The 1st WW is usually simply assumed to be caused by imperialist competition, embedded in the domestic economic conditions of the time: very high income and wealth inequality, high savings of the upper classes, insufficient domestic aggregate demand, and the need of capitalists to find profitable uses for surplus savings outside their own country.
In the early twentieth century, finding an external investment outlet for the surplus savings meant being in physical control of a place, and making such investment profitable required that other possible competitors be excluded even at the cost of a war. The “competitive struggle for markets” led to the exploitation of the colonies. A brutal, scramble for new territories took place in Siberia, where Russia expanded eastward, and in the Americas, where the United States expanded westward to annex Mexican territories and southward to reinforce political control. Ghana, Sudan, Vietnam, Algeria, the Philippines, California, and Siberia are all part of the same process.The malign forces that broke the first Kuznets cycle*and set the rich world’s inequality on its downward path for the next seventy years were contained in the unsustainably high domestic inequality that existed before. Linking colonialism to domestic maldistribution of income was made by John Hobson in his book Imperialism: A Study. At its peak, almost half of Britain’s annual savings were invested abroad, implying close to 7% of British national income. Hobson attributed these capital exports to the “surplus savings” of the elites and, by implication, the ‘underconsumption’ of the masses. Lenin adopted a similar argument, but with a small difference (which becomes relevant later). Hobson actually believed British industry ‘overproduced’ and had to sell the ‘surplus’ abroad, and this was the source of the high savings (high profits).
But the reality is that by the 1850s (at least) Britain had a deficit every year in the merchandise trade balance. That goes against the stereotype of Victorian Britain as the “workshop of the world”. Both British India and Egypt (under the British protectorate) exported raw cotton to Britain’s competitors in textile manufacturing such as Germany, France, and later Japan. Japan started industrialisation partly with Indian cotton and, especially after 1918, exported cotton textiles to British India itself. The Government of India built a national railway system ordering only from British suppliers. The import of food and raw materials consistently exceeded British manufactures exports by quite large amounts. As Britain’s comparative advantage moved farther away from manufacturing to services, the shift also implied that financial capitalism was ever more threatened by great power tensions. British bankers, insurers, and shippers facilitated the prodigious expansion of global trade and investment in 1870-1914 and profited from the economic growth of France, Germany, and the United States. After some point “surplus savings” in Europe were generated not through domestic production but through foreign production. Simply put, GDP < GNP. Many UK manufacturers may have feared German trade competition and agitated for protection, much as USA manufacturers reacted to Japanese and later Chinese competition in late 20th century. But the financiers were more powerful.
There truly was global financial integration, and great power rivalries did not necessarily interfere with it. Gunboat diplomacy and “informal empire” on behalf of bond holders. Napoleon III occupied Mexico. Germany blockaded Venezuela, or when the British navy shelled Peru for the same reason dominated throughout the period by Egypt, but this particular jump [between 1892 and 1900] is two‐thirds explained by the mining boom in South Africa. For several decades before the Great War, Britain and France were the chief competitors for colonial possessions, and one of the flashpoints after the British semi-annexation of Egypt in 1882 was over the Nilotic region. Anglo-French tensions were so incendiary they almost went to war during the Fashoda incident (1898). Yet here we have French private investment flowing unceasingly, not to France’s own colonies for the most part, but to the British-controlled parts of Africa. We might even call this the “Fashoda Principle”: politico-military rivalry implied very little about commercial rivalry. Britain dropped its objections to the Berlin-Baghdad Railway, when Germany agreed Britain could control its eastern terminus (again, that Indian paranoia). The anticipated “scramble for China” ended up as the Yangtze Agreement on the open door policy, perhaps the most pristine example of multilateral “free trade imperialism”, with everyone having access to trading and investing in an unpartitioned but prostrate China.
What actually soured Anglo-German relations was that Germany’s naval programme was perceived as an existential threat to an island trading nation. “Most influential Germans believed that their country should secure a large place in the world order” — first and foremost in Europe, secondarily in the rest of the world. Germany’s rulers believed the country’s political standing and national prestige was incommensurate with its sudden and dramatic rise as an economic superpower.
