Empire of rails
By Vittorio Jucker
he early 21st-century economic downturn that has burdened global nations for more than a decade has less in common with America's Great Depression than the so-called Long Depression, which ran through the last quarter of the 19th-century and undercut both Europe and the United States.
As a student of economic history at the London School of Economics in the early 1960s, I was asked to focus on an economic event that — while it interested LSE founders Sidney and Beatrice Webb and British liberals and socialists — seemed alien to the concerns of my time. Only after years of study did I grasp the Long Depression's fundamental connection to the revival of colonialism and imperialism as well as to social reform. The industrial-age poverty that characterized the period not only created the conditions for the birth of the Welfare State but also helped set off the arms race-oriented nationalism that led to World War I and its even bloodier 1939 successor.
Between 1875 and 1900, industrialized and industrializing countries (Italy, Japan and Russia among the latter) scrambled to acquire empire status through colonies. This scramble for Africa and Asia holdings, all but forgotten today, loomed large into the mindset of the period's ruling elite.
Neo-colonialism, with its emphasis on heavy industry, weapons production, and public investment, eventually slowed the Long Recession. But the imperialist and militaristic thinking it trumped up would produce disastrous wars in Asia and Europe and trigger revolutionary movements that overhauled Western society.
Historically speaking, neo-imperialist was short-lived. Less than half-a-century later, by 1970, most empires and colonies had been dismantled. A handful of colonial states yielded a plethora of newly sovereign nations, some of great size and relevance. In Asia alone, China, India, Pakistan, Indonesia and South Korea finally rid themselves of foreign interference and came into their own.
These and other countries are the new actors on a global stage that with each passing decade further alters the international balance of power. Numbers provide context. China's GDP is almost identical to that of the United States and the European Union. Though still much poorer in per capita income, China is now a very real giant capable of grand ideas. India's GDP is roughly a third of America's and growing six percent a year. Both countries are learning to think on a global scale, evident in the futuristic projects they're planning.
Consider China's so-called Silk Road Project, a colossal plan intended to link China, Eastern Siberia, Central Asia and Europe using high-speed trains, highways, oil and natural gas pipelines, integrated power grids, and harbors. Stalled in the aftermath of the 2008 recession, the project has since been revived and officially presented to the governments of Russia, France, Italy and others. China says it's prepared to directly invest some $600 billion, which Beijing's calculations say could have a multiplier effect of around $5 trillion. At times, the Chinese seem like the last Keynesians on the planet.
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THE ECONOMIST ARCHIVE