by Michael Roberts
There is a new dataset on world trade that looks at changes in
exports and imports globally going back to 1800 and the beginnings of
modern industrial capitalism. Two authors, Giovanni Federico, Antonio
Tena-Junguito have presented a number of papers on the trends found in the data.
Their main conclusions are that trade grew very fast in the ‘long
19th century’ from Waterloo to WWI, recovered from the wartime shock in
the 1920s, and collapsed by about a third during the Great Depression.
It grew at breakneck speed in the Golden Age of the 1950s and 1960s and
again, after a slowdown because of the oil crisis, from the 1970s to the
outbreak of the Great Recession in 2007. The effect of the latter on
trade growth is sizeable but almost negligible if compared with the
joint effect of the two world wars and the Great Depression. “However, the effects might become more and more comparable if the current trade stagnation continues”.
The data show that there were two major periods of ‘globalisation’,
if you like. The first was from 1830-70 when the export to GDP ratio, a
measure of openness in trade, rose. The second was from the mid-1970s
to 2007 – the great globalisation period of the 20th century. According
to the data, the current level of openness to trade is unprecedented in
history. The export/GDP ratio at its 2007 peak was substantially higher
than in 1913.
There were two periods of stagnation or decline in global trade
expansion: during the depression of the late 19th century up to the
start of WW1 and then in the 1930s Great Depression. Indeed, “openness collapsed during the Great Depression, back to the mid-19th century level.”
Now we appear to be in another downturn in globalisation and trade. “Since
2007, the apparently unstoppable growth of world trade has come to a
halt, and the openness of the world economy has been stagnating, or even
declining. The recent prospect of a trade war is fostering pessimism
for the future. Some people are hinting at a repetition of the Great
Depression”, conclude the authors.
As you would have expected, the rise of industrial capitalism
globally meant that the share of agricultural and mineral products in
total exports declined for both advanced capitalist (imperialist)
countries and (interestingly) for the peripheral (colonial) economies.
The share of primary products fell from about 65% in the 1820s to
slightly above 55% on the eve of WWI, with an acceleration of the trend
around 1860 (as industrialisation spread).
The big change was the move of America from an agriculture exporter
to industrial giant in the 20th century. The continued rise in
industrial and services trade in the late 20th century globalisation has
been in turn been led by China’s transformation from a poor
agricultural peasant economy into the manufacturing (and increasingly
hi-tech) workshop of the world.
Share of primary products on exports, baseline series, 1820–1938
The data in general confirm that my own study of globalisation and imperialism that I recently presented.
In my thesis, I argue that globalisation and increased trade are
responses by capitalism to falling profitability and then depression in a
previous period. Globalisation of trade and capital took off whenever
profitability of capital fell in the imperialist centres.
Between 1832-48, profitability of capital in the major economies
fell; after which there was an expansion of globalization to drive up
profitability (1850-70). However, a new fall in profitability led to
the first depression of the late 19th century (1870-90), during which
protectionism rose and capital flows shrunk. With economic recovery
after 1890, imperialist rivalry intensified, leading up to the Great War
Again after the defeats of various labour struggles post 1945 in
Europe, Japan and in the colonial territories, capitalism entered a new
‘golden age’ of relatively fast growth and rising profitability.
Globalisation of trade (reduction in tariffs and protectionism) and
capital (dollar-led economies and international institutions) revived,
until profitability again began to fall in the 1970s. The 1970s saw a
weakening of trade liberalization and capital flows. From the 1980s
however, capitalism saw a new expansion of globalization in trade and
capital to restore profitability.
The beginning of the 21st century brought to an end this
wave of globalisation. Profitability in the major imperialist economies
peaked by the early 2000s and after the short credit-fuelled burst of
up to 2007, they entered the Great Recession, which was followed by a
new long depression. Like that of the late 19th century, this brought
to an end globalisation. World trade growth is now no faster than world
output growth, or even slower.
So the counteracting factor to low profitability offered by exports,
trade and credit has died away. This threatens the hegemony of US
imperialism, already in relative decline to new ambitious powers like
China, India and Russia. With US President Trump now launching his attempt
to put the US back in the driving seat for international trade, renewed
rivalry threatens to unleash major conflicts in the next decade or so.