The secret of 300 years of economic hegemony is hidden in every crisis.

Recently, the global markets have been turbulent.

The Federal Reserve’s interest rate hike expectations keep jumping back and forth, Europe’s economy struggles amid the energy crisis, Japan is still searching for a way out after experiencing its lost three decades, and around us, discussions of “economic downturn,” “consumer downgrade,” and “employment difficulties” never cease.

Many ask: What exactly is happening to this world? How should ordinary people understand these complex and chaotic changes?

My answer is: If you can’t understand today, go back and look at history. History doesn’t repeat exactly, but it rhymes.

Recently, I read a new book—“300 Years of Competition Among European and American Economies.” The author, Wang Dongjing, is an economist who has long lectured to provincial and ministerial-level officials. Using a span of 300 years, he unpacks the rise and fall of the United States, the United Kingdom, Germany, France, Italy, Canada, Russia, and Japan, telling us their stories in detail.

After reading, I only have one feeling: Everything happening today has already been answered by history.

01

Every crisis is a reshuffle

What moved me about this book is its revelation of a fundamental law of economic history: crises are never the end, but turning points.

At the founding of the United States, Treasury Secretary Alexander Hamilton and Secretary of State Thomas Jefferson argued fiercely. Hamilton wanted to build an industrial nation, with tariffs for protection and centralized power; Jefferson favored an agricultural nation, free trade, and states’ supremacy. Their arguments were like fire and water.

And then? In 1807, the British navy attacked American warships. Jefferson enacted the “Embargo Act,” thinking that relying on agriculture could choke off Britain. The result? The U.S. economy sank into depression, factories closed, farmers went bankrupt. Jefferson then realized that without a strong domestic industry, the U.S. would be vulnerable.

So, this former Hamilton rival quietly used a report written by his political enemy 14 years earlier, and passed higher tariffs than those during Hamilton’s time.

What does this story tell us? In the face of crisis, ideology must give way to survival. Today, the two American parties fight fiercely, but looking back at history, the most practical policies often come from opponents.

Looking at Germany: after WWII, Germany’s economy collapsed completely. The mark became worthless paper; people used money to paste walls rather than buy things. What to do? Ludwig Erhard, the “father of the social market economy,” took office and did something seemingly very risky at the time: within a day, he abolished over 90% of price controls and rationing.

U.S. military government officials in Germany came to question him: “Dr. Erhard, how dare you do this?”

Erhard replied: “I haven’t changed anything; I just abolished what shouldn’t exist.”

And? After deregulation, Germany’s economy quickly recovered. Store shelves filled up, the black market disappeared, and the mark regained its value. This marked the beginning of Germany’s postwar “economic miracle.”

Germans call this the “Third Way”—neither the laissez-faire old path nor the planned economy dead end.

02

Behind the shift of hegemony is a contest of systems

Why can some countries sustain their rise while others fall rapidly? This book provides a clear answer: institutions determine destiny.

The UK is the birthplace of the Industrial Revolution. Steam engines, textile machines, railways—all originated in Britain and spread worldwide. In the 19th century, Britain, leveraging its early advantage, became the “Empire on which the sun never sets.” But by the 20th century, Britain’s glory waned, and the U.S. pulled far ahead.

Why?

The book explains clearly: Britain’s welfare system dragged it down.

After WWII, Britain implemented comprehensive welfare from cradle to grave. Free healthcare, free education, unemployment benefits, pensions—sounds wonderful, but where did the money come from? It all came from taxes.

And the result? Heavy corporate taxes stifled innovation; high personal benefits reduced work motivation. By the 1970s, Britain faced “stagflation”—stagnant economy coupled with inflation. The British realized that the cost of free lunches was losing competitiveness.

Margaret Thatcher came to power and launched bold reforms: privatizing state-owned enterprises, cutting welfare, reforming labor relations. Though heavily criticized at the time, these painful reforms revived the British economy.

