Download How Has Geography, a History of Naval Supremacy, and Economic

How Has Geography, a History of Naval Supremacy, and Economic Empire
Impacted the British People, Its Economy and Its Culture?
Donald E. McLachlan
History Department
Trinity Valley School
Fort Worth, TX
NEH Summer Seminar for School Teachers, 2011
The Dutch Republic and Britain
The purpose of this essay is to examine the role that geography may have played
in the development of the Industrial Revolution in Britain during the eighteenth century
and the establishment of a global economic empire by the middle of the nineteenth
century. I will also investigate how the establishment of empire, which was predicated
upon naval supremacy, may have impacted British culture and an entrepreneurial outlook
that was truly global and uniquely British. I will also examine modern Britain and its
economy within the context of the development of the European Union and will provide a
brief review of its present economic policy objectives as outlined by Prime Minister
David Cameron.
When one studies a map of the European continent, it is immediately apparent
how important the North Sea and the English Channel have been to Britain’s national
security during periods of war and revolution. For much of the history of England and
later, Great Britain, the Royal Navy’s prime duty or responsibility was to maintain a
superiority over all other ships sailing in these waters. The threat of invasion by powerful
continental nation-states dates back to the Spanish Armada of 1588. This is not to say
that there have not been other periods of history preceding the threat by Spain to conquer
the island. But in the modern period of European history, the sea has provided a natural
barrier to thwart the ambitions of dictators and emperors as different as Hitler and
Napoleon. During the Second World War, the very survival of Britain and its capacity to
wage war against Nazi Germany had more to do with the ability of its army to escape
across the channel to the relative safety of the island rather than hold out against vastly
superior German forces on the French coastline. As the history of the Second World War
would reveal, it would be air power rather than sea power that would become the more
decisive instrument of the war in Europe. Nonetheless, despite German control of the
2
skies above Dunkirk, the British army was evacuated by a flotilla of “little ships” that
would deny Hitler complete victory in northwest Europe.
While the sea might be viewed as a defensive perimeter for an island nation like
England, the sea provided other opportunities that the British people were quick to
realize. Water facilitates transport and communication provides a medium to connect
nations around the world through commerce and trade. Water, simply put, provides an
easy means of access (Davies, p. 699). Access to the sea also created conflict among the
colonial powers of Europe as each nation sought to expand its trade and commerce. The
British fought four wars with the Dutch alone over control of the seas and trades routes
during the seventeenth and eighteenth centuries. For Britain, the creation of an overseas
empire would accelerate as well as complement the process of industrialization during the
eighteenth century.
Seventeenth-century Europe as whole has been described as a peasant society (De
Vries, p.30). The development of an agricultural as well as an industrial revolution
completely transformed life in Britain and later, Europe. The right of the people to
access grazing lands and woodlands as “common land” was hitherto protected by
“common law.” These changes in agriculture undermined and eventually eliminated this
traditional medieval practice. Beyond the British Isles and northwestern Europe, there
were other very significant economic developments that would impact favorably both
England and Holland. In the seventeenth century, Europe was, “particularly rich in
declining economies” (De Vries, p.25). The reasons behind this decline were both
regional and economic. The Venetian spice trade collapsed in 1602 and the Dutch and
English had much to do with its demise. Both nations had been expanding their
respective economic interests in the east at the expense of the traditional Mediterranean
powers. With Dutch and English penetration of the Indian Ocean aided by what the
contemporary historian of Venice, Nicolo Contarini, referred to as the “luxury and
idleness” that accompanies prosperity, the traditional economic powers of the region
succumbed to the competitive challenge presented by the Dutch and English who had
reorganized their economies to fully exploit international market opportunities. Much of
this change centered upon utilizing vessels and trading companies that were semi-private
rather than aristocratic with the state providing them monopoly powers. These business
3
ventures more often than not reflected a specific political or economic strategy of interest
to the state. Indeed, it would be the rise of “joint stock ventures” in both nations that
would provide the enormous sums of “venture capital” that would be necessary to finance
and commercially exploit opportunities in the New World.
