The Rise and Fall of the Great Powers – Economic change and Military conflict from 1500 to 2000 By Paul Kennedy Fontana Press, London, 1989. This fascinating book by Paul Kennedy, a professor of history at Yale University, is about the changing balance of power in the past 500 years. The book explains the interaction between economics & strategy and relates military conflicts to economic progress. As the author puts it, “Wealth is usually needed to underpin military power and military power is usually needed to acquire and protect wealth. But if too much money is diverted towards military expenditures or if the state over extends itself by too many conquests, the results will not be satisfactory. There is a very significant correlation over the longer term between productive and revenue-raising capacities and military strength. Another point which the author emphasizes is that wealth and power are always relative. Also, a nation’s relative economic and military power may not rise and fall in parallel. There is a noticeable lag between the trajectory of a state’s relative economic strength and the trajectory of its military/territorial influence.
According to the author, “Great powers in relative decline instinctively respond by spending more on security and thereby divert potential resources from investment and compound their long-term dilemma. ” The Rise of the Western World In 1500, few could have predicted the tremendous economic progress the western world would make. Compared with other great centres of cultural and economic activity, Europe’s relative weaknesses were more apparent than its strengths. Europe had no significant advantages in culture, mathematics, engineering/navigational technologies, compared with other great Asian civilizations.
Ming China, the Ottoman empire, the Moghuls, Russia and Japan all looked equally well placed compared to Europe. But Europe went ahead due to a combination of circumstances. There was political fragmentation. Different regions specialized in different products leading to a thriving trade. The decentralized, largely unsupervised growth of commerce and merchants and ports and markets allowed economic progress to take place unhindered. No systematic or universal plundering of merchants by a central authority could take place.
In Europe, there were always some authorities willing to tolerate merchants and their ways even when others plundered and expelled them. Gradually, most of the regimes of Europe entered into a symbiotic relationship with the market economy, providing domestic order and a non-arbitrary legal system. In return, they received taxes. The development of long-range armed sailing ships heralded a fundamental advance in Europe’s place in the world. These vessels enabled the west to control the important sea trade routes. There was also an upward spiral in knowledge in science and technology, based on observation and experimentation.
Printing presses helped disseminate knowledge. As Kennedy puts it, “In most cases, what was involved was not so much positive elements, but rather the reduction in the number of hindrances which checked economic growth and political diversity. Europe’s greatest advantage was that it had fewer disadvantages than other civilizations… It was a combination of economic laissez faire, political and military pluralism and intellectual liberty, which had been in constant interaction to produce the European Miracle. ” This mix of ingredients did not exist in Ming China or in the Muslim empires of the Middle East and Asia.
As a result, these societies seemed to stand still while Europe advanced. The key ideas in this book
• Wealth is the basis for military power.
• Too protect wealth, military power is necessary.
• There is a significant correlation between a country’s ability to generate resources and its military power.
• Wealth and power are always relative
• Powerful countries, in order to protect their states must strike the right balance between defence, consumption and investment.
• The US will decline in the coming years but it will continue to be the leading power of the world in the foreseeable future. The Habsburg bid for Mastery, 1519-1659
During the period 1519-1659, a combination of kingdoms, provinces and duchies controlled by the Spanish and Austrian members of the Habsburg family threatened to become the predominant political authority in Europe. The Reformation had added a new dimension to the traditional dynastic rivalries of the continent. The intensity and scale of warfare also increased because of the network of territories controlled by the Habsburgs, stretching from Gibraltar to Hungary and from Sicily to Amsterdam. Moreover, the Habsburgs expanded their territory through marriage and inheritance. The first series of major wars was focused on Italy.
There were also skirmishes in Germany. Over time, the Habsburgs found themselves in a weaker position compared to their rivals. In 1648, Spain made peace with the Dutch, finally recognizing their full independence. Then it became a Franco-Spanish war. The French finally teamed up with the British to deliver a crushing blow to the Spanish, leading to the Treaty of Pyrenees in 1659. Consequently, the political plurality of Europe remained intact. The Habsburgs failed for many reasons. The scale and costs of wars had increased significantly. So, the Habsburgs were involved in an almost continual struggle for solvency.
