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Chapter 1: The UK and the USA, two world-economies from 1850 to the end of the 20th century Brainstorming : Using your knowledge and the text below, try to give a definition of world-economy. Source 1 : […] The concept “world-economy” assumes that there exists an “economy” wherever (and if but only if) there is an ongoing extensive and relatively complete social division of labor with an integrated set of production processes which relate to each other through a “market” which has been “instituted” or “created” in some complex way. Using such a concept, the world-economy is not new in the 20th century nor is it a coming together of “national economies” […]. Rather, a world-economy, capitalist in form, has been in existence in at least part of the globe since the 16th century. Today, the entire globe is operating within the framework of this singular social division of labor we are calling the capitalist world-economy.

Immanuel-Maurice Wallerstein, The politics of the world-economy, 1984. I. The Britsh world-economy: 1850-1914:

A. A power born with the Industrial Revolution Source 1 : Percentage distribution of the World’s manufacturing Production (percentage of world total). 1870 1913 USA 23.3 35.8 Germany 13.2 15.7 UK 31.8 14 France 13.3 6.4 Russia 3.7 5.5 Italy 2.4 2.7 Canada 1 2.3 Belgium 2.9 2.1 Sweden 0.4 1 Japan 1.2 India - 11 1.1 Other countries 12.2

Source: League of Nations, Industrialization and World Trade, 1945.

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Source 2: Output of Coal and Lignite (Annual averages in million metric tons) UK France Germany Austria Belgium Russia 1840-1860 34.2 3.5 4.4 0.5 4.1 1860-1880 86.3 10 20.8 4.1 10.2 0.04 1880-1900 158.9 20.2 65.7 17 17.5 3.7 1900-1913 230.4 33 157.3 38.8 23.3 17.3

Source : based on the statistical appendices in Carlo M. Cipolla (Ed), Fontana Economic History of Europe Vol 4: Emergence of industrial societies, 1976-1977.

Source 3: Output of Pig Iron1 (Annual Averages in thousand metric tons). UK France Germany Austria Belgium Russia 1855-1859 3,583 900 422 306 312 254 1875-1879 6,484 1,462 1,770 418 484 424 1900-1914 8,778 2,665 7,925 1,425 1,070 2,773

Source : based on the statistical appendices in Carlo M. Cipolla (Ed), Fontana Economic History of Europe Vol 4: Emergence of industrial societies, 1976-1977.

Questions: 1. Present sources together (you must have six elements in you presentation: nature, author, date,

context, audience and main idea). 2. Which were the reasons explaining why the UK was the world-economy from 1850 to 1914?

B. Social division of labour and British Empire Case study: Trade and British Empire. Source 1: Advertising for Lipton tea company, published in Ceylon, 1896.

1 Pig iron: after being melted in a blast furnace, iron is called 'pig iron' because it flows into a little canal called piglets. Fer brut

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Source 2: Lipton company beginnings Sir Thomas Lipton, born in Glasgow, Scotland in 1850, created such a marketing empire that within a few decades his name became inextricably linked with quality tea. In 1890, he set sail for Ceylon in search of the world's finest tea. There, he turned the growing of tea into a subtle and noble art, blending teas to create unique and refreshing flavours and in doing so became famous. Under the slogan 'direct from the tea garden to the tea pot', he made tea a popular and approachable drink for everyone as it was high quality but reasonably priced. Lipton's entry in the tea business was tremendously successful. Lipton Teas were an immediate success in the UK. […] Introduction into the US market was a slow process due to Americans resisting tea, but Lipton’s passion for perfecting the finest blends took him to the most far flung reaches of the British Empire. He earned the privilege of supplying tea to Queen Victoria as well as too many of the European royal families. At the end of the 19th century, he had 300 clerks in London where he had moved his business from Glasgow in 1891, 2, 5000 hands in Ceylon and 150 shops all over England.

Source: Lipton tea company website. Source 3: Tea production in China at the end of the 19th century

Photo from the left: Packing finished tea into wooden chests, often lined. Here, the tight packing is ensured by the dark-clad worker at center who is stamping tea into a chest. Photo from the right: A train of porters with carrying poles lugging tea chests to the shipper; the colorfully decorated tea chests often became valuable collectibles in themselves after the tea reached its intended market. Source 4: Joseph Chamberlain2 vision of the British Empire, June 10th, 1896 and March 31st, 1897 Speech in front of the House of Commons, June 10th, 1896: […] The Empire, to parody a celebrated expression, is commerce. It was created by commerce, and it could not exist a day without commerce. […] The fact is history teaches us that no nation has ever achieved real greatness without the aid of commerce, and the greatness of no nation has survived the decay of its trade. Well, then, gentlemen, we have reason to be proud of our commerce and to be resolved to guard it from attack. […] Speech in front of the House of Commons, March 31st, 1897 […] We have suffered much in this country from depression of trade. We know how many of our fellow-subjects are at this moment unemployed. Is there any man in his senses who believes that the crowded population of these islands could exist a single day if we were to cut adrift3 from us the great dependencies which now look to us for protection and assistance, and which are the natural markets for our trade?

2 British minister of colonies from 1895 to 1903. 3 No longer attached or fixed in the right position.

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Source 5: Maritime routes from Liverpool:

Source: based on Liverpool’s ocean Steamship service’s map, 1922 (conservation, Liverpool national museum).

