Chapter Content
Okay, so, like, in 1870, you had the British Empire, right? This massive thing, maybe only rivaled by the Mongol Empire back in the day. And it was, like, at its peak. What made it so impressive was that it wasn’t just about armies and, you know, bureaucrats pushing papers around. It was also this… this *informal* power, you know? Ways they influenced things without directly controlling them.
And, look, we know how this story goes, so I'm gonna jump ahead a bit. By 1945, the U.S. had basically taken over as the top dog, the leading industrial, commercial, and… well, imperial power. The funny thing is, the U.S. built its empire in a totally different way, almost entirely informal, unlike the British.
Now, here's where things get tricky in terms of trying to explain it simply. You can kind of squeeze the story of the "global north," which is basically Europe and North America, into one main storyline between 1870 and 1914. But you can't really do that with the "global south" – you know, countries that were generally south of, and, more importantly, on the *edge* of the global economy. It's just too complex to make all of those countries into one story.
And, well, most of what defined the 1800s was the economic history, centered in the global north. I mean, that doesn't mean other places didn’t have interesting stuff going on, of course, it just that the global north was leading the way in pushing all of the economic activity and development.
So, what I want to do here is just hit some highlights with a few examples. I'm thinking India, Egypt, China, and Japan. And, to give you some context, 1870 isn't just when the global north started booming. It was also kind of the midpoint of the whole imperialism thing for the global south. I mean, that project started way back in 1500 and didn’t wrap up until pretty late in the 1900s. It's kind of a slippery topic, you know? But we can talk about it using some historical perspective.
Basically, Europe—or, more specifically, Spain and Portugal—kicked off empire building in the 1500s. It's not like they were, like, *that* much more technologically advanced. What they *did* have was this connected bunch of systems—religious, political, bureaucratic, commercial—that all worked together to make them want to grab power through, you know, conquering stuff. So, building empires was, like, strategically smart, ideologically cool, and made money sense, all at the same time. Spanish conquistadors wanted to serve their king, spread the good word of God, *and* get rich. People elsewhere didn’t have all of those incentives lined up.
Like, when the Portuguese showed up in what’s now Malaysia, the local rulers fought back, the Islamic folks didn’t like the new religion, and Chinese traders weren’t happy about being pushed out. But the Chinese merchants didn’t have the Ming government backing them up, the sultans couldn’t drum up, you know, a religious war to kick the Portuguese out, and the whole thing just wasn’t profitable enough for sultans and allies to keep getting involved. The Portuguese, and the Spanish, and later the Dutch, French, and British, they had everything. Gold, guns, God, and kings, all pulling in the same direction.
So, that's how those early European empires got going. Between 1500 and, say, 1770, imperialism and globalization went hand-in-hand across military, political, economic, and cultural lines. For better and for worse, of course.
But, these early empires were, you know, *limited*. Outside of the Americas, Europe controlled the *seas*, but not the land. Sea control mattered a lot, though. Back in the 1500s and 1600s, controlling high-value, low-weight stuff from East Asia, or metals from Latin America, made people rich, gave European kings some extra cash, and kept potentially disruptive young guys busy fighting.
This also led to the, tobacco, sugar, and slave trades. Made the West Indies really important. The slave trade, meanwhile, messed up Africa, maybe setting the stage for why it’s, you know, the poorest continent today.
But, around 1870, the whole "empire" thing seemed to be losing steam. There wasn’t a ton of luxury stuff that couldn't be made cheaper in Europe. Plus, conquering new places was getting more expensive than just trading. But empires aren’t just built on logic, so they kept on growing anyway. People kept conquering, controlling, and exploiting.
Now, one way to look at it is: yeah, imperialism was terrible, but it was inevitable. All that money to be made by connecting the world into one marketplace. And, well, the other way to look at it is: yeah, imperialism was terrible, but *people* chose to do it. You know?
By 1870, the gap between Europe and everywhere else was huge. Technology, organization, political power, you name it. New ways to travel and communicate made war and conquest a lot easier. Western Europeans could basically do whatever they wanted, wherever they wanted, at a pretty low cost. And these guys weren’t just thinking about what resources they could ship back home. These outposts were often full of young guys trying to prove themselves or missionaries trying to save some souls. Figuring out if it was cheaper to just trade was, for a lot of these guys, not really a priority.
They had the means *and* the method.