In his book on the history of the English Channel, Peter Unwin titled his work,
The Narrow Sea: Barrier, Bridge and Gateway to the World. Unwin argues that during
the eighteenth century, “the English Channel came to its fulfillment as one of Europe’s
greatest arteries, carrying its life-blood from the continent to Britain and back again, and
out into Europe’s every overseas extremity” (Unwin, p.144). Moored just above Tower
Bridge is the Royal Navy cruiser HMS Belfast. As Weightman points out in his history
of the Thames River, it has been an 11,000 ton tourist attraction for nearly 40 years and is
a “reminder of something which is not very evident today-London is, or was, a seaport”
(Weightman, p.1).
King Henry VIII particularly favored the word “empire” after his break with
Rome because it called to mind the “relative isolation of England rather than its dominion
over foreign countries” (Koebner, pp. 53-55). By the mid-seventeenth century however,
the British government was busy developing policies that would in the end, seek to
preserve and enlarge Britain’s overseas possessions and trade (James, p.28). What was
clear to the British government at the time was the need to achieve absolute naval
supremacy. An island nation and its emerging empire needed the protection of ships that
were designed for war. The key development occurred according to Davies, with the
invention of the hinged gun port which:
first let ships carry heavy guns at the stern and then gave them a continuous gun
deck, which allowed the firing of broadsides. Warship design was consequently
transformed from that of floating castles to that of floating platforms for heavy
cannon (Davies, pp. 699-700).
If the pursuit of profit was the driving force of colonization and overseas trade, the Royal
Navy was to provide the security to make this economic objective possible. This
therefore, required the building of an extensive fleet of warships. With the passage of
legislation in 1649, British ship owners were given the right to Royal Navy protection
which was confirmed at the Restoration. The Royal Navy was now a national force at the
disposal of those subjects with foreign and colonial business interests (James, p.29). At
4
the time of these developments, it was the Dutch that were the greatest threat to British
overseas ambition and three rather inconclusive wars were fought during the latter half of
the seventeenth century.
While the Royal Navy provided protection to Britain’s overseas empire and trade,
a great change was taking place in the way that business was done at home. The period
between the sixteenth and eighteenth centuries witnessed what Wrightson referred to as
“the gradual creation of an integrated national economy in which market relationships
were the central mechanism…” (Wrightson, p.23). It was also a period when “market
relationships grew in scale, pervasiveness and power” (Wrightson, p.23). This new and
pervasive market unleashed a series of changes that brought about a commercial
revolution that would ultimately create the process by which an Industrial Revolution
would develop in Britain. As this revolution accelerated, Britain would require new
territory to obtain raw materials and new markets in which to sell its manufactured goods.
This in turn, would lead Britain to establish by the nineteenth century extensive overseas
capital investments in “mines, plantations, railroads, harbor facilities and banks. These
investments necessitated a political and military presence to protect them, thus bringing
soldiers, administrators, and settlers in increasing numbers” (Mason, p.95). A number of
writers, including Marx and Lenin, argued that nineteenth century imperial policy was a
“natural consequence of capitalism” (Mason, p.96). A major cause of war, Lenin argued,
was due to the rivalry of imperial empires and the deeply exploitative effects upon people
of capitalism and its ruthless process of procuring new economic resources and markets.
The Industrial Revolution refers to the era in which economic production shifted
from the use of hand tools to the use of power machinery, fueled primarily by coal and
steam (Mason, p.37). It began in Britain and was, most historians agree, an extension of
the changes brought by the revolution in agriculture. The agricultural revolution had two
components: the development of scientific agriculture and the enclosure movement. An
example of the impact of this new science on agriculture was the seed drill. It was
invented around 1700 by Jethro Tull, and it allowed farmers to plant their seeds in a
much more efficient way. The seed drill allowed farmers to plant seed in neat rows and
displaced the much less efficient method of planting seeds by hand. The other
component of this revolution in agriculture was the enclosure movement. This was the
5
process by which landowning aristocrats expanded their farms and holdings by fencing
off “common lands” for private pastures. In the late seventeenth century, large
landowners controlled Parliament and pushed through hundreds of enclosure acts that
“legitimized the practice” (Mason, p.38). The impact of the enclosure movement was
that land ownership became concentrated in the hands of a relatively few wealthy
landlords. Farms increased in size and benefited from decreasing costs of production or
what economists refer to as “economies of scale.” The results of these changes in
agricultural practice were many. Food prices dropped as productivity soared and this in
turn left fewer people to work the land. Workers left the countryside and migrated to the
cities in an attempt to find work. Both of these developments fueled urbanization and
industrialization.