The Austrians and Spanish failed also because they had too many empires to fight and too many fronts to defend. They had to face too many foes simultaneously. The other states like France, England and Sweden enjoyed certain periods of peace and discovery. But the Hasburgs moved from one conflict to another. The Spanish government also failed to mobilize available resources in the most efficient way. By acts of economic folly, it helped to erode its own power. The Habsburg monarchs resorted to a wide variety of expedients easy in the short term, but disastrous for the long-term good of the country.
At the centre of the Spanish decline was the failure to preserve the economic underpinnings of a powerful military machine. Taxes were steadily increased but rarely fell on those who could pay. Taxes also hurt commerce. The government, in its desperation to raise cash, also sold off various privileges, monopolies and honours. It used various forms of deficit financing. The Spanish expelled Jews, terminated contracts with foreign universities, concentrated on larger vessels at the exclusion of more useful, smaller, trading vessels and sold monopolies which restricted trade.
But the Habsburg failure was a relative one. It is not that the Habsburgs failed utterly to do what other powers achieved so brilliantly. All the participants in the wars fought by the Habsburgs were placed under severe strain due to the constant drain of resources for military and naval campaigns. The victory of the anti Habsburg forces was only a marginal and relative one. They may have managed their resources better and showed greater appreciation of the role of the manufacturer, trader and the farmer. But the margin of their better handling of economic elements was only slight.
Financial muscle and geopolitics (1660-1815): The decline of France and the rise of Britain After 1660, a genuinely multi polar system emerged in Europe. Each state increasingly tended to make decisions about war and peace on the basis of national interests rather than for transnational, religious causes. A system of short-term, shifting alliances emerged. Countries which had been foes in one war often found themselves partners in the next. A crude trilateral equilibrium emerged, consisting of France, Prussia and the Habsburgs. Britain and Russia were the other two leading powers.
The most significant changes occurring in the military and naval fields were in organization. The enhanced authority and resources of the state gave to the armed forces a degree of performance which had often not existed, a century earlier. Not only were there professional standing armies and royal navies, there was also a much more developed infrastructure. War academies, barracks, ship-repair yards and the like, came up with administrators to run them. As the military establishments became more sophisticated, the need arose for creating financial institutions which could raise and manage capital. The apacity to maintain credit worthiness and mobilise supplies became very important. States could not fund wars with their normal revenues. There was the danger that steep rises in taxes would provoke domestic unrest. So, the only way a government could finance a war was by borrowing, selling bonds and selling offices. The two-way system of raising and simultaneously spending vast sums of money spurred the development of western capitalism. The success of the system was critically dependent on two factors – reasonably efficient machinery for raising loans and the maintenance of the government’s credit rating.
Amsterdam, which satisfied both conditions, become the leading financial centre of the world. In Britain, an institutional framework evolved, which permitted the mobilization and servicing of long-term loans efficiently. The process was facilitated by the establishment of the Bank of England in 1694, a flourishing stock exchange and growth of the banking system. The obligations of the state were guaranteed by successive parliaments. Also, customs and excise revenues increased as trade & commerce expanded. Interest rates steadily dropped.
British government stock become attractive to foreign investors in general and the Dutch in particular. Compared to Britain, the French public finance system was relatively weak. The French monarchy’s financial operations had been managed from the middle ages by a cluster of bodies – municipal governments, the clergy, provincial estates and tax farmers. The organization was lax and inherently corrupt. Much of the taxpayer’s money ended up in private hands. During times of war, the financial system let the French down. It is not however correct to say that financial clout alone determined the fate of nations.
Amsterdam was the greatest financial centre in the world, but the United Provinces (erstwhile Netherlands) declined in importance. Russia was economically backward but it played an important role in European affairs. This trend can be attributed to geopolitics. Was a particular nation able to concentrate its energies upon one front? Did it share common borders with weak ones or powerful ones? Was it chiefly a land power, a sea power or a hybrid? France, for example, suffered from being a hybrid power during the 18th century.