Think about the Battle of Omdurman in 1898. Ten thousand Sudanese soldiers died. Only forty-eight British and Egyptian soldiers died. It wasn’t *just* about European technology. The Sudanese actually had some machine guns, telegraphs, and mines they bought from Europe. The problem was, they didn't have the organization or, you know, the discipline to use them effectively.
So, a well-organized global north meant that the world was basically connected to a European-controlled economy. A lot of it was run by European guys, and everyone started using European languages and, you know, European stuff. Schools, culture, methods of government, science, technology. You saw harbors, railroads, factories, popping up all over the place.
And, basically, people everywhere were told they were, you know, worthless compared to their European rulers.
Take India, for example. In 1756, the new ruler of Bengal, Siraj ud-Dowla, he wanted to show the British who was boss. So, he borrowed some guns from the French, attacked, and took over Calcutta and its Fort William. He was thinking, you know, this would lead to negotiations. The French would be happy, the Europeans would pay him more taxes, and the British would stop smuggling.
Big mistake.
The British sent 3,000 soldiers from Madras. Siraj ud-Dowla got ready for a fight. But the British commander, Robert Clive, bribed three of the Nawab’s top guys. And after that, the British East India Company decided they wanted to conquer, rule, *and* tax India, instead of just trading with it.
By 1772, Calcutta was the capital of British India. Warren Hastings was the first governor-general. The British East India Company got into the middle of fights for control of the Mogul Empire. And every generation, independent places became allies, then allies became puppets, and then puppets became just another part of the British Empire ruled from London. It all culminated in the Sepoy Mutiny in 1857. It was put down. And then, Queen Victoria was named Empress of India.
Even Karl Marx, way back in 1853, wrote that British rule was both the worst thing *and* the best thing to happen to India. He thought the British conquest was awful in the short run, but that it would set the stage for, you know, progress in the long run. Stuff like political unity, electric telegraphs, and an army trained by the British would eventually lead to India freeing itself.
It was Marx's version of "the market giveth, the market taketh away." The bourgeoisie basically forced progress kicking and screaming, dragging everyone through blood and dirt, but that it also gave the ingredients for a communist utopia at the same time.
But, by 1914, a lot of the big changes Marx talked about hadn’t really happened yet. Sure, India had railroads and a few industries to support them. But modern industry, education, and better farming practices? Not so much. Overthrowing the caste system? Nope. And while that 1857 thing came really close to pushing the British out, they failed.
The fact that the British Raj didn’t transform India is a huge problem for economists. Even Marxist economists. You know, India had peace, a decent justice system, and low taxes. But there was no sign of the kind of progress that they thought should be happening.
Whether you call it natural or unnatural, things went differently than expected.
Egypt is another useful example. Muhammed Ali, an Albanian dude who’d enlisted as a mercenary in the Ottoman army, somehow ended up running the show. He looked at Europe and India, and he saw that Europeans might do to Egypt what they had done to India.
So, Muhammed Ali tried to make Egypt a major player. New crops, land reform, a modern military, cotton exports, state-owned factories. He knew that if he didn’t keep things moving, his grandkids would end up as puppets of French bankers and British officials. But the machines couldn’t be kept running. Was it the engineers? The bureaucracy? The lack of long-term vision?
Muhammed Ali died in 1849. In 1863, his grandson Ismail took over. He was educated in France, open to European ideas, and, lucky for him, he took over during the "cotton famine" caused by the American Civil War. Everyone needed cotton, Egypt had it, so Egypt became rich.
But it didn't last.
The Egyptian government went broke in 1876. Egypt's lenders took over. Ismail stepped down. Two financial controllers, one British and one French, were hired to make sure Egypt paid its debts. People wondered why they were being taxed to pay for the debts of their old ruler. British troops moved in in 1882, and Egypt was basically a British puppet until 1956.
So, yeah, Muhammed Ali’s great-grandchildren did end up as puppets.
China is another important story.
In 1870, China was poor and a mess. The government and the economy were in crisis. The Qing dynasty just couldn't get anything done.
One guy, Li Hongzhang, managed to rise to the top. He was trained to be a bureaucrat, but he found that the only skills that really mattered were being a good general and knowing how to deal with the European powers.
Some historians think that China *could* have stood up to the West like Japan did.
Economists, though, are more skeptical. The Qing dynasty couldn’t even manage its own infrastructure, collect taxes effectively. When they thought they were strong enough to take on the French in Vietnam, their fleet was destroyed in an hour. When they thought they were strong enough to stand up to Japan in Korea, they were wrong again.