The Thames River became home to the world’s greatest metropolis and financial
center. Parliament itself, was situated on the river and through this elected body of
ministers, an economic empire that spread around the world was governed from London.
By the middle of the eighteenth century, the Royal Navy and its global land-based
systems of service and support represented the “biggest industrial enterprise of the
century, employing every kind of trade in its ships and dockyards” (Unwin, p.145). But
historians of the Industrial Revolution in Britain tend to overlook entirely, or grossly
underestimate, the central importance of London as a manufacturing and industrial base.
According to Wilson, a study of the trade directories of the period, most prominently,
Pigot and Co.’s London and Provincial New Commercial Directory itemizes 49,000
businesses of which over 35 percent were engaged in manufacture of some kind (Wilson,
pp. 62-63). Clearly, London was much more than a city by which an emerging empire
was administered.
London had always been a city of immigrants. Like Amsterdam and the other
great seaports of Europe, there was work to be had in the dockyards and upon the vessels
of trade that frequented the coastal cities. It was tough and oftentimes brutal work, but it
drew a steady pool of labourers hired on for a day’s wage. As Ackroyd points out in his
biography of the city, London was once known as “the city of nations.” To provide a
contemporary source, he quotes the remarks of the mid-eighteenth century writer Joseph
Addison who wrote that, “when I consider this great city, in its several quarters, or
6
divisions, I look upon it as an aggregate of various nations, distinguished from each other
by their respective customs, manners, and interests” (Ackroyd, p.686). Situated on the
river, London “owes its character and appearance to the Thames” (Ackroyd, p. 530). The
river, he points out, was a place of “crowded wharfs and people-pestered shores.” It was
water that was continually in motion with “shoals of labouring oars” (Ackroyd, p.530).
Other historians have placed great emphasis on Britain’s extensive coal resources
as the fuel that powered industrial development. Allen makes the argument that Britain’s
relatively high wages and cheap energy increased the demand for laborsaving
technologies by giving British businesses an exceptional incentive to invent techniques
that substituted capital and energy for labour (Allen, p.15). The advance of labour-saving
technologies in Britain and their impact upon workers, consumers, producers and the
economy as a whole were also closely followed by a group of academics and writers
whose names became synonymous with economic theory. Many of these writers sought
to understand and explain the mechanism of the market. Capitalism as an economic
ideology was under examination. With the development of new theories and ideas of
economic relationships came new insight into what created wealth among nations. New
models that utilized mathematical precision to challenge accepted notions about the
benefit of international trade and commerce were being advanced.
In his The Wealth of Nations (1776), Adam Smith provided a blueprint of the
operation of economic markets and the respective roles of the consumer, producer and the
state. Markets, Smith argued, are self-regulating and need little intervention by the state.
Wages, prices, and the way by which markets supply the goods and services needed by
society are provided naturally and efficiently by the process of supply and demand.
Markets work best when independent of government regulation. Economic efficiency,
Smith argued, was provided by what he referred to as an “invisible hand” that guaranteed
low prices and the absence of economic shortage or surplus. Smith was a sharp critic of
the mercantile policies practiced by European governments of the day. The goal of
mercantile policy was to pursue a huge surplus in foreign trade for the specific purpose of
accumulating large quantities of bullion, gold and silver, which was the conventional
measures of economic power and thereby, military power and resourcefulness. By
restricting foreign trade through government tariffs, export restrictions or quotas,
7
efficiency was lost and monopoly power gained by domestic producers. Economic “selfinterest” was the guiding principle for both consumers and producers and the free market
was the mechanism that guaranteed this result. Government mercantile restrictions did
not benefit the consumer or the producer and Smith was highly critical of the policy as is
evident from the following statement:
The importation of gold and silver is not the principal much less the sole
benefit, which a nation derives from its foreign trade. Between whatever
places foreign trade is carried on, they all of them derive two distinct
benefits from it. It carries out that surplus part of the produce of their land
and in return for it something else for which there is demand (Smith,
IV.1.31).
