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April 2003 Historically Speaking2 1 The British Empire And Globalization: A Forum With two newbooksanda British televisionseries, Nial/Ferguson hasplacedaspotlighton thehistory oftheBritish Empireandits relevanceformakingsenseofthecontemporary world. Hereheconsiderstheempire'simpacton theglobaleconomy. P.J. Marshall, RobertE. Lucasjr., AndrewPorter, andAndrewBacevich respondtohisessay, followedby Ferguson's concluding reply. British Imperialism Revisited: The Costs and Benefits of "Anglobalization" Niall Ferguson Itis fair to saythat recenteconomic history has not been kind to the British Empire. According to one influential school of thought, late 19th-centurycapital exports to the country's numerous colonies diverted resources away from the modernization of British industry. Some scholars have questioned whether it was even economically rational for the investors themselves.1 Patrick O'Brien has argued that after around 1846 Britain could have withdrawn from empire with impunity, and reaped a "decolonization dividend" in the form ofa 25% tax cut. The moneytaxpayers would have saved as a result ofa Victorian decolonization could have been spent on electricity, cars, and consumer durables, thus encouraging industrial modernization at home.2 Such negative assessments of Britain's relationship to the empire sit somewhat uneasilyalongside the large "nationalist" literature on the impact ofempire on Britain's colonies, notablyIndia. In die words ofB. R. Tomlinson, "the suggestion remains that British rule did not leave a substantial legacy ofwealth, health, or happiness to die majority of the subjects ofthe Commonwealth."3 Numerous authors have insisted that the principal consequence of British rule in the Indian subcontinentwas a legacy of"underdevelopment ." Can it really be that the empire was economically bad for bodi Britain and her colonies? By drawing on the recent economic literature on globalization, pastand present, this essay argues odierwise. • · · In an influential paperpublished in 1995, Jeffrey Sachs and A. M. Warner demonstrated conclusivelythat one ofthe principal reasons for widening international inequalityin the 1970s and 1980swas protectionism in less developed economies. In their words, "open economies tend to converge [on the developed economies], but closed economies do not. The lack of convergence in recent decades results from the fact that the poorer countries have been closed to the world." When they compared per capita Gross Domestic Product (GDP) growth among developing countries, they found that "the open economies grew at4.49% peryear, and die closed countries grew at0.69% peryear." Sachs and Warner's findings have beenwidely interpreted as making the case for presentday "globalization." However, dieir findings also have important historical implications. As the authors note, in the previous era of globalization—conventionally seen as the period from the mid 19di century until die First World War—economic openness was imposed by colonial powers (principally, of course, Britain) not onlyonAsian andAfrican colonies but also on Soudi America and even Japan.4 A similar point can be made with respect to flows oflabor.JeffreyWilliamson and others have emphasized the importance ofinternational migration (or die restrictions on it) in determining the extent of international inequality. The more free movement diere is oflabor, die more international income levels will tend to converge. One reason that modern globalization is associated with high levels ofinequality is that diere are so many restrictions on the free movement of labor from less developed to developed countries.5 This too has obvious implications for the history of the British Empire, which actively promoted emigration to at least some of its colonies, and certainly did nothing to heed the migration ofBritish peoplewherever they wished to go. Consider also the evidence on international capital flows, another key component of globalization. Development economists have spent many decades trying to work out how to raise the level ofinvestment in backward agrarian societies. The most obvious solution has been for them to import capital from where it is plentiful, namely die developed world. Accordingto die simple classical model oftheworld economy, this should happen naturally: capital should flowfrom developed to less developed economies, where returns are likely to be higher. But as Robert Lucas pointed out, with respectto the United States and India in the 1970s, this does not seem to happen in practice.6 Aldiough some measures ofinternational financial integration seem to suggest diat the 1990s saw biggercross -border capital flows dian die 1890s, in realitymost oftoday's overseas investment goes on within the developed world. In 1996 only 28% offoreign...

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Additional Information

ISSN
1944-6438
Print ISSN
1941-4188
Pages
pp. 21-27
Launched on MUSE
2012-01-04
Open Access
No
Archive Status
Ceased Publication
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