Questions: 1. Prove that the British world-economy lied on social division of labour and colonial preference

(define those terms first). 2. Which were the three pillars of the British economic power in those times?

C. London, heart of the British world-economy Source 1: Extract from Mary Poppins, scene at the bank, 1964. (http://www.youtube.com/watch?v=jt9JpYRulSk) Source 2: London 1903, Thomas Edison film footage. (http://www.youtube.com/watch?v=8viKvXl81J0) Source 3: London at the turn of the 20th century: […] Enormous, diverse, London was the imperial capital of the day, surpassing Paris, Vienna, Rome, New York and Peking in importance. On the docks of the Thames, thousands of workmen unloaded the riches of the globe – spices, herbs, furs4, jute5, hemp6 – while in the Square Mile of the financial district, thousands of lawyers, bankers, insurance agents, stockbrokers, importers and exporters made their fortunes. […] Zoo elephants evoked the exotic reaches of British dominion. The city's revamped streets provided an imposing backdrop for parades of "sunburned heroes returning from the veldt". And the white man's burden echoed as a theme in cigarette advertisements, school textbooks and music hall songs. London was full of racial stereotypes but also brought to Irish, Indian and African nationalists applied liberal ideologies born and honed in Britain to their own nascent independence movements. […]

Source: Jonathan Schneer, London 1900, 2001.

4 Fur = fourrure 5 Le jute. 6 Hemp = Chanvre.

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Source 4: Plan of the City of London in 1896, extract from London guide in 1900.

Source: http://freepages.genealogy.rootsweb.ancestry.com/~nmfa/Maps/pocket_atlas_and_guide_to_london/plate6r.jpg Questions: 1. Which were the powers concentrated in London? 2. How did London rule the British Empire and the world-economy from 1850 to 1914? 3. How did it reflect in London landscape?

D. The end British world-economy Question: Using sources from part A, try to explain how and why the British world-economy ended. II. The American world-economy in the 20th century:

A. WW1 brought the USA to the top Source 1: Consequences of WWI on the American economy: The international economic position of the United States was permanently altered by the war. The United States had long been a debtor country. The United States emerged from the war, however, as a net creditor. The turnaround was dramatic. In 1914 U.S investments abroad amounted to $5.0 billion, while total foreign investments in the United States amounted to $7.2 billion. Americans were net debtors to the tune of $2.2 billion. By 1919 U.S investments abroad had risen to $9.7 billion, while total foreign investments in the United States had fallen to $3.3 billion: Americans were net creditors to the tune of $6.4 billion7. Before the war the center of the world capital market was London, and the Bank of England was the world's most important financial institution; after the war leadership shifted to New York, and the role of the Federal Reserve was enhanced.

Hugh Rockoff, Rutgers University, article US economy in WWI, 2010 7 All the data come from U.S. investments abroad (U.S. Bureau of the Census 1975, series U26); Foreign investments in the U.S. (U.S. 1975, series U26).

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Question: what was the main reason at the origin of the US rise as the 20th century world-economy?

B. Hard Power and Soft Power Source 1: Modern Times, Charles Chaplin, 1936: Home sweet home extract http://www.youtube.com/watch?v=5njTU7a3__g&feature=related Source 2: Marshall plan aid to Europe:

Source: Princeton University.

Source 3: Starbucks and Mac Donald expansions throughout the world:

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Source 4: Proportion of the industries of high technologies in industrial production:

Source : National science foundation, sciences and engeneering indicators, 2004.

Questions: 1. Which are the elements of power of the American world-economy? 2. How does the American world-economy function? 3. What’s the emblematic center of such a power?

C. The end of the hyperpower? Source: Keith Bradsher, Made in U.S., Shunned in China, NY Times, November 18th, 2005. GUANGZHOU, China, Nov. 17 - Abby Chan, a 23-year-old advertising copywriter, took a break from shopping for Levi's jeans at a mall here on Wednesday evening and relaxed at a table in a Starbucks restaurant. Aside from coffee and denim, there were not many American brand products that interested her. She covets Chanel clothing and Louis Vuitton bags, dreams of owning a BMW or Mercedes-Benz someday, and struggles to think of an American brand that appeals to her. "There are more choices for European brands, more styles, so they are more interesting," she said. […] But for a long list of reasons, American products are struggling these days in the Chinese market, where they have trouble measuring up to European brands and even some Chinese brands. […] China's economy is galloping along just as a long series of America's weaknesses are combining to hurt American exports. With many of America's name brands made in China these days, from clothing to cars, the Chinese are beginning to wonder what a "Made in U.S.A." label really has to offer. […] Another big reason for the expanding bilateral deficit lies in changing patterns of trade. Companies from Japan, South Korea, Taiwan and elsewhere in Asia increasingly manufacture only the most technologically sophisticated components at home. They ship them to China, buy the less complicated parts locally at low cost and assemble the product in China for shipment directly to Europe or the United States. A result is that East Asia has achieved the dream that a dozen years ago gave rise to the North American Free Trade Agreement: a regional manufacturing center that taps each country for the part it can produce most efficiently. […] Question: Does the American world-economy and hyperpower come to an end? (Use the source and your knowledge)