INTERNATIONAL POLITICS

International Politics

International Politics

Question 1: How do you account for the growth of large-scale enterprise in the late nineteenth century?

In the late nineteenth century, the United States experienced rapid economic growth and emerged as a world industrial power. During this period, the United States also maintained high import tariffs that kept out foreign manufactured goods. That the high tariffs were accompanied by rapid growth and industrialization was noted by contemporary proponents of protectionism and has been a source of controversy ever since. Few observers have argued outright that the high tariffs caused such growth. Yet the association between high tariffs and rapid output growth is frequently noted in such a way as to leave the distinct impression that such causation is highly likely, or at least that the nineteenth century experience demonstrates that protectionism was not a bad economic policy. This interpretation has received increasing popular expression in recent years, partly in an effort to enlist history on the side of those advocating the adoption of protectionist trade policies today, such as Pat Buchanan. This line of reasoning about America's past is also frequently invoked among those sympathetic to “economic nationalist” policies, such as journalists James Fallows and Michael Lind.

Capitalism gradually spread throughout Europe, and in the 19th and 20th centuries, it provided the main means of industrialization throughout much of the world. The large, geopolitically undivided market did not impede the flow of goods. There was a rapid population increase through immigration. The population of urban areas grew dramatically. The United States had abundant raw materials and natural resources. The country experienced the rise of the steel and railroad industries.New forms of business organization, such as vertical integration, came into being.

That there is a correlation between high tariffs and economic growth in the late nineteenth century cannot be denied. But correlation is not causation. There is no reason for necessarily thinking that import protection was a good policy just because the economic outcome was good: the outcome could have been driven by factors completely unrelated to the tariff, or perhaps could have been even better in the absence of protection. To understand the relationship between tariffs and growth, therefore, requires investigating the possible mechanisms by which the tariff could have generated such benefits and assessing whether such benefits were likely to have materialized and have been of economic importance.

The relationship between tariffs and economic growth during the late nineteenth century is quite intriguing and clearly deserves closer scrutiny. What are some of the basic facts about U.S. growth during this period? To say that the United States economy grew rapidly during the late nineteenth century is to make a comparative statement - compared to other countries during the same period, or to the U.S. economy during a different period, the economy performed well. Those attempting to demonstrate that protection was not bad (and possibly beneficial) have made both comparisons, one point of reference being the “free trade” United Kingdom of the late nineteenth century, then the leading industrial ...