Consciousness of Sheep
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Four empires died in just two years, 1916 to 1918 – Austria-Hungary, Germany, the Ottomans, and Russia. Two others – Britain and France – were badly shaken. And yet, just four years previously five of the six looked set to go from strength to strength. Only the aged Ottoman empire was already displaying the signs of its crumbling foundations… most notably – and fatefully – in its loss of control of the Balkans. Russia, despite its drubbing at the hands of the Japanese and the ensuing failed revolution of 1905, was widely believed to have recovered and rebuilt. Indeed, with the aid of French finance, Russia seemed set to become the leading military power in Europe by 1917 – a belief which undoubtedly informed the German decision to seek – or at least risk – war in 1914. Austria-Hungary was even weaker than Russia. Although, as with Russia, outward appearances suggested otherwise – not least in its ability to face down Russia in the – again fateful – 1908 annexation of Bosnia-Herzegovina.
Germany was the exception – an industrial power second only to the USA, and by far the leading military power on land. In part for military reasons, and in part to quell revolt, Germany also led the world in public education and social welfare programmes. Indeed, one reason why so many histories of the First World War focus on the unstable personality of Kaiser Wilhelm II, is that had Germany remained on its nineteenth century course, it would have become the European hegemon and may even have eclipsed a USA which, without the demands of global war, may not have developed its full economic and military potential. Instead, the Kaiser, egged on by Admiral Tirpitz, insisted on building a navy large enough to challenge Britain’s… something which did a good deal to bankrupt Germany while having no noticeable impact on the war when it finally broke out.
The cause of the First World War is as unclear today as it was at the time. Those who learned about it in school will no doubt remember the acronym MAIN:
- Militarism
- Alliances
- Imperialism
- Nationalism.
Those who learned about it from the Blackadder series, on the other hand, might wonder if it started “when a bloke called Archie Duke shot an ostrich because he was hungry.” This latter is only a little less credible than the version we learned at school. Because, while militarism – including the naval arms race, alliances – and “ententes” – imperialism and nationalism provide a context for the outbreak of war, they do not explain it. All had been present during the Morocco crisis, the annexation of Bosnia, and the two Balkan wars – none of which led to open war. Indeed, the false sense of security stemming from the relative success of diplomacy in solving those crises may have been the greater reason why war broke out in August 1914.
The triggering crisis was not, as widely believed, the assassination of Franz Ferdinand on 28 June 1914, but rather the delivery of the Austro-Hungarian Ultimatum to Serbia on 23 July 1914. Designed to provoke war, the delivery of the Ultimatum wrong-footed the antiquated system of European diplomacy through which the European empires sought to manage their affairs. As with the largely nineteenth century armies, which found themselves caught in the technological gap between cavalry and barbed wire and the development of tanks and motorised infantry (i.e., between steam age and oil age warfare) the diplomats struggled in the gap between railways and telegraphs and aeroplanes and radio. In the thirteen days between the Ultimatum and a general European war, events moved faster than diplomatic telegrams (which had to be encoded, transmitted across the continent, and then decoded at the other end). Proposals which might have stilled the crisis arrived too late, while tragic errors – Russia unnecessarily mobilising on 25 July, Sir Edward Grey hinting that Britain would remain neutral, Germany’s ambassador in Vienna failing to stay the hand of the Austro-Hungarian hardliners – pushed Europe ever closer to catastrophe.
The war itself proved the point laboured by Norman Angell in The Great Illusion – which some historians wrongly claim was an argument that industrial war was impossible. Angell actually says that industrial war is both possible and in the conditions of the day, far too likely. Angell’s argument, in contrast is that industrial warfare is both pointless and ruinous. Pointless because, as Angell maintains the British war in South Africa had demonstrated, all Britain gained was the additional cost of administering and policing the acquired province of Transvaal:
“One heard a good deal at the outbreak of the South African War of the part that the gold-mines played in precipitating that conflict. Alike in England and on the Continent, it was generally assumed that Great Britain was ‘after the gold-mines.’ A long correspondence took place in the London Times as to the real value of the mines, and speculation as to the amount of money which it was worth Great Britain’s while to spend in their ‘capture.’ Well, now that England has won the war, how many gold-mines has she captured? In other words, how many shares in the gold-mines does the British Government hold? How many mines have been transferred from their then owners to the British Government, as the result of British victory? How much tribute does the Government of Westminster exact as the result of investing two hundred and fifty millions in the enterprise?
“The fact is, of course, that the British Government does not hold a cent’s worth of the property. The mines belong to the shareholders and to no one else, and in the conditions of the modern world it is not possible for a Government to ‘capture’ so much as a single dollar’s worth of such property as the result of a war of conquest.”
The extent of Britain’s ruin of the First World War was quantified to some extent by Clive Ponting in 1940: Myth and Reality:
“In 1914 Britain estimated that American orders might cost a maximum of $50 million. But by early 1917 expenditure was running at about $80 million a week and during the first two years of the war orders amounted to $20 billion. Additional strain was placed on Britain’s resources by the financial weakness of its allies. From September 1915 Britain was responsible for the US purchases made by Russia and Italy, and after May 1916 for those of France as well…
“By the spring of 1917 the situation was desperate. Britain had just $219 million of gold and securities in the US and about $530 million in gold held in the UK. With spending running at about $80 million a week, it was enough to finance the war for less than ten weeks.”
