Читать книгу Island Stories: Britain and Its History in the Age of Brexit - David Reynolds - Страница 11

It is a precept of international affairs that wealth is needed to underpin power: to quote historian Paul Kennedy, there is ‘a very significant correlation over the longer term between productive and revenue-raising capacities, on the one hand, and military strength, on the other’.[38] The British case certainly fits that broad argument. In 1880, Britain produced nearly 23 per cent of the world’s manufactured goods; only 10 per cent in 1928 when Churchill was Chancellor of the Exchequer and a mere 4 per cent in 1980, around the start of Thatcher’s premiership. As a trading nation Britain’s slide was slower but the end result was similar. In 1899 Britain accounted for 33 per cent of the world’s exports of manufactured goods, 25 per cent in 1950 and less than 10 per cent in 1980.[39] While Britain’s share of the world’s wealth gradually diminished, the cost of armaments rose exponentially. In the 1980s, for instance, 385 Tornado fighters for the RAF cost more in real terms than all the 21,000 Spitfires produced before and during the Second World War.[40] Yet a nation that fell behind in the spiral of technological sophistication risked eclipse as a first-rank power, especially if others overtook it in economic capacity.

And this was bound to happen. Britain’s Victorian-era economic supremacy was in a sense artificial, given the country’s size and population. Britain’s comparative advantage was certain to be reduced once the process of industrialisation spread to countries with larger populations and greater resources – Germany in the late nineteenth century, America during the twentieth century and China in the twenty-first. The United States and the People’s Republic were both countries the size of a continent, blessed with a booming workforce, abundant natural resources and a vast tariff-free internal market. Apart from being disadvantaged in the long run by relative size, Britain was also susceptible to the ‘catch-up’ phenomenon. Once countries had crossed a basic socio-economic threshold, they could copy an economic leader’s technological innovations, rather than having to learn by trial and error. And the growth rates of previously underdeveloped countries always look particularly spectacular – the ‘Asian tigers’, for instance, in the 1960s, and China during the last quarter-century.

The predominant British response to economic catch-up was to consolidate existing advantages. One of these was its naval-industrial complex – based on integrated steel/armament/shipbuilding firms such as Vickers, Armstrong-Whitworth and John Brown, as well as the Royal Dockyards – which later diversified into military aircraft and tanks. In the early 1930s, Britain and France shared half of global trade in armaments almost equally between them; in 1938, Hawker-Siddeley advertised itself ‘the leading aircraft organisation in the world’. The British arms industry was boosted by the two world wars and sustained by the Cold War. Even though the ‘warfare state’, like the slave trade, is now largely omitted from general narratives about the British economy, it matters as much in the history of modern Britain as the ‘welfare state’.[41]

Even more important were financial and commercial services – another aspect of Britain’s economy often neglected by narratives of rise and decline that focus on heroic industrialism. This service sector coexisted with the development and mutation of industrialisation; indeed these processes were often complementary because goods can be derived from services just as much as services from goods – exemplified by innovations across the centuries ranging from bills of exchange and actuarial tables to barcoding and computerised trading.[42] Britain’s merchant navy, most of it serving non-British customers, headed the list of ‘invisible’ earnings, supported by insurance and banking. Together with profits from overseas assets such as railways, plantations, utilities and oil concessions, these earnings were equivalent to around 75 per cent of the earnings from exports of domestic merchandise in the 1890s.[43] These more than covered the gap between Britain’s imports and exports, and they provided a ‘war chest’ on which British governments drew in both world wars. Indeed, during the 1930s, the Treasury referred to Britain’s financial position as the ‘fourth arm’ – as central to waging a future war as the three armed services.

The other response to sharper economic competition was to shift from free trade to protectionism. In the 1900s, Joseph Chamberlain may have failed in his campaign for tariff reform, but in 1932, at the nadir of the world depression after Britain had abandoned the gold standard, his son Neville – then Chancellor of the Exchequer – steered it through the Commons with Joe’s widow watching proudly from the gallery. In a trading economy now protected by tariffs, ‘Imperial Preference’, meaning preferentially lower rates, was accorded to countries of the British Empire. An embryonic Sterling area was also formed during the 1930s, and then consolidated during the Second World War. This overlapped with Imperial Preference but was not coterminous. Canada, though enjoying preferential tariffs, was outside the Sterling Area; countries in Latin America and Scandinavia belonged to the latter but not the former. Between 1913 and 1938 the empire’s share of British exports rose from 22 per cent to 47 per cent, and during the interwar years the empire attracted far more new British foreign investment than non-imperial countries – a contrast with the pre-1914 story.[44] The empire/Commonwealth and the Sterling Area became the framework for British foreign economic policy – a privileged market for goods and capital which tried to insulate the domestic economy from international competition from the thirties to the late sixties.