Now, look at Japan. In the 1980s, Japan was at its peak. Sony bought Columbia Pictures, Mitsubishi acquired Rockefeller Center, Tokyo land prices once could buy the entire U.S. Japan scholars even wrote books titled “Japan Can Say No.”

And then? After the 1985 Plaza Accord, the yen appreciated sharply. To hedge against the rising yen, Japan cut interest rates significantly, fueling bubbles in stocks and real estate. When the bubbles burst, Japan fell into “the lost three decades.”

A passage in the book left a deep impression: Japan’s problem, on the surface, was the Plaza Accord; deeper down, it was institutional rigidity. Lifetime employment, seniority-based pay, main bank system—these institutions once supported Japan’s miracle but became burdens during economic transition.

Japan’s lesson tells us: no system is forever. What made you successful can also be what causes your failure. Reform is always ongoing.

03

Technological revolutions are never accidental

Today, everyone talks about technological independence and supply chain security. This book reminds us that technological revolutions are never dropped from the sky but are the result of top-down design and institutional guidance.

How did the U.S. become a tech superpower? The book explains: the government is a “catalyst,” not the “engine.”

In the 19th century, to promote industrialization, the U.S. did something incredible: “trade land for railroads.” For every mile of railroad built, the government provided 10 to 40 miles of land. In total, the government allocated 200 million acres of land in exchange for five transcontinental rail lines.

The clever part? The government took no risk, didn’t raise taxes, didn’t borrow, yet gained control over the railroads, transported nearly ten million immigrants to the West, and spurred regional economic development. This operation is a textbook example of “small effort, big results.”

Later, in tech innovation, the U.S. government didn’t directly run companies. In 1863, it established the National Academy of Sciences to encourage private-sector research. Edison’s “invention factories” and General Electric’s labs all came from this model. The government’s role was to create an environment, provide space, and lend a hand at critical moments.

What about Germany? Its rise was driven by science and education.

In the early 19th century, Prussia began compulsory education. After the Napoleonic Wars and territorial losses, Prussia was desperately poor but still insisted that “the best building is a school.” After the founding of Humboldt University, Germany’s higher education soared, producing top scientists and engineers.

More importantly, Germany turned scientific research into productivity. Chemical industry, machinery manufacturing, precision instruments—all products of the “laboratory plus factory” model. By the late 19th century, Germany surpassed Britain in chemicals, electrical engineering, and steel.

Today, China’s technological breakthrough follows this path too.

04

Understanding history helps see the future clearly

The final chapter of the book discusses Japan’s “lost three decades.” Reading it is quite sobering.

After the Plaza Accord in 1985, the yen appreciated sharply. Japanese companies panicked, moving factories to Southeast Asia. Domestic industries hollowed out, jobs were lost. To stimulate the economy, Japan’s central bank cut interest rates sharply, but the money didn’t flow into the real economy; it went into stocks and real estate.

By 1989, the Nikkei index soared to 38,915 points, and Tokyo land prices could buy the entire U.S. Japan’s myth seemed everlasting.

And then? In 1990, the stock market crashed; in 1991, the real estate bubble burst. What followed was a long period of deflation, recession, and struggle. Today, the Nikkei has only just recovered to its 1989 high—34 years of stagnation.

A thought-provoking passage in the book states:

“Economies do not have eternal myths. Behind prosperity, there are always hidden risks. When everyone believes ‘this time is different,’ it’s often the eve of a crisis.”

Reading this today, I am especially alert.

The 300-year history of Europe and America’s economies is a grand drama of crises, responses, rise, and fall.

Studying this history is not for entertainment but to find patterns.

In the face of unprecedented changes—technological blockades, supply chain restructuring, aging populations—we can find references in history.

As Professor Wang Dongjing said in the book:

“During decision-making in the face of challenges and opportunities, extract the essence, eliminate the false, and find the underlying code behind the complex phenomena.”

Understanding history is not about predicting the future—since the future is unpredictable. It’s about finding the unchanging in change, seeing the underlying logic in chaos.

When everyone is swept up in short-term fluctuations, those who understand history can stay clear-headed.