The English economist, David Ricardo, was another advocate of free trade.
Ricardo developed the law of comparative advantage through the use of mathematical
examples. The principle behind the theory was that through specialization and trade
mutual benefit was achieved even if one party to the exchange was more productive in
every possible area than its trading counterpart as long as each concentrates on the
activities where it has a relative productivity advantage. His research into trade clearly
demonstrated that the contemporary policies of mercantilism utilized by many European
states during the period were bad for the economy. Ricardo was also interested in the
mechanism of the market as it related to wages and labor. The forces of supply and
demand determined wage rates, such as the price of commodities. His research on this
would later be associated with what economists refer to as the Iron Law of Wages. Other
research interests of Ricardo included his labour theory of value, which postulated that
the value of all commodities is related to the labor needed to produce or obtain that
commodity. These and other ideas of how the capitalist economy operates were
published in Ricardo’s most famous work, Principles of Political Economy and Taxation
(1817).
Another economist that was fascinated with the prevailing models of capitalism
and the role of labour and capital within this system of economics was Karl Marx. Marx
was a German but due to his political and economic writings he was forced into exile and
spent the last third of his life in London. Marxism was a reaction to and product of the
Enlightenment, capitalism and industrialization. In The Communist Manifesto (1848),
8
Marx makes the argument that the history of man has been throughout the ages, a
struggle between two economic classes:
The history of all hitherto existing society is the history of class struggle…
Society as a whole is more and more splitting into two great hostile camps,
into two great classes directly facing each other- bourgeoisie and
proletariat…The immediate aim of the Communists is the same as that of
all other proletariat parties: Formation of the proletariat into a class,
overthrow of the bourgeois supremacy, conquest of political power by the
proletariat…” (Marx, p. 9, 22)
The Industrial Revolution stimulated both production and demand in Europe and
led to a search by entrepreneurs and governments alike for new sources of raw materials
for industry, new markets for the products of industry and new supplies of labor,
especially cheap labor (Mason, p.94). Beginning in 1873 and lasting until the mid 1890s,
a serious and prolonged economic depression descended upon Europe. During this
economic decline, European nations sought to protect their domestic markets from
foreign imports while at the same time, they searched the world for new markets and new
economic opportunities. By the mid-nineteenth century, European imperialism had
reached its pinnacle. Among the nations of Europe, Great Britain administered the largest
imperial and economic empire the world had ever experienced. Imperialism was,
therefore, primarily a policy of economic expansion. As Vladimir Ilyrich Lenin would
later write, “Imperialism is the monopoly stage of capitalism” (Lenin, p. 265).
By the nineteenth century, Great Britain’s Royal Navy was the most powerful
naval force in the world. It was, as Davies put it, “the absolute master of all the world’s
oceans.” As an island people, the British knew instinctively the importance of
establishing a navy to protect their nation from the threat of invasion by other European
nations. Historically, the French had represented the greatest threat because they
possessed huge and well-organized armies. To counter this threat, Britain had established
a naval presence in Europe that was unrivaled. By the time that the old European powers
were “scrambling for Africa,” and any other territories that would benefit their ailing
domestic economies, Britain’s Royal Navy had become the principal instrument of
Britain’s security and its ability to execute foreign policy initiatives that spanned the
globe. Perhaps even more significant than its initial role as an island defense mechanism,
the Royal Navy had provided a small island nation with the opportunity to secure a world
9
empire that allowed it to become the wealthiest and most economically powerful nation
in the world by the dawn of the twentieth century.
In his work, The Rise and Fall of the British Empire, James writes that the
possession of an empire profoundly influenced the ways in which the
British people thought of themselves and the rest of the world. The British
character was changed by empire, and this is important. It encouraged a
sense of superiority, which is also a feature of another former imperial
power France, that frequently bordered on downright xenophobia. It also
fostered racial arrogance. And yet at the same time, deeply rooted liberal
and evangelical ideals produced a powerful sense of imperial duty and
mission. The empire existed to civilize and uplift its subjects, or so its
champions claimed (James, p.xiv).