The end of imperial preference and Britain’s entry into the EEC broadly coincided with the demise of the Sterling Area, the onset of the oil crisis and the collapse of the post-war boom. The long 1970s recession accelerated the process of deindustrialisation for all Western European countries, but Britain’s experience of it was exacerbated by the ferocity of class politics in the Thatcher era. Within this complex nexus of global economic change, it is no simple task to isolate the historical consequences of joining the EEC. Suffice to say here that a crude declinist narrative fails to take account of the country’s adaptive economic changes since the 1970s: an accelerating shift into services and the success of the financial sector, which adjusted particularly well to the post-imperial era.

‘As the good ship sterling sank, the City was able to scramble aboard a much more seaworthy vessel, the Eurodollar.’[45] This term signified dollar assets held not in the USA but in Europe – starting with those created by Middle Eastern states from the profits of the 1970s oil shocks. They were attracted to the City of London by the tax benefits on offer and by the deliberately more relaxed regulatory environment than Wall Street. But this was not the ‘old’ City, geared to sterling and the British economy, but a ‘new’ City, ‘externally orientated’ and ‘foreign-owned’ (dominated by US, Japanese and continental European banks) and which ‘flourished as long as it was left alone by the authorities’.[46] This externalisation process accelerated when the Thatcher government ended exchange controls in 1979 and encouraged the ‘Big Bang’ deregulation of the stock market. In 1981 only 3.6 per cent of the UK stock market was owned by foreigners but the proportion then rose to 43.1 per cent in 2010 and 53.9 per cent in 2016. There are, of course, still plenty of British players in this business – Jacob Rees-Mogg, for instance, made his multimillion fortune as a hedge-fund manager – but in large measure the City had adapted to change by becoming an immensely lucrative offshore banking sector through which foreigners, not least post-Soviet Russian oligarchs, could move their money without too many questions or impediments.[47]

So the erosion of Britain’s relative advantage in manufacturing did not mean that the country became a minor feature of the world economy. On the contrary: today it is the tenth-largest global exporter and fifth-largest global importer; it ranks second or third in both inward and outward direct foreign investment. In economic terms Britain is roughly where one might expect for a country of its size, resources and historic commercial expertise. What has changed is that Britain’s relative power internationally has diminished because, over the last century, other states have generated economies that are equal or superior to it.

What mattered even more for the country’s place on the world stage was the changing nature of geopolitics. International rivalries intensified from the 1860s, after a half-century of peace since the defeat of Napoleon. And then revolutions in the technology of warfare over the subsequent century negated many of the benefits of Britain’s insular position.

Despite what is a common belief, ‘European peace in the nineteenth century did not derive to any great degree from Britain’s maintaining a continental balance.’[48] That equilibrium stemmed from the exhaustion of Europe in 1815, after more than two decades of ruinous war, and the acceptance of the post-Napoleonic peace by all the continental powers except defeated France. Rather than the Pax Britannica sustaining the peace it was peace that sustained the Pax. Indeed Britain was almost a free rider – allowed to concentrate its resources on global expansion because of the unusual tranquillity of Europe, which was in marked contrast to the eras of Philip II, Louis XIV and Napoleon.

When continental states once more resorted to war as an instrument of policy – resulting in the unification of Italy and then Germany between 1859 and 1871 – Britain could do little to affect the outcome. Its trump card, the Royal Navy, was largely impotent in the face of fast-moving crises in the hinterland of Europe, and the British did not adopt the continental practice of large standing armies sustained by military conscription. In 1871, during the Franco-Prussian war, Lord Salisbury reckoned that whereas the Austrians and the Germans could each put over a million men into the field, and the Russians 1.5 million, Britain’s ‘utmost strength’ for ‘foreign action’ was 100,000. Little wonder that Otto von Bismarck, the Prussian chancellor, reportedly scoffed that if the British army landed on the German coast, he would send the local police force to arrest it.[49] Bismarck’s new German Empire – created through successive victories over Denmark, Austria and France – became the greatest military power on the continent, dominating Central Europe. Benjamin Disraeli called the Franco-Prussian War of 1870–1 ‘a greater political event than the French Revolution … The balance of power has been entirely destroyed and the country which suffers most … is England.’[50]

Even more important for future geopolitics was the outcome of the American Civil War. At the start, in 1861, Britain declared its neutrality: 80 per cent of Britain’s cotton imports came from the Confederacy, supporting a textile industry that employed 4 million people. And the ethical issues looked confused: the Federal government claimed to be fighting to preserve the Union, not to abolish slavery, and many English liberals saw the Confederate cause as a war for national liberation, like the recent secession of the Italian states from the Habsburg Empire. In October 1862 Gladstone told an audience in Newcastle that the ‘leaders of the South have made an army; they are making, it appears, a navy; and they have made what is more than either, they have made a nation.’ Indeed, he welcomed the potential break-up of the Union because it was ‘in the general interests of Nations that no State should swell to the dimensions of a continent.’[51]

But talk of possible British mediation in the conflict was a passing phase. By April 1865, the North, with its far superior resources, had defeated the ‘Rebellion’ and the United States of America regained its unity ‘from sea to shining sea’. The implications of a country the size of a continent were not lost on Europeans. In 1866 the French economist Michel Chevalier urged Europe to unify in the face of ‘the political colossus that has been created on the other side of the Atlantic’. And in 1882, as the pace and intensity of economic development accelerated throughout America’s vast and now peaceful single market, the German writer Constantin Frantz considered it ‘hardly preventable’ that ‘the New World will outstrip the Old World in the not far distant future’.[52]

