Second, in analytical terms, the common intellectual thread that runs through all of these movements -- namely, the rejection or demotion of market competition in favor of top-down control -- represents a direct assault on the principles of social order that gave rise to industrialization and are truest to its full promise. Of course, the partisans of the Counterrevolution thought quite the opposite: They believed that their political programs and industrialization rode together on the same great wave of history.
It is impossible to understand the collapse of the first world economy, or the rise of the present one, except in relation to the Counterrevolution's centralizing impulses. For the story of globalization and the story of the Industrial Counterrevolution are mirror images of one another: In the early decades of the 20th century, the rise of collectivism spelled the demise of the global economy; in the past couple of decades, the loss of faith in the collectivist dream has allowed globalization to resume its course.
Here I examine the first half of that cycle: the destruction of the global economy by the forces of runaway centralization. In particular, I want to focus on the critical decades leading up to World War I. For it is clear enough that the final breakdown of international economic integration during the calamitous 1930s was an extended consequence of the Great War. What is less well known is how the collectivist delusion helped to lead the world toward that awful conflict -- and thus toward all the horrors that followed in its wake.
Cobden's Dream
At the midpoint of the 19th century, a very different future appeared to be on the horizon. The liberal creed of cosmopolitanism, free trade, and peace promised to define the shape of things to come. As in so much else, Great Britain led the way. In the decades after Waterloo, it made gradual but significant progress in dismantling its protectionist policies. Seizing this political opening, a pair of textile manufacturers, Richard Cobden and John Bright, led their country to bolder action, organizing the Manchester-based Anti�Corn Law League into a national mass movement of middle-class urban interests against the landed elite. Their seven-year campaign achieved victory in 1846 with the repeal of the Corn Laws and the elimination of all duties on imported grains.
From its testing ground in Great Britain, free trade began to spread into continental Europe. The major breakthrough, again featuring Richard Cobden, was the Cobden-Chevalier treaty of 1860 between Great Britain and France. A flurry of European trade agreements followed. Building on its tradition of the Zollverein, a customs union of German states, the newly unified Germany steadily pursued a liberal trade policy. By the mid-1870s, average tariffs on manufactured goods had fallen to between 9 and 12 percent on the continent -- compared to effective rates of 50 percent or more at the close of the Napoleonic Wars.
The liberal champions of free trade did not view their cause solely or even primarily as a commercial matter. In their view, free trade carried profound implications for the whole field of international relations. Free trade, they believed, could pave the way toward a new and modern form of international order -- one that would replace the pointless and destructive dynastic struggles foisted upon the people by kings and aristocracies. Peaceful cooperation among nations, not mere economic efficiency, was the grand prize for which they strove.
Cobden outlined this larger vision in a speech in Manchester on the eve of the Corn Laws' repeal: "I believe that the physical gain will be the smallest gain to humanity from the success of this principle....I have speculated, and probably dreamt, in the dim future -- ay, a thousand years hence -- I have speculated on what the effect of the triumph of this principle may be....I believe that the desire and the motive for large and mighty empires; for gigantic armies and great navies -- for those materials which are used for the destruction of life and the desolation of the rewards of labour -- will die away; I believe that such things will cease to be necessary, or to be used when man becomes one family, and freely exchanges the fruits of his labour with his brother man."
Cobden and other Victorian free traders are often faulted for their naive faith in the healing powers of commerce. And indeed, some in that camp did fall prey to the facile assumption that major wars were no longer possible in the new global economy. But Cobden himself, as the above passage makes clear, was under no illusions as to the difficulty of subduing the powers of destruction. He saw the task as a monumental and centuries-long project.
However tempered by realism, though, the Cobdenite vision of the future was clearly optimistic. Though the challenges ahead were still daunting, the remaking of the world had begun. The sterile futility of conflict among nations was slowly but surely giving way to interdependence, peace, and prosperity -- with commerce the steam-powered engine of that beneficent change.
Nationalism, Socialism, and Tariffs
The free traders' sunny cosmopolitanism all too quickly gave way to a very different vision of the international scene. As the Industrial Counterrevolution began to gather momentum, the prospect of a world at peace started to recede. A new prospect, dark and menacing, came in its stead to the fore -- one of rival nations, rival races, pitted in fundamental and irresolvable conflict, engaged in a grim and merciless struggle for supremacy or submission. This radical and ruinous shift of perspective did not merely coincide with the spreading enthusiasm for centralization and top-down control; rather, the two developments were interconnected and mutually reinforcing.
First, the momentum of the Industrial Counterrevolution pushed inexorably toward expanding the power of the national state. This was true despite the fact that the most potent and influential of all the counterrevolutionary movements -- Marxist socialism -- was deeply internationalist in orientation. Marx himself was thoroughly cosmopolitan: He conceived of the coming socialist revolution and the workers' paradise it would establish as worldwide phenomena that would overwhelm dynastic, national, and racial distinctions as thoroughly as they did the historically fundamental distinctions of class. He had no interest in augmenting the strength of current states, which he condemned as tools of capitalist oppression.
Recall, however, that Marx's great contribution was a powerful theoretical and historical conception of why collectivism was inevitable. Marx had little to say as to how collectivism would actually work in practice, and he had even less influence over the ultimate course of events. The worldwide proletarian uprising never came, and in the absence of that hoped-for event, the overwhelming drive toward centralization that Marx did so much to engender fastened itself upon the instrumentality at hand: the national state.
Consider, for example, the fate of the German Social Democrats, Europe's first socialist party of political significance. Their original leaders were orthodox Marxists who preached international revolution, not domestic statism. Over time, though, electoral success spoiled the Social Democrats' doctrinal purity. In the 1890s, after their stunning gains in the Reichstag precipitated Bismarck's fall and the repeal of the repressive Socialist Law, new leaders like Georg Vollmar and Eduard Bernstein pushed the party toward "revisionism," or support for gradual reform and cooperation with the existing state. The domestication of the Social Democrats culminated in August 1914, when every single party member in the Reichstag voted in favor of war credits for the Kaiser's army.
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