Following the traumas of World War I, world wide economic depression, the Russian
Revolution, and the Second World War, Europe lay in ruins in 1945, its people shocked
and exhausted, and its continent divided. As the Cold War emerged, Europe had become
divided in almost every way. The Soviet Union imposed communist political and
economic systems across Eastern Europe. The United States implemented the Marshall
Plan to assist Western Europe in its economic recovery and to promote the development
of liberal democracies. In Germany, the tensions that divided “East” and “West” were
most poignantly clear in the division of Germany and of its capital city, Berlin. In 1961,
the East German state began its construction of the Berlin Wall to stop its young and
talented workers from “escaping” to West Berlin and freedom. The Berlin Wall
collapsed in 1989 and the two German states were once again unified. In 1991, the
Soviet Union also collapsed and a new era of political and economic reform swept
Eastern Europe.
At the same time that Europe was recovering from the Second World War and
being split in half by the Cold War, Britain was shedding its colonies (Mason, p.152). By
the end of the war in 1945, Britain’s far-flung empire was 125 times as large as Britain
itself (Mason, p.152). Over the next thirty years or so, virtually all of the old European
powers would lose their empires. The Atlantic Charter of 1941 signaled the beginning of
the end of European colonization and empire. President Franklin Roosevelt and Prime
Minister Winston Churchill signed the document that acknowledged the “right of all
peoples to choose the form of government under which they will live” and called for
10
“sovereign rights and self-government restored to those who have been forcibly deprived
of them” (Mason, p.152). Even if the old imperial powers of Europe had wished to retain
their colonial empires, they were now, as a consequence of the war, financially and
militarily incapable of doing so. This then, marked the end of the British Empire. It was
also the end of an era that had allowed Britain to achieve a dominant economic and
military presence around the world. At the same time, it was also the end of what had
been the world’s greatest sea power, the Royal Navy.
According to the James, what matters most is that the British Empire
“transformed the world” (James, p. xv). What modern day Britain has become is a
consequence of three hundred years of British overseas expansion. With the
development of modern commercial aircraft, the world, it has been said, has become a
much smaller place. Military aircraft have assumed the role of “front line” intervention
and nuclear-armed submarines lurk in the deep with their deadly arsenal of weapons.
Revolutions in the communication, transportation, and information industries have
transformed the way the world does business. But the legacy of colonization,
imperialistic policy and the establishment of empire have brought much change to Europe
as it navigates the twenty first century. As James writes about the legacy empire:
Human memorials of the empire are abundant. David Livingston, one
hand resting on his revolver and the other clasping a Bible, overlooks
Prince’s Street, Edinburgh. Walk up towards the castle and one is
confronted by embattled, and, thanks to weathering, gaunt stone
Highlanders who form their country’s monument to the Boer War.
Churches and cathedrals are draped with dusty, threadbare regimental
ensigns embroidered with exotic names such as ‘Chillianwala’ and ‘Telel-Kebir’, and the men who died in these and other battles are often
commemorated nearby in marble and brass. Pub signs celebrate imperial
heroes, and street names conquests and conquerors. In the northern
suburbs of Southampton, I once saw a Khartoum Road and an
Omdurman Road, and in the small West Riding town of Crosshills, a
Rhodesia Road.” (James, p. xiii)
As the ideals and values of the European Enlightenment have been embraced by
Western civilization, the United States, the United Kingdom and much of Europe have
expanded their populations and cultural diversities. In Britain, many of the old working
class manufacturing districts of cities like Birmingham, Glasgow, and Manchester have
been populated by people from the old empire as a result of relaxed restrictions on
11
immigration during the postwar period. London and New York are perhaps the best
examples of what a truly cosmopolitan society might look like. Multiculturalism has
come to represent in reality the very ideals of European Enlightenment thinking. People
of different faiths or ethnicities could live together in peace and prosperity. This does not
mean that multiculturalism as a political or economic goal of the people and their
representative governments has not been without controversy. Competition for jobs and
housing has at times, led to conflict between certain ethnic groups. Then on the morning
of a beautiful September day in New York in 2001, everything changed.