Its attention and energies were divided between continental aims on the one hand and maritime and colonial ambitions on the other. France was unable to launch decisive campaigns because in each direction, she had to manage various interests simultaneously. Again, Britain was in a better position. Being an island, Britain could focus more on the sea. And the British continued to team up with other European powers to fight the French on the continent. During the period 1660-1815, it was Great Britain which made the most decisive advances, finally dislodging France as the greatest of the powers.
The British and the French governments decided to settle their differences in 1748 under the Treaty of Aix-la-Chappelle. Diplomatic talks arranged for a general return to status quo. But the agreement was more in the nature of a truce. In the 1762-63 settlements, Great Britain emerged the clear winner. It had made advances in the West Indies and East Africa. It had virtually eliminated French influence from India. It was supreme in North America. The French were determined to extract advantages from any problems which Britain might encounter overseas.
When Britain’s war with the American colonies started, it was in a much weaker position. In the 1776-83 conflict, Britain was engaged in land fighting, thousands of miles away from home and it had to fight unaided by other European powers who could distract the French. Britain’s concessions at the1783 Peace of Versailles was not a reversal of the great imperial gains of 1763. But the French were reasonably satisfied at the creation of an independent US and at the blow dealt to Britain’s global leadership. The rise and fall of Napoleon
But France’s position continued to deteriorate owing to the costs of wars and its failure to reform national finances. From 1787 onwards, France looked less and less capable of playing a decisive role in foreign affairs. The French did try to reform their army organization. And the Revolution of 1789 gave the reformers the opportunity to put their concepts into practice when war broke out. With an army of about 650,000 in July 1793, fired by enthusiasm and willing to take the risks involved in lengthy marches and aggressive tactics, the French were soon over running neighbouring territories.
Though the French had organizational lacunae, the necessary political commitment and strategic thinking were also missing among its enemies who did not take the French threat seriously, early on. But if the British could not defeat France, the French would not undermine the naval mastery of the British. British control of the sea routes could not by itself undermine French hegemony in Europe. And Napoleon’s military mastery could not induce the islanders to surrender. Like the whale and the elephant, each was by far the largest entity in its respective region.
Around 1801, the two sides were thinking of peace. But hostility increased when the British found themselves denied access to trade in much of Europe and French intrigues continued in various parts of the world. The final round of the Anglo French wars lasted for 12 years and was the most testing. The British won back several overseas possessions of the French. The Franco-Spanish fleets were thrashed soundly by the British in Trafalgar in October 1805. Meanwhile, Napoleon’s position on land continued to be strong. Napoleon also imposed bans on British exports to Europe.
These trading bans hurt England, but they were were never applied long or consistently enough to take effect. Also, the British tapped other markets and total exports rose during the period 1794-96 to 1814-16. Moreover, the momentum of the British economy was maintained by the industrial revolution. So, the British were able to endure the costs of war better than the Napoleonic empire. During the period 1789-1815, the competitiveness of French agriculture and industry declined. Indeed, to a large extent, Napoleonic imperialism was financed by plunder.
Though Napoleon’s system looked unbeatable, cracks soon began to appear. By entering Spain and Portugal, Napoleon committed a strategic blunder. A friendly Spain undid the earlier damage done to British trade. The French overstretch reflecting Napoleon’s own hubris, was by this time extreme. Any major setback affected other parts of the system since they had to be drained of troops in order to repair the broken front. The defeat at Leipzig in October 1813 was a major set back to the French. As fighting started on their own soil, the French public became less than enthusiastic.
As France grew weaker, European powers seized the initiative to surround it with an array of strong buffer states. Controlling most of Europe’s colonies by 1815, dominating the maritime routes and the profitable re-export trades and well ahead of other societies in the process of industrialization, the British were now the richest nation in per capita terms. Over the next 50 years, Britain would emerge as the global economic superpower. Napoleon’s refusal to compromise ensured not only his downfall but his greatest enemy’s supreme victory. Industrialisation and the shifting global balances, 1815-85
In the 50 years following Napoleon’s downfall, an integrated global economy began to take shape. The erosion of tariff barriers and widespread propagation of ideas about free trade and international harmony, resulted in a new order. There were conflicts but none except the American civil war became a major one. Technology developed during the industrial revolution, began to make its impact on military and naval warfare. The shifts in balance of power caused by the uneven pattern of industrial and technological change probably affected the outcome of mid 19th century wars, more than did finance and credit.
