Free trade, British hegemony and the international economic order in the nineteenth century

Abstract

The theory (or rather the notion) that the international economy functioned more or less effectively for roughly a century down to 1914 because Great Britain provided the ‘public goods’ required for the smooth operation of the ‘liberal international order’ has become a textbook generalization. That notion emerged quite recently and can be traced to Kindleberger's attempt to explain the pronounced cyclical fluctuations experienced by the world economy during the interwar years 1919–39, as well as the severity and duration of the Great Depression from 1929–33 in terms of the American failure to sustain conditions necessary for the financial stability of an interdependent global economy. In Kindleberger's view, Britain, which had acted as a hegemonic power before 1914, lacked the resources to continue with its historic role after the Great War, while the United States (which by 1918 enjoyed a position in the world economy of arguably greater weight and significance than the United Kingdom had ever possessed during the long nineteenth century) commanded neither the knowledge nor the political will to replace Britain as the responsible hegemonic power until after the Second World War.

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