In the context of the twenty-first century, the 11 September 2001 bombings in
New York sent shock waves throughout the world as American and British intelligence
services grappled with the surreal reality that on two separate occasions, two commercial
aircraft full of passengers had been hijacked by Islamic extremists and flown into the
twin towers of the World Trade Center in Manhattan killing thousands of people. Then
in Amsterdam in 2004, the Dutch filmmaker Theo van Gogh, a man who was also a
controversial and outspoken talk radio personality and the great grand nephew of Vincent
van Gogh the artist, was shot while riding his bicycle to work on a busy street during rush
hour. An eyewitness to the murder stated:
I heard Theo van Gogh beg for mercy. ‘Don’t do it!’ he cried. I saw him
fall onto the bicycle path. His killer was so calm. That really shocked me.
How you can murder a person in cold blood, right there in the street?
(Buruma, p.1)
As Buruma continues the story:
It was the coolness of his manner, the composure of a person who knew
precisely what he was doing, that struck those who saw Mohammad
Bouyeri, a twenty-six-year-old Moroccan-Dutchman in a gray raincoat
and prayer hat, blast the filmmaker Theo van Gogh off his bicycle on a
dreary morning in Amsterdam. He shot him calmly in the stomach, and
after the victim had staggered to the other side of the street, shot him
several more times, pulled out a curved machete, and cut his throat ‘as
though slashing a tire’ according to one witness. (Buruma, p. 2)
Theo van Gogh had, on a number of occasions, insulted Muslims and the Muslim faith.
He was a polemicist and a brash one at that. A flamboyant homosexual, he ridiculed
Dutch politicians, devout Catholics, Jews and the Islamic faith. The murder of van Gogh
in Holland, like the publication of Salman Rushdies’ The Satanic Verses, or the
12
publication in a Danish newspaper, Jyllands-Posten, of cartoons linking the prophet
Mohammad with violence that many Muslims around the world found insulting, has
created a dilemma for a tolerant and permissive Europe that embraces freedom of the
press and individual liberty. How can a liberal and democratic society that requires its
citizens to live by the law survive when part of the population believes that divine laws
trump those made by man? Citizenship of a democratic state means living by the laws of
the country (Buruma, p. 25).
In Britain and prior to 11 September 2001, the British government and its police
and intelligence services were distracted by the Cold War on one hand and Irish terrorism
on the other. As a consequence of this distraction, the security forces had failed to
anticipate the danger of “homegrown” Islamic terrorism. Then on 7 July 2005,
just before nine in the morning in central London, bombs went off
simultaneously in three London Underground trains deep below the
streets of the capital. Soon after, a fourth bomb ‘blew a red London
bus to bits as it trundled through a leafy Bloomsbury square. Fifty-six
people, including four bombers, were killed by the attacks, and about
700 were injured (Phillips, p. vii).
Melanie Phillips, a British journalist, sees the bombings and murders in New York,
Amsterdam and London as an “attack on the historic core of Western liberty…” (Phillips,
p. x). Phillips is a sharp critic of British government policy over the past few decades.
She makes the argument that a succession of British governments have pursued a series
of policies and decisions that are tantamount to “appeasement” on the issue of Islamic
extremism. Britain’s capital city, she wrote in her book, Londonistan has “…been the
epicenter of Islamic militancy in Europe…and a major center for the promotion,
recruitment and financing of Islamic terror and extremism” (Phillips, p. x-xi).
Her conclusions are both controversial and frightening. According to Phillips, the
principal weapon that is being used to undermine the fundamental values of Western
society is the doctrine of human rights (Phillips, p.29). Britain is an example of a liberal
society in danger of being destroyed by its own ideals- Britain is “sleepwalking” into a
relentless transformation. Britain has become a “decadent society weakened by alarming
tendencies toward cultural and social suicide… It needs to abolish the doctrine of
multiculturalism by reaffirming the primacy of British values” (Phillips, p. xviii).
13
As Britain heads into the second decade of the new millennium, one could argue
that it has been reluctant to commit to full membership within the European Union. It
has retained the sterling pound as its currency and defers to Parliament for legislative
guidance. Britain it seems, “is worth more than a star” when it comes to membership
within the European Union. This was at least what one protester’s placard indicated in
the debate about Britain adopting the euro as a national currency.