Most of the wars were relatively short. The emphasis was on a speedy victory in the field using existing military strength rather than the long-term mobilization of national resources and the sharing of fresh revenues. The industrial revolution in Britain increased productivity on a sustained basis. The expansion in national wealth and in the population’s purchasing power easily outweighed the increase in population. Inanimate sources of power replaced animate sources, resulting in greatly increased productivity, especially in the textile industries.
This stimulated a demand for more machines, more raw materials, more iron, more shipping, better communications and so on. The nation’s per capita income went up and the demand of urban workers for food increased. But this could be easily met. Countries such as China and India found their share of world manufacturing shrink. The penetration of their traditional markets by far cheaper and better products of the Lancashire textile factories seriously undermined their industrial competitiveness. In 1800, Europeans occupied or controlled 35% of the world’s land surface, in 1878, 67% and by 1914 over 84%.
Steam engines and machine-made tools gave Europe decisive economic and military advantages. The UK became the unchallenged global superpower. Between 1760 and 1830, the UK was responsible for around two thirds of Europe’s industrial growth of output. Its share of world manufacturing production leaped from 1. 9 to 9. 5% in the next 300 years and in the next 30 years to 19. 9%. Around 1860, when British might was at its peak, the UK produced 53% of the world’s iron, 50% of its coal and lignite and consumed about half the world’s raw cotton output. British shipping also dominated the world.
The ideology of the day preached peace, minimal government expenditures and reduction of state controls over the economy and the individual. So, the modernization which occurred in British industry and communications was not paralleled by improvements in the army. The economic dominance of the British was not quite reflected in their military power. But the British navy and British colonialism were more or less unchallenged. Between 1815 and 1880, the British empire existed in a vacuum. Which is why the colonial army could be kept relatively small.
Meanwhile, Britain’s economic progress continued impressively. Britons became major foreign investors. The British economy acted as a vast bellows, sucking in enormous amounts of raw materials and foodstuffs and sending out vast quantities of textiles, iron goods and other manufactures. This was complemented by a network of shipping lines, insurance arrangements and banking links. The British began to play a pivotal role in international trade and international finance. Britain also contributed to the industrialization of other nations.
The path taken by the French was different. The French were not short of capital but they deliberately chose not to invest in large scale industrial enterprises. They concentrated on high quality rather than mass-produced goods. The relative military as well as economic power of the French continued to decline. France’s army was inferior to that of Russia and its navy to that of the British. But the French were keen on playing an important role in Europe and were very active diplomatically. Russia’s relative power declined the most during the post 1815 decades. GNP did increase.
But this was mainly due to an increase in population and not any increase in productivity. A general lack of capital, low consumer demand, a miniscule middle class, vast distances, extreme climates and the heavy hand of an autocratic, suspicious state made the prospects for industrial take off more difficult in Russia than in the rest of Europe. Meanwhile, the development of America was taking place impressively. Steady industrial growth and ready availability of land resulted in labour shortages. Manufacturers began to invest in labour saving machinery, further boosting productivity.
By 1800, wages in America were one third higher than in Western Europe. By 1861, the United States had become an economic giant. But its distance from Europe and lack of participation in international trade, disguised this fact. The Americans, till the Civil War, spent relatively little on defence. But the Civil war transformed the US into the greatest military nation in the world. The powers which were defeated during this period were those that failed to adjust to the military revolution of the mid 19th century – acquisition of new weapons, mobilizing and equipping of large armies, the use of improved ommunications offered by the railways, steamship, telegraph and a productive industrial base. The winning sides did commit blunders from time to time. But these blunders were more than made up by their trained manpower, supply, organization and economic base. The coming of a Bipolar world (1885-1918) It is interesting to track the important economic and military developments in the major countries during this period. Italy: As opposed to a cluster of rivaling small states, there was now a solid block of 30 million people in Italy. Within just a decade of reunifying, Italy had become one of the great European powers.