What is more, the balance of force across the whole world was shifting against Britain. After the post-1815 lull, imperial rivalries renewed with the scramble for Africa in the 1880s and 1890s and the attempted partition of China at the turn of the century. Britain’s naval supremacy had by then been undermined. In 1883 the Royal Navy boasted 38 battleships; the rest of the world had 40. By 1897 Britain was outnumbered: 62 against 96.[53] By this time the Russian Empire had expanded across Asia to the Pacific, creating friction along the borders of British India. And other non-European powers were emerging. Japan had industrialised and turned its economic strength into military might, defeating China in 1894–5 and Russia in 1904–5.

In the first half of the twentieth century, the British therefore tried to defend a global position that had been consolidated during a rare half-century of European peace and stability after 1815. And they had to do so against rivals which had caught up with Britain, and even surpassed it, in economic and military capability. France remained a competitor in the 1920s and 1930s, and the Japanese threat was acute in 1937–42. But the most momentous and sustained challenge came from the German Reich.

Unified Germany’s first bid for hegemony, in 1914–18, was stopped but at great cost. Britain and the empire lost one million dead, as well as nearly 15 per cent of the country’s total assets. The war also saw a geopolitical shift to the Pacific as both Japan and America – wartime allies of Britain – developed into major naval and economic powers. And although the Habsburg and Ottoman Empires disintegrated under the strain, Russia survived revolution and civil war to re-emerge under Bolshevik leadership. This posed a double danger for Britain, because traditional rivalries with Russia in Asia were now coupled with the ideological challenge of a Soviet state officially dedicated to world revolution.

Round two of the German challenge assumed a more menacing form for Britain because of the collapse of France in June 1940. Throughout the Great War the French, with increasing British support, had sustained a Western Front against Germany. But in four weeks Hitler achieved what the Kaiser’s best generals had failed to do in four years – knocking France out of the war and winning a continental empire. Hitler was now free to turn against the Soviet Union years earlier than expected. Germany’s amazing victories emboldened Italy and Japan to press their own bids for empire in North Africa and East Asia respectively – with British possessions as the main target.

Thanks to its own resources and those of the empire, Britain avoided defeat in 1940. There is no doubt that this was a moment of global significance. Had Britain surrendered, like France, or been knocked out the war, Hitler would have been free to devote all Germany’s manpower and resources on his war against the Soviet Union, while the United States would probably have pulled in its horns and concentrated on defending the Western Hemisphere. Instead, British defiance encouraged Roosevelt to extend material support and then enter the war. Britain became the essential base from which the Western Allies could eventually mount a cross-Channel assault to help liberate Europe.

So Britain’s 1940 really mattered. But whatever Churchill declaimed then about ‘victory at all costs’, overcoming Hitler’s Reich was beyond its own capabilities once there was no French army or Western Front in Europe, and when the Royal Navy faced challenges in the Mediterranean and the Pacific as well as in home waters. Britain therefore had no choice but to rely on new allies to win the victory – above all the USA and the USSR. By May 1945, after five years of total war, Hitler was dead and his Thousand-Year Reich lay in ruins, but he had brought down the old Europe with him. Such was the extent of Germany’s early success in 1940 that the Führer had, in effect, called the superpowers into existence to redress the balance of the Old World. After the D-Day landings in Normandy in June 1944, the United States dominated the campaign in Western Europe, while the Red Army’s long and bloody fightback from Stalingrad to Berlin left it in control of most of Eastern Europe. By the time the Germans surrendered, the armed forces of the USA and USSR each numbered between 11 and 12 million men, more than double the British figure.

Had the world reverted to the pattern of the previous post-war era after 1918, with American and Russian withdrawal from Europe, the power shift would not have been so pronounced. But out of this war there developed a bitter Soviet–American rivalry, which not only divided Germany and Europe into two military blocs but also became truly global and fiercely ideological. Although Britain was still a major power in the immediate post-war period – third in military and industrial terms around 1950, thanks in part to the total defeat of Germany and Japan – it could not match the two superpowers, despite maintaining until 1960 the policy of peacetime conscription. In 1953, Britain’s peak post-war year, its armed forces totalled 900,000 compared with 3.5 million for the USA and 4.75 million in the case of the USSR.[54] Nor, in the age of nuclear weapons and inter-continental missiles, could it hope to keep up in the Cold War arms race with the Big Two. Since the 1960s, Britain’s continued existence as a nuclear power has depended on its ‘special relationship’ with the United States.

This does not mean that Britain is no longer of any military consequence. It remains the only European member of the Western Alliance, apart from France, to maintain a capacity for power-projection outside the NATO area. But its days as a major global presence are over. As with the economic story, others have surpassed its precocious early lead – reducing Britain to the position that one might expect for a state of its size, population and resources. In power, as in wealth, what is historically striking was ‘rise’, not ‘fall’.