For nearly four centuries, the world’s economy has been weaving an intricate tapestry of greater integration, one that even the upheavals of two world wars could barely unravel. This relentless march of globalisation was driven by the ever-expanding avenues of international trade and investment, the grand movements of people across borders, and dramatic strides in transportation and communication technology.
French model: mercantilism, money and war
In the mid-1600s, France emerged as Europe’s dominant power, pioneering the economic theory of mercantilism. Nearly four centuries later, its principles seem revived in some quarters, perhaps exemplified by Trump’s approach to economic policy. French finance minister Jean-Baptiste Colbert championed trade barriers to limit imports while boosting domestic industries, echoing present concerns over economic competitiveness.
Despite initial success, France’s mercantilist pursuits—triple import tariffs and subsidies for local industries—led to conflict with rivals like Britain and the Dutch Republic. The prolonged struggle saw Britain’s ascendancy by the 18th century, marking the decline of France as the hegemonic power.
British model: free trade and empire
Led by thinkers such as Adam Smith and David Ricardo, Britain’s economic philosophy turned to free trade, which was not considered a zero-sum game as per Colbert’s views. The repeal of the Corn Laws in 1846 exemplified the nation’s pivot from protectionism to free trade, aiding its industrial dominance.
By the late 19th century, Britain’s empire encompassed a quarter of the globe, thriving on free trade principles and financial leadership, notably due to the City of London’s prowess. However, British control extended beyond economics, manipulating territories such as India by undermining local industries.
US model: protectionism to neoliberalism
The United States initially embraced protectionism post-independence, a strategy championed by Alexander Hamilton. High tariffs safeguarded American industries through much of the 19th century, with figures like William McKinley bolstering this approach.
When the US emerged post-World War II as a global superpower, there was a strategic shift. The Bretton Woods agreement of 1944 cemented the US dollar’s role in global finance, establishing a rules-based order and promoting free trade—but still with a distinctly American lens.
From dream to despair
Despite the mythos of the American Dream, the 1970s brought rising challenges from skilled international competitors like Germany and Japan. This culminated in Nixon’s 1971 decision to abandon the gold standard, fundamentally altering global finance and enabling a new era of financialisation.
The neoliberal policies of the 1980s and ’90s, known as the Washington Consensus, further redefined international trade. However, these shifts exacerbated inequality, sowing discontent among parts of the American populace.
Making a bad situation more dangerous
Trump’s tenure highlighted these economic divides. His policies, such as tariffs meant to curb trade deficits, underscore an embrace of mercantilism that challenges earlier globalisation models. Yet, in the broader canvas of history, globalisation’s decline appears inevitable.
In conclusion, the global tapestry of commerce and power is undergoing a transformation. While globalisation isn’t quite dead, it teeters on the brink. The imperative question remains: what narrative unfolds next in this grand saga?
Read more on how international trade impacts job markets and how investing in communities might help offset job losses: Here.
This compelling tale sheds light on the vast historical shifts in economic power. For further exploration of insights and evidence-based analysis, consider subscribing to The Conversation’s newsletter to stay informed on topics affecting our world today.
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Steve Schifferes does not work for, consult, own shares in, or receive funding from any company or organisation that would benefit from this article and has disclosed no relevant affiliations beyond their academic appointment.
