When the Periphery Became More Central: From Colonial Pact to Liberal Nationalism in Brazil and Mexico, 1800-1914 Steven Topik Introduction The Global Economic History Network has concentrated on examining the “Great Divergence” between Europe and Asia, but recognizes that the Americas also played a major role in the development of the world economy. Ken Pomeranz noted, as had Adam Smith, David Ricardo, and Karl Marx before him, the role of the Americas in supplying the silver and gold that Europeans used to purchase Asian luxury goods.1 Smith wrote about the great importance of colonies2. Marx and Engels, writing almost a century later, noted: "The discovery of America, the rounding of the Cape, opened up fresh ground for the rising bourgeoisie. The East-Indian and Chinese markets, the colonisation of America [north and south] trade with the colonies, ... gave to commerce, to navigation, to industry, an impulse never before known. "3 Many students of the world economy date the beginning of the world economy from the European “discovery” or “encounter” of the “New World”) 4 1 Ken Pomeranz, The Great Divergence , Princeton: Princeton University Press, 2000:264- 285) 2 Adam Smith in An Inquiry into the Nature and Causes of the Wealth of Nations (1776, rpt. Regnery Publishing, Washington DC, 1998) noted (p. 643) “The colony of a civilized nation which takes possession, either of a waste country or of one so thinly inhabited, that the natives easily give place to the new settlers, advances more rapidly to wealth and greatness than any other human society.” The Americas by supplying silver and “by opening a new and inexhaustible market to all the commodities of Europe, it gave occasion to new divisions of labour and improvements of art….The productive power of labour was improved.” p. 503. 3 Karl Marx and Friedrich Engles, The Communist Manifesto (NY: 1973), p. 33. 4 Fernand Braudel, Civilization and Capitalism vol. 2: The Wheels of Commerce trans. By Sian Reynolds (London: Collins, 1982) Dennis Flynn and Arturo Giraldez eds. Metals and Mining in an Emerging Global Economy( Brookfield Vt.: Variorum, 1997);, Immanuel even though whether we should date the origins of “globalization” from 1500 is controversial. 5 For Christopher Baily and Niall Ferguson the Americas clearly played an important role in the rise of the first British Empire and had certainly been the jewel of the first French overseas empire.6 Alfred Crosby as well as Pomeranz note the interrelationship between the Americas and the “neo-Europes.”7 Thus the Americas played a crucial role in expanding European overseas influence, in generating global exchange, and in the accumulation of capital during the mercantilist era. They were the laboratories for developing colonial regimes and export systems and played a large role in the debates over imperialism. However the Americas are given less attention in the study of nineteenth century imperialism by economic historians because the emphasis has been placed on colonial efforts in Africa, Asia, and Oceania. This, despite the fact that western European traders and investors at the beginning of the century salivated at the opportunity to replace Spanish and Portuguese merchants, investors and imperial officials and initially gave 8 much attention to the western hemisphere. Wallerstein, The Modern World System (NY: Academic Books, 1976) . Andre Gunder Frank, Reorient: The Global Economy in the Asian Age,( Berkeley: University of California Press, 1998) sought to reduce the role of the Americas in the creation of the world economy because of the prior importance of Asia. 5 Kevin O'Rourke and Jeffrey Williamson, Globalization and History: The Evolution of a Nineteenth Century Atlantic Economy (Cambridge: MIT Press, 1999) and Michael D. Bordo and Barry Eichengreen “Is Globalization Really Different than Globalization a Hundred Years Ago ?”, National Bureau of Economic Research, working paper 7195, June 1999 use price convergence as the measure of globalization which they find in the last part of the nineteenth century. 6 Christpher Baily, The Imperial Meridian (London: Blackwell, 1989). Niall Ferguson, Empire (London: Penguin, 2003). 7 Alfred Crosby, Ecological Imperialism (Cambridge: Cambridge University Press, 1986), The Colombian Exchange (Westport CT: Greenwood Publishers, 1972). 