And even way later, in 1929, China’s steel and iron production was tiny compared to the US.
Look at the Kaiping coal mine in northern China. Li Hongzhang saw that China needed industry. So, he helped build the mine. But they faced some serious weird obstacles. One official said that mining would anger the earth dragon and upset the emperors. Li had to choose between building a modern mine and maybe upsetting the imperial family. He chose modernity.
Production started in 1881. But even by 1900, the mine was way less productive than mines in the US or Australia. It was run as both a government project *and* a private business. The director was an employee of the company and an official of the bureaucracy.
When the first director died, he was replaced by a political fixer who was super rich. Making money was more important than running the mine well. Li Hongzhang died in 1901.
In 1901, Herbert Hoover, who was mining engineer and future president, took over the mine. Hoover said that thousands of workers on the payroll were totally fake and that the director had paid a fortune to get the job.
“Wait, Hoover took over?”
Yeah. He was in China during the Boxer Rebellion. The director had fled because he was afraid the Boxers would kill him and the Europeans would put him in jail.
Things get complicated at this point. Hoover somehow got the director freed. Then, he got the guy to sign the mine over to him and reincorporated the Kaiping mine as a British-flag enterprise controlled by Herbert Hoover. One British diplomat said Hoover and his crew “made a pretty pile at the expense of the Chinese” and that they “lined the pockets of an Anglo-Belgian gang.”
Hoover, obviously, saw things differently. Maybe he thought the old shareholders should be grateful they got something, and that he was making the mine run efficiently and making a lot more money.
Again, it's the market giveth, taketh away thing. But others cursed the economic structure that favored corruption over competence, an educational system that favored scholars over engineers. Outside of the areas around foreign ports and near a few reform-minded governments, modern industries just didn’t develop in late imperial China.
Sun Yat-sen, who had been rejected by Li Hongzhang, built a resistance network among Chinese people abroad. Yuan Shikai, decided that working with the Qing court was useless. In 1912, Sun Yat-sen started a rebellion, Yuan Shikai refused to stop it, and the Qing dynasty was gone.
The emperor gave up. Yuan Shikai declared himself president and tried to seize power. China fell apart.
I could tell you a million more stories, but India, Egypt, and China give you a pretty good idea. The power of European empires meant that even places that weren’t officially colonies were still, you know, dominated by them. It was a world where you couldn’t really say no to the offers that were being made.
Maybe those offers were good. Maybe the alternative was just worse. As the economist Joan Robinson said, the only thing worse than being exploited by capitalists was *not* being exploited by them. Being ignored and left out.
And, depending on who you asked, this was either a godsend or a disaster.
It was easier to point fingers when it came to formal empires. But as the informal empire took over, things got more complicated. It had some real benefits: free trade, concentrated industry, free migration, and freedom of investment.
You could resist, but saying no often led to your own people turning against you. Most countries agreed to play by Britain’s rules for a few reasons.
First, Britain was successful, so why not try doing what they did? Second, doing something *else* was expensive. Britain could offer stuff cheaply and paid well for exports. And third, even if you *wanted* to do something else, you didn't necessarily control what was going on in your country. And there was a lot of money to be made by joining the British system.
But playing that game had consequences.
Steam-powered machines were way better than, you know, handcrafted stuff. Manufacturing declined outside of Europe, and places started focusing on agriculture and raw materials. So, countries got "underdeveloped." They gained in the short run, but couldn’t build the engineering and manufacturing skills to become, you know, actually rich.
It also meant that those machines could only really work in the global north. Because you needed engineers, trained workers, and money to keep them running.
Free migration also meant there weren't restrictions, and contributed to Europe’s economic dominance during that time. These free capital flows let you lend and borrow from whoever you wanted. Before World War I, the idea was that you would actually try to pay it back. And for some countries, like the U.S., Canada, Australia, Argentina, these capital inflows were a major help.
It’s not totally clear that exporting capital helped those who were doing the exporting. France subsidized Russia before World War I hoping Russia could fight Germany, but after the war, Russia was ruled by Lenin, who wasn’t interested in paying back debts.
Informal empire also worked by giving the world an example to follow. Britain was doing well, so everyone tried to copy them. Business suits, studying Latin, property rights, railroads. Some of it was helpful, some of it wasn’t. And what worked for Britain didn’t always work so well for everyone else.
That was the story of the global periphery in the age of empire. The pattern seemed to happen everywhere.
But there was one exception.
Japan.
Japan managed to deal with the imperialists, get rich, industrialize, and join them.