The Netherlands, like France and Germany, has made a full commitment to the
concept of European economic union and adopted the euro. As of July 2011, there are
twenty-seven member states within the European Union whereas only seventeen of these
member states have adopted the euro. Britain, it seems is not alone in distancing itself
from full monetary union with Europe. Britain negotiated an opt out clause from the part
of the Maastricht Treaty of 1992 that required it to adopt the common currency and the
coalition government elected in 2010 pledged not to adopt the euro for the lifetime of this
parliament.
The Economist magazine frequently publishes special feature stories on different
regions and economies throughout the world. It also publishes on a weekly basis
economic data profiles on both developed and developing economies across the globe. It
is a good source for timely information and data if one wants to follow economic as well
as political developments in the news. The data I have cited below on Britain, Germany
and the European Union are taken from the publication for the week of June 11-17, 2011.
My purpose is to provide a brief but recent statistical overview of the performance of the
British economy and to compare this performance with that of the European Union and
Germany. I decided to include Germany in this analysis because it is the largest economy
within the European Union.
As the world enters the second decade of the twenty-first century, many of the
modern and western economies have struggled to achieve economic growth and stability
after a decade of economic crisis. In Britain, the GDP was up 1.9% while its industrial
production index was up only 0.7% as of June 2011. For comparison, the respective data
for the EU were 3.4% and 5.3%. Clearly, the EU is producing on a percentage basis, a
higher output of goods and services. In terms of manufacturing capacity, which is
measured by the industrial production statistic, the EU has a much higher rate of growth
14
than Britain. The EU, as it expands east, is, unlike Britain, adding skilled workers at
lower costs. Also, if one examines the data for Germany, it is clear that the EU economy,
which of course includes Germany, benefits from a German GDP growth rate of 6.1%
and a dramatically rising industrial production growth rate of 9.6%.
The performance of an economy’s financial markets, like the GDP, is always an
important indicator when assessing the health of economies in a relative way. The
Financial Times Stock Exchange (FTSE 100) is a measure of the performance on
average, of the one hundred largest publicly traded corporations in the United Kingdom.
It is the US equivalent of the Dow Jones Industrial Average (DJIA), which tracks the
thirty largest corporations in the United States. As of June 2011, the FTSE was up 3.0%
since 31 December 2010 in US dollar terms while the EU and Germany were up 5.8%
and 11.2%. The UK clearly tracks closer to the DJIA, which was up 4.1% for the period.
Unemployment in the UK is at 7.7%, which is more or less the same as the
German rate of 7.0%. The EU it should be noted, has an unemployment rate that is well
above both the UK and Germany at 9.9%. The EU unemployment rate is slightly higher
than the US rate of 9.1%. Unemployment within the EU is higher in countries like Spain
and Portugal and within the Mediterranean regions. A decline in tourism is a factor in
these economies within Europe.
In the area of trade, the UK like the US has a large balance of trade deficit when
compared to the EU and especially, Germany. The deficit, measured in dollars for this
analysis, is the equivalent in US dollar terms of $151.6 billion. Clearly, the UK imports
many more goods and services than it exports despite its export of North Sea oil. What is
really striking here is the fact that the EU, a region approaching 500 million people, has a
trade deficit of only $25.4 billion. The EU trade data is much helped by a German trade
surplus of +$209.1 billion, a surplus that exceeds the +$179.0 billion surplus of China, as
well as a large trade surplus in The Netherlands of over $60 billion and significant trade
surpluses in Sweden, Denmark, Austria and Belgium. What this data clearly demonstrate
is that the “new Europe” is a rapidly expanding economic empire that has nudged the
United States aside as the largest market economy in the world. Britain is a part of this
new empire but not exactly a full member state as are nations like France, Germany and
Holland. When it comes to economic policy, Britain has ideologically speaking, been
15
more closely aligned with the policies of the United States than it has been with Europe.