But the country was economically very weak. When it came to literacy, agricultural productivity and per capita national wealth, Italy continued to be a laggard. Italy had only 25% of Great Britain’s industrial strength in 1900. It had a share of less than 2. 5% of the world’s manufacturing output. The country’s inadequate railway network made troops deployment difficult. Other problems which Italy faced were serious north-south imbalances and hostilities between the church and the State. Japan (1885-1918): Japan’s transformation began under the Meiji Restoration.
A new constitution was established. The legal system was revamped. The educational system was expanded. A modem banking system evolved. The state encouraged the creation of a railway network, telegraphs and shipping lines. It supported industries like iron and steel, ship building and textiles. But there were some fundamental weaknesses. The country was heavily dependent on agriculture. Because of small holdings, agricultural productivity was not very high. But Japan’s isolation helped it to emerge as one of the great powers. Besides, morale was also high.
According to Kennedy, “It seems indisputable that the strong Japanese sense of cultural uniqueness, the traditions of emperor worship and veneration of the state, the samurai ethos of military honour and valour, the emphasis upon discipline and fortitude, produced a political culture at once fiercely patriotic and unlikely to be deterred by sacrifices and reinforced the Japanese impulse to expand into “Greater East Asia’ for strategical security as well as markets and raw materials. … The Samurai spirit, it seemed, could secure battlefield victories with the bayonet even in the age of mass industrialised warfare.
If, as all the contemporary military experts concluded, morale and discipline were still vital pre-requisites of national power, Japan was rich in those resources. ” Indeed, the great powers could not attempt any thing in the Far East without considering Japan’s response. Germany: By 1914, Germany had become the most powerful state in Europe. The country’s population soared from 49 million in 1890 to 66 million in 1913. Germany achieved high levels of education, social services and per capita income. The country built an impressive system of schools, polytechnics and universities.
Industries such as coal, steel, electrical equipment, optics and chemicals all grew impressively. By 1913, Germany was one of the leading exporters in the world. It had a 14. 8% share of global manufacturing output compared to Britain’s 13. 6% and France’s 6. 1%. With the exception of Britain, Germany could afford to spend on armaments, more than any other European state. But Germany’s weakness lay in its geography as well as diplomacy. Its very creation affected the interests of Austria-Hungary and France. As Germany lay in the centre of the continent, its growth appeared to threaten a number of other Great Powers simultaneously.
Unlike Bismarck, many of the other German leaders did not display great diplomacy. Germany combined the modern, industrialized strength of Western democracies, with the autocratic decision making features of the eastern monarchies. So, it was a formidable power. France: France’s main enemy was Germany. But Italy’s naval and colonial challenge was also disturbing. Anglo-French clashes weakened France’s position. But the country did make significant economic progress. Till Henry Ford came, France was the leading automobile producer in the world. Railways, telegraphs, postal systems and inland waterways also showed tremendous improvements.
The country’s sizable foreign investments yielded significant political and diplomatic benefits though the economic benefits were far from clear. Also, the French economy was smaller than that of Germany. The country also did not have economies of scale in coal, steel and iron. But the French were in a mood to do battle. A patriotic revival took place after 1911. France’s national confidence was also boosted by the diplomatic efforts of foreign minister, Delcasse. Though France was not in a position to take on Germany one to one, it was wealthy, military strong and had powerful allies.
So, French enthusiasm was high. Great Britain: In 1900, Great Britain possessed the largest empire, the world had ever seen. But its relative industrial and commercial strength had declined. The US and Germany had overtaken Britain industrially. But Britain still remained the leading power in the world because of its financial resources, productive capacity, imperial possession and naval strength. However, Britain was now a mature state and was in favour of preserving the status quo. Russia: Russia’s sheer size and the strength of its standing army were impressive.
But economically, it was not strong. Russian industrialization was essentially carried out by foreigners. Native entrepreneurship was virtually missing. Russia accumulated the largest foreign debt in the world. 80% of the population derived its livelihood from agriculture. A good proportion of the remainder was rooted in village ties. According to Kennedy, “What was happening was that a country of extreme economic backwardness was being propelled into the modern age by political authorities obsessed by the need to acquire and retain the status of a European Great Power…
The great thrust toward modernization was state-inspired and related to military needs. ” But resources at Russia’s disposal were limited. According to a source quoted by Kennedy, by 1913, the average Russian had 50% or more of his income appropriated by the state for current defence than did the average Englishman, even though the average Russian’s income was only 27 percent of that of his British contemporary. The discipline introduced in factories and relatively low living standards created an ideal breeding ground for radicals.