To understand how, we need to go back to the 1600s, when Tokugawa Ieyasu became shogun, or viceroy for the emperor. His son and grandson finished setting up the new government. They were based in Edo, which later became Tokyo.
From the start, they were careful about letting Europeans in. They had seen what happened in the Philippines, with merchants, missionaries, soldiers. By 1600, Spain was in charge.
The Tokugawa Shogunate knew it could control its own people. But they weren’t sure if they could resist European technology, armies, and religion. So, they closed the country. Trade was restricted. Japanese people who came back from abroad were killed. Foreigners found outside of certain areas were killed. Christianity was banned. Formal empire struggled to get a foothold.
Another thing that set Japan apart was that a lot of people lived in cities. And, literacy was high. That gave them the base they needed for developing technology.
One story is about the Lord of Nagasaki, Nabeshima Naomasa, and his cannon foundry. His workers found a Dutch description of a foundry. They copied it. In 1850, they built a furnace. Three years later, they were casting cannons. In 1854, they imported some guns from Britain and started copying those. By 1868, Japan had eleven furnaces casting iron.
The Tokugawa era ended in 1868 with the Meiji Restoration. A group of leaders took over and wanted to bring in European technology while keeping Japanese culture. They adopted the slogan "Western learning with Japanese spirit" to create "a rich country with a strong army."
They quickly copied a lot of Western ideas: prefects, bureaucracies, newspapers, a standard language, an education ministry, mandatory school, conscription, railways, getting rid of internal customs barriers, fixed working hours, and the Gregorian calendar, all in place by 1873. Local government was set up by 1879. Parliament and a constitutional monarchy were in place by 1889. And, by 1890, most kids were in school.
In China, only a few people like Li Hongzhang were able to push through modernization. In Japan, there were a lot of these people. One of them was ItĹŤ Hirobumi. In 1863, his clan illegally smuggled him and four other students out of Japan to study in Europe. ItĹŤ worked as a sailor for 130 days before ending up in England. He quit after only six months and told everyone that Japan was too weak to fight the Western powers.
By 1870, ItĹŤ was in the U.S., studying money and banking. The next year, he wrote new tax laws in Japan. By 1873, he was in charge of industry, building telegraph lines, streetlights, textile mills, railroads, and so on. He became prime minister in 1885.
ItĹŤ launched the First Sino-Japanese War in 1895. Japan won and grabbed Korea and Taiwan.
In 1902, Japan allied itself with Britain. Three years later, they fought and won a war against Russia, taking Manchuria.
In 1909, ItĹŤ Hirobumi was assassinated by a Korean nationalist. Japan formally took over Korea in 1910.
It wasn’t just the elites, though. Other people also played roles in shaping modern Japan. Takahashi Korekiyo, for example, was a working class guy who made it all the way up to being prime minister. He understood finance without being stuck on old ideas.
How did Japan do it?
One theory is that Japan focused on four things: railways and ports, education, banks, and tariffs to protect key industries.
Japan wasn't allowed to impose high tariffs. But the government found ways around that. It didn't really "pick winners," but it did support successful exporters. The government also built schools to train engineers. And it tried to use local suppliers as much as possible. Japan didn't have big banks, but it had some wealthy merchant families who were willing to invest in industry. And the government focused on building up its military.
It was a close call, though. In 1910, manufacturing was only a small part of the economy. But Japan had managed to bring industrial technology outside of Europe and had the skills to keep it running.
Empires, both formal and informal, sped up *and* slowed down economic growth in the global south. On the whole, they probably did more to slow it down. Because the point of empire wasn’t economic development. It was… well, empire.
Some people thought empires were good. Rudyard Kipling wrote about it, saying that it was the "White Man’s burden" to civilize the world.
Others thought that these empires were confidence games.
Joseph Schumpeter thought that people were being tricked into supporting the system, and that the aristocrats were being tricked into going off to war when they could be relaxing in Vienna.
He thought people would eventually get richer and would give up the idea of empire.
He was wrong.
John Hobson had another idea—that empire was driven by economics. He thought governments used empire as a way to avoid unemployment and keep peace at home.
Hobson thought that if there was more equality at home, there would be less need for empire.
He was also wrong.
Norman Angell thought that war and empire were pointless and outdated.
He was also wrong.
The same forces that drove European powers to build empires would drive them into a terrible war. And those forces would turn Europe into a truly dark continent. The big question was: Would all that progress that the world made since 1870 be totally erased?