The United States has never really embraced “socialism” as philosophic doctrine. It has
however, from time to time, implemented government policies that were essentially
socialistic to fight economic collapse or world wars. Europe, on the other hand, has
traditionally provided its citizens with more government based services and benefits in
exchange for higher levels of taxation. Britain had, up until the Thatcher years, pursued
economic policies that were more in line with the rest of Europe. It was Thatcher,
following the example of Reagan that pulled the country to the right implementing a
whole range of supply-side oriented economic policies that were, it has been argued,
good for capitalism and the market process. These included lower rates of corporate
taxation, reduced government provided benefits and services, and less regulation of
business.
Today, Britain has once again recently replaced a Labour government in favor of
a more conservative approach to economic policy. As governments around the world
deal with massive public debt and a weakened world economy, Britain, with the election
of the moderately conservative, David Cameron in 2010, represents a return toward a
more entrepreneurial culture in government. Cameron was elected as Prime Minister at
the age of 43, the youngest to do so since the Earl of Liverpool nearly 200 years ago.
During his campaign to become head of the Conservative Party, he expressed his concern
about Britain becoming too entangled in the European Union’s federalist approach to
government. Cameron describes himself as a “compassionate conservative” that wants to
concentrate upon improving the general well being of the British people. He also
believes that British Muslims and all other recent immigrants from the former empire
have a duty to fully integrate into British culture but realizes that many of these people
find aspects of British culture, such as high divorce rates, alcoholism and the use of
recreational drugs “uninspiring.” Cameron has even acknowledged that in some
instances, mainstream Britain could benefit from integrating more with the British-Asian
way of life.
The British, as James has written, were never entirely easy with the idea of
territorial Empire:
16
From the seventeenth century, and with considerable official
encouragement, the British were taught to be proud of their laws,
individual freedoms, and elected government. But, many asked, were the
rights of the British exclusive, or could they be exported and shared by
everybody under Britain’s rule? (James, p. xiv)
As Britain contemplates its relationship with the European Union and a much more
culturally diverse British people at home within the British Isles, the legacy of empire
and its imperialist “codes of behavior” may seem with the passage of time, to have less
relevance in the 21st century. They do not. On the contrary, the experience of empire
continues to impact British business and its entrepreneurial culture to this day. The
British people share an outlook on the world that is truly global and unique, only this
time, much of that international interest is channeled into activities that promote positive
social as well as political change around the world. British art, media and fashion impact
the entire world while its aviation, energy financial systems to name but a few, span the
globe in their reach and service to a global community.
Works Cited
Ackroyd, P., London: The Biography, New York: Doubleday, 2001.
Allen, R.C., The British Industrial Revolution in Global Perspective, Cambridge:
Cambridge University Press, 2009.
Buruma, I., Murder in Amsterdam: The Death of Theo van Gogh and the Limits of
Tolerance, New York: The Penguin Press, 2006.
Davies, N., The Isles: A History, Oxford: Oxford University Press, 1999.
De Vries, J., The Economy of Europe in an Age of Crisis, 1600-1750, Cambridge:
Cambridge University Press, 1976.
James, L., The Rise and Fall of the British Empire, New York: St. Martin’s Press, 1994.
Koebner, R., Empire, Cambridge: Cambridge University Press, 1961.
Lenin, V.I., Selected Works, Moscow: Progress Publishers, 1970.
Marx, K. & Engels, F., New York: The Communist Manifesto, International Publishers
Co., Inc., 1983.
17
Mason, D.S., A Concise History of Modern Europe: Liberty, Equality, Solidarity, 2nd
edition, Lanham: Rowman & Littlefields Publishers, Inc., 2011.
Phillips, M., Londonistan, New York: Encounter Books, 2006.
Ricardo, D., Principles of Political Economy and Taxation, London: 1817.
Smith, A., The Wealth of Nations, 1776 (Seminar Handout)
The Economist, London, June 11-17, 2011.
Unwin, P., The Narrow Sea: Barrier, Bridge and Gateway to the World-The History of
the English Channel, London: Headline Book Publishing, 2003.
Weightman, G., London’s Thames: The River That Shaped a City and Its History, New
York: St. Martin’s Press, 2004.
Wilson, A.N., London: A Short History, London: Weidenfeld & Nicolson, 2004.
Wrightson, K., Earthly Necessities: Economic Lives in Early Modern Britain, New
Haven: Yale University Press, 2000.