8 Pomeranz is an exception in that he does recognize the role of American commodities— though more North than South—in the European industrial revolution by providing raw materials, food, and energy. See, however, the little attention given to Latin America in Although the doctrines of laissez faire and free trade became intellectually fashionable in the mid-nineteenth century and had been seen as a product of the industrial revolution, it was mainly in the Americas that they were put into practice. In fact, the depression of 1873 turned the major European powers to defensive methods scrambling to secure independent parts of the world market. International commerce continued to balloon, doubling between 1870 and 1890, but free trade was abandoned for protective tariffs in France, Germany, Austria, Italy, Belgium and Russia. Lord Salisbury complained that England was suffering relative decline because of the number of protective tariffs "growing up on all sides of us constantly in the nature of protective duties limiting and, to the utmost of their ability, stifling our trade."9 The Age of Empire The British version of protectionism was to increase its colonial systems as according to Eric Hobsbawm the "Age of Capital" became the "Age of Empire," or in Lance Davis' term, the period of "high imperialism"10. Despite the glorification of the protean action of private capital in the global market, according to Hobsbawm the Age of Empire "was essentially an age main works such as J.A. Hobson, Imperialism (Ann Arbor: University of Michigan, 1972); Nikolai Bukharin, Imperialism and the World Economy (NY: Monthly Review Press, : Economic Imperialism edited by Kenneth Boulding and Tapan Mukergee (Ann Arbor: University of Michigan Press, 1972); Wolfgang J. Mommsen, Theories of Imperialism Trans. by P.S. Falla (Chicago: University of Chicago, 1980) and William Roger Lewis, ed. Imperialism: The Robinson and Gallagher Controversy (1929 rpt. NY: Monthly Review Press, 1976). 9 Economist, 28 Nov. 1891, p. 1520. 10Lance Davis and Robert A. Huttenback, Mammon and the Pursuit of Empire (Cambridge: Cambridge University Press, 1986), p. 11. of state rivalry".11 For continental European Marxian theorists such as Hilferding, Lenin, and Bukharin, not only state protectionism but also the rise of “finance capital” merging bank and industrial capital in cartels and trusts led to imperialist rivalries12. The link between domestic protectionism and an expansionist foreign policy also can be seen in the policies of the United States Secretary of State James G. Blaine who pushed forward Pan- Americanism to exclude the Europeans. 13New opportunities for her European competitors--and for the United States—arose as the European powers rushed to divide up the world and increase the openings to international commerce and trade. Between 1876 and 1915 about one- quarter of the globe's land surface was distributed or redistributed as colonies among the Great Powers. A French free-trading economist noted the reason and the consequences of the spread of Empire in 1889: “It is in the colonies, in the still unexploited markets, that one seeks to extend Europe's commerce. Africa is attacked on all sides; it is being partitioned. The rivalries between nations is equally lively on the seas. In light of the digging of the American isthmian [canal] all maritime peoples want to have rest and coaling stations there. In Indochina the English and the French are searching a route to penetrate the heart of China. Russia, which is more an Asian than a European power, regularly annexes... barbarian countries to the civilized world.”14 11Eric Hobsbawm, The Age of Empire (NY: Scribners, 1975)) p. 51 and The Age of Capital NY: Pantheon Books, 1987). .Julian Hayem ed., Congress International de 1889, (Paris: Imprimerie Nationale, 1890), pp. 39-47.. 12 V.I. Lenin, “Imperialism, the Highest Stage of Capitalism” in The Essential Works of Lenin ed. By Henry Christman (NY: Bantam, 1971), Rudolf Hilferding, Finance Capital: A Study of the Latest Phase of Capitalist Development (London: Routledge and Kegan Paul, 1981). 13 A fuller discussion of Blaine’s views and policies is to be found in Steven Topik, Trade and Gunboats, The United States and Brazil in the Age of Empire (Stanford: Stanford University Press, 1996). 14Report of Louis Strauss in Hayem, Congress International de 1889 p. 79. In this rendition, however, the Americas were a barrier to be traversed to reach colonies, rather than a site for new colonies. In fact, the Americas, the site of the first major overseas European colonization, were also the first to decolonize. While much of the rest of the non-European world was being colonized, the Americas declared their independence. The first theoreticians of “imperialism”, Hobson, Rosa Luxemburg, Bukharin, and Trotsky, concentrated on the impact of Europe on Africa and Asia, rather than on the Americas. This was not simply an oversight. It reflected a reality: in the nineteenth century: the Americas were out of step with much of the world; they followed a different trajectory. While almost all of Africa, the Middle East and most of Asia fell under formal or informal European control, the Americas led the first movements of national liberation and independence against the major European colonial powers15. Latin America’s experience challenges some of the popular dualistic conceptualizations of the world economy: “the west versus the rest”, the first world versus the third world, the north-south divergence which assume the European and neo-European worlds moved in one direction while the rest moved in another, or in the same but at a much slower pace16. In fact, the non-European world had a variety of experiences with dramatically different imperialist influences and systems.