In the early twentieth century, finding an external investment outlet for the surplus savings meant being in physical control of a place, and making such investment profitable required that other possible competitors be excluded even at the cost of a war. The “competitive struggle for markets” led to the exploitation of the colonies. A brutal, scramble for new territories took place in Siberia, where Russia expanded eastward, and in the Americas, where the United States expanded westward to annex Mexican territories and southward to reinforce political control. Ghana, Sudan, Vietnam, Algeria, the Philippines, California, and Siberia are all part of the same process.The malign forces that broke the first Kuznets cycle*and set the rich world’s inequality on its downward path for the next seventy years were contained in the unsustainably high domestic inequality that existed before. Linking colonialism to domestic maldistribution of income was made by John Hobson in his book Imperialism: A Study. At its peak, almost half of Britain’s annual savings were invested abroad, implying close to 7% of British national income. Hobson attributed these capital exports to the “surplus savings” of the elites and, by implication, the ‘underconsumption’ of the masses. Lenin adopted a similar argument, but with a small difference (which becomes relevant later). Hobson actually believed British industry ‘overproduced’ and had to sell the ‘surplus’ abroad, and this was the source of the high savings (high profits).
But the reality is that by the 1850s (at least) Britain had a deficit every year in the merchandise trade balance. That goes against the stereotype of Victorian Britain as the “workshop of the world”. Both British India and Egypt (under the British protectorate) exported raw cotton to Britain’s competitors in textile manufacturing such as Germany, France, and later Japan. Japan started industrialisation partly with Indian cotton and, especially after 1918, exported cotton textiles to British India itself. The Government of India built a national railway system ordering only from British suppliers. The import of food and raw materials consistently exceeded British manufactures exports by quite large amounts. As Britain’s comparative advantage moved farther away from manufacturing to services, the shift also implied that financial capitalism was ever more threatened by great power tensions. British bankers, insurers, and shippers facilitated the prodigious expansion of global trade and investment in 1870-1914 and profited from the economic growth of France, Germany, and the United States. After some point “surplus savings” in Europe were generated not through domestic production but through foreign production. Simply put, GDP < GNP. Many UK manufacturers may have feared German trade competition and agitated for protection, much as USA manufacturers reacted to Japanese and later Chinese competition in late 20th century. But the financiers were more powerful.
There truly was global financial integration, and great power rivalries did not necessarily interfere with it. Gunboat diplomacy and “informal empire” on behalf of bond holders. Napoleon III occupied Mexico. Germany blockaded Venezuela, or when the British navy shelled Peru for the same reason dominated throughout the period by Egypt, but this particular jump [between 1892 and 1900] is two‐thirds explained by the mining boom in South Africa. For several decades before the Great War, Britain and France were the chief competitors for colonial possessions, and one of the flashpoints after the British semi-annexation of Egypt in 1882 was over the Nilotic region. Anglo-French tensions were so incendiary they almost went to war during the Fashoda incident (1898). Yet here we have French private investment flowing unceasingly, not to France’s own colonies for the most part, but to the British-controlled parts of Africa. We might even call this the “Fashoda Principle”: politico-military rivalry implied very little about commercial rivalry. Britain dropped its objections to the Berlin-Baghdad Railway, when Germany agreed Britain could control its eastern terminus (again, that Indian paranoia). The anticipated “scramble for China” ended up as the Yangtze Agreement on the open door policy, perhaps the most pristine example of multilateral “free trade imperialism”, with everyone having access to trading and investing in an unpartitioned but prostrate China.
What actually soured Anglo-German relations was that Germany’s naval programme was perceived as an existential threat to an island trading nation. “Most influential Germans believed that their country should secure a large place in the world order” — first and foremost in Europe, secondarily in the rest of the world. Germany’s rulers believed the country’s political standing and national prestige was incommensurate with its sudden and dramatic rise as an economic superpower.
Resumo de:
https://pseudoerasmus.com/2016/05/08/bm/
* Kuzentz Cycle - is a claimed medium-range economic wave with a period of 15–25 years identified in 1930 by Simon Kuznets.Kuznets connected these waves with demographic processes, in particular with immigrant inflows/outflows and the changes in construction intensity that they caused, that is why he denoted them as “demographic” or “building” cycles/swings. Kuznets swings have been also interpreted as infrastructural investment cycles.
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