitalist economies had plunged into recession and sought salvation in protection (or even autarky). After 1945, though, all earlier divisions of the world economy were transcended; two methods of organizing the distribution of resources increasingly divided first the developed world and then most other areas. The essential determinant of the capitalist system was the market – though a market very different from that envisaged by the old liberal free trade ideology and in many ways a very imperfect one, tolerating both a substantial degree of intervention and of financial oligarchies. In the Communist-controlled group of nations (and quite a few others, such as India and in Scandinavia) political authority was intended to be the decisive economic factor. Trade continued and expanded, even between the two Cold War systems, but on a cramped basis.

Neither system remained unchanged. Contacts between them multiplied as the years passed. None the less, they long appeared to offer the world alternative models for economic growth. Their competition was inflamed by the military strategies of the Cold War and actually helped to spread its antagonisms. Yet, this could not be a static situation. Before long one system was much less completely dominated politically by the United States, and the other somewhat less completely dominated by the Soviet Union than was the case in 1950. Both shared (though in far different degree) in continuing economic growth in the 1950s and the 1960s, but were later to diverge as the market economies moved ahead more rapidly. The distinction between the two economic systems nevertheless remained a fundamental of world history from 1945 to the 1980s, not least because of the choices many new states in Africa and Asia had to make about their economies.

The entry of China to the world of what were called socialist economic systems was at first seen almost purely in Cold War terms, and as a shift in strategic balances. Yet by the time of Stalin’s death there were many other signs that the prophecy made by the South African statesman Jan Smuts more than a quarter of a century before, that ‘the scene had shifted away from Europe to the East and the Pacific’, had been realized. Although Germany continued to be the focus of Cold War strategy, Korea was dramatic evidence that the centre of gravity of world history was moving once again, this time from Europe to the Orient.

The collapse of European power in Asia was bound to be followed by further changes as new Asian states came to be aware of their interests and power (or lack of it). Shapes and unities given them by their former masters often did not long outlast the empires; in 1947 the subcontinent of India turned its back on less than a century of political cohesion, while Malaya and Indochina were already by 1950 beginning to undergo important and not always comfortable changes in their governmental arrangements. Internal strains troubled some new nations; Indonesia’s large Chinese communities had disproportionate weight and economic power and anything that happened in the new China might disturb them. Whatever their political circumstances, moreover, all these countries had fast-growing populations and were economically weak. For many Asians, therefore, the formal end of European domination was less important than the gradual overcoming of poverty (although for some the two are of course connected).

Europe’s control of Asian destinies had for the most part been fitful. Although Europeans had swayed the fate of millions of Asians, and had influenced their lives for centuries, their culture had touched the hearts and minds of few even among the dominant élites. In Asia, European civilization had to contend with deeper-rooted and more powerful traditions than anywhere else in the world. Asian cultures had not been (because they could not be) swept aside like those of pre-Columbian America. As in the Middle Eastern world, both the direct efforts of Europeans and the indirect diffusion of European culture through self-imposed modernization faced formidable obstacles. The deepest layers of thought and behaviour often remained undisturbed even in some who believed themselves most emancipated from their past: horoscopes are still cast in educated Hindu families when children are born and marriages contracted, and Chinese Marxists were to draw on an unassailable sense of moral superiority grounded in age-old Chinese attitudes to the non-Chinese world.