The government kept the tax burden on the rich to the minimum but increased the burden on the poor. Russia also did not have the competent civil servants which countries like Germany, Britain and Japan had. United States: After the civil war, economic development in the US was breathtaking. The country combined its natural resources and technological advancements, to its advantage. The US had a vastly superior railway network, compared to Russia. US firms generated economies of scale as they enjoyed a huge domestic market.
By 1914, US national income both in absolute and per capita terms was higher than that of anyone else. It was growing so fast that it was on the verge of overtaking the whole of Europe. The role of foreign trade in the growth of the US economy was initially small. Later, the transportation revolution and the growth of its industry boosted US exports. Between 1860 and 1914, the US increased its exports seven times. A vast trade surplus with Europe resulted in huge capital inflows from that continent.
Given its turn-of the country rapprochement with Great Britain, the US was immensely secure. It did not have to worry about other major powers. As a result, the US could afford to spend less on armaments. Even more than Britain, the US continued to show a dislike of mass standing armies and avoided fixed military obligations to allies. The growth of alliances and World War I In the 1890s, alliance blocs emerged. Germany, Austria-Hungary and Italy combined against France and Russia. The US remained on the sidelines on the eve of World War I.
Austria-Hungary and Italy remained weak powers. While Russia’s arms output did increase, its transportation system was inadequate. France needed British and American military assistance. During the first two or three years of war, it sustained many casualties. The British also came to depend on the US. The British Royal Navy was quite unprepared to counter the unrestricted U-boat warfare, which the Germans launched by early 1917. But Britain was an economic superpower, in spite of a major trade deficit with the US. It had a crucial rule to play in financing the war efforts.
Germany had intelligent, motivated personnel on the fronts, a large population and a strong industrial base. But popular morale suffered as the authoritarian regime exercised all sorts of controls over the German society and economy to meet the demands of war. Agriculture was also neglected. The unrestricted U-boat campaign launched by the Germans and the revelations of secret German offers to Mexico of an alliance prompted the US to enter the war. Though the US army was not fully prepared for war, its sheer economic might and industrial strength swung the tide in favour of the allies.
Finally, the Germans were outnumbered and outpowered by the combined economic muscle of the allied forces. As Kennedy puts it, “The overall course of that conflict – the early stalemate between the two sides, the ineffectiveness of the Italian entry, the slow exhaustion of Russia, the decisiveness of the American intervention in keeping up the allied pressures and the eventual collapse of the central powers correlates closely with the economic and industrial production and effectively mobilized available forces to each alliance during the different phases of the struggle.
To be sure, generals still had to direct their campaigns, troops still had to summon the individual moral coverage to assault an enemy position and sailors still had to endure the rigorous of sea warfare but the record indicates that such qualities and talents existed on both sides and were not enjoyed in disproportionate measure by one of the coalitions. What was enjoyed by one side, particularly after 1917 was a marked superiority in productive forces. ” The coming of a Bipolar World (1919-42)
During this period, the most striking change in Europe was the emergence of a cluster of nation states – Poland, Czechoslovakia, Austria, Hungary, Yugoslavia, Finland, the Baltic states. The first world war had seen a lot of damage to life and property. After decades of growth, world manufacturing output had sharply declined. In many countries, public debt rose sharply as did inflation. Competitive depreciation of currencies led to financial instability and political rivalry. Between 1914 and 1919, the centre of global finance moved across the Atlantic.
But the US was still more of a domestic economy, protectionist inclined, and not fully integrated into the global economy. The US was also saddled with excess capacity in some industries. In the 1930s, the differential growth rates were more marked than they had been in the 1930s. The remarkably different ways in which national economic policy was pursued meant that output and wealth could be rising in one country while falling in another. The armed forces had become more dependent than ever on the productive capacity of their nations.
The future of the armed forces was increasing