This provides an additional context for the 1914 war. Britain had emerged on the winning side of the Napoleonic Wars a century earlier because of its ability to out-borrow France. That is, Britain’s growing economic dominance allowed it to borrow at a much lower interest rate than France. And so, Britain was able to fund the armies of its allies – Austria, Prussia, and Russia – and to raise mercenary armies of its own. By 1914, in contrast, Britain was no longer able to finance its – and later its allies – war effort without having to go deeper into debt with an emerging USA. Which is why, while avoiding the collapse which struck down the empires of central and eastern Europe, Britain emerged in 1918 deeply indebted and facing industrial decline.
As with the other European powers in 1914, on the face of it, Britain was at the height of its powers. Even after the naval arms race, the Royal Navy was still bigger than its two nearest competitors. And Britain’s naval dominance of the Atlantic and Indian Ocean trade routes guaranteed its economic pre-eminence. But the British economy was already facing two economic forces which eat at the foundations of empires – the psychology of prior investment and being on the wrong side of the process of combined and uneven development.
As the first economy to industrialise, British companies tended to be invested in the oldest and least efficient processes and technologies. But having invested the equivalent of billions of pounds at today’s rates in these, the owners were loathe to tear them down and replace them with the leading-edge equivalents. Competitors had no such difficulties. Enjoying even greater energy and mineral wealth than the British, Germany and the USA were able to deploy the very latest industrial technologies with which they were able to eclipse the British during the second half of the nineteenth century.
One consequence of this growing weakness was a turn away from “free trade.” When British industry had led the world, unfettered trade was advantageous, since it gave British companies access to the world’s markets without the risk of Britain’s competitors taking trade from within Britain’s market. But as other states took slices out of British markets, the choice before Britain was between massive investment in updating the productive base or implementing trade restrictions. Unsurprisingly, Britain’s leaders chose the latter.
The more obvious consequence of Britain’s growing weakness was the shift in geopolitics. Gone were the days when British governments could ignore the concerns of other states. No longer could British troops burn down the seats of government in former colonies without reprisal. Indeed, the earliest two measures of growing British weakness were the diplomatic resolution of disputes with the USA (conceding US naval superiority in the Caribbean) and the defensive alliance with Japan (accepting Britain’s naval weakness east of Singapore). These were followed – partly in response to perceived German belligerence and partly to settle disputes with Russia over Persia and the northeast frontier of India – by the 1904 unofficial alliance with France and Russia which British leaders deluded themselves into thinking would not oblige them to fight in a pan-European war.
In reality, the Entente Cordiale came with all of the drawbacks but none of the benefits of a formal alliance. In a formal alliance, the British would have been consulted by France and Russia over military planning and would have had a veto on proposed military actions. Instead, the British were left in the dark about the Russian mobilisation – and the likely French encouragement (the transcripts of the meetings with the French president during his July visit to St. Petersburg were conveniently lost in a fire) – which prompted the Germans to declare war. And while – unofficially – general Henry Wilson had been spending his summer holidays scouting out the potential battlefields of Belgium and northern France, and developing war plans with General Foch, even as war broke out the majority of the Cabinet along with the government as a whole remained unaware that such commitments had been made.
This points to another facet of empire which is often omitted from the history books… factions. All too often, we talk about states as if they are singular entities. School histories, for example, talk about the war beginning because Austria-Hungary declared war on Serbia, causing Russia to come to Serbia’s defence, provoking Germany to declare war on Russia and to invade Russia’s ally France. This though, ignores the factions within each state, some favouring war others desperate to avoid it. In Britain, for example, while a small cabal – Asquith, Grey, Churchill and Haldane – actively sought war, the majority of the Cabinet remained opposed, so that as late as 3 August 1914 – with German artillery already shelling Belgian forts – there was a good chance that the British government would fall over the undeclared obligations to France. Grey, for example, had on several occasions deceived the German and Austrian ambassadors into believing that Britain would remain neutral, despite his knowing of the secret military agreements with France. Asquith, on the other hand seemed more concerned with the threat of an army mutiny and ensuing civil war in Ireland, which he believed would be averted if Britain was drawn into a continental war. Haldane – after abortive attempts to secure a peace with Germany – together with Churchill and Grey seems to have been drawn more to what became an obsession in the inter-war years – engineering a conflict between industrial Germany and the Russian steamroller in the hope that both would be destroyed in the fighting. In other words – and this seems a common theme in the death of empires – a war faction emerged in the belief that war would somehow solve crises resulting from the empire’s economic and political decline.
In this respect, the war was only partially successful. The threat of an army mutiny in Ireland dissolved on the outbreak of war. And both Irish Catholics and Irish Protestants proved to be among the most loyal and most effective soldiers in the British Army… an army which cynically slaughtered both on the first day of the Battle of the Somme. And by November 1918, both Russia and Germany had collapsed into revolution and were removed from the geopolitical chessboard for a generation. But victory – which had only been snatched from the jaws of defeat by the rapid arrival of fresh American armies in 1918 – had come at enormous cost.
The British – and French – empires which emerged out of the 1919 peace negotiations were at their largest, having swallowed up former German colonies in Africa and the Pacific. But they were paper tigers. Unlike the USA, whose industry had grown in response to European war orders, and whose banks had grown fat on European debt, Britain did not enjoy the “roaring twenties.” Instead, Britain faced growing industrial unrest and economic stagnation at home along with ever louder demands for independence abroad. And while successive governments sought to “salami slice” their way to resolving these crises, the direction of travel was all but inevitable… although again, accelerated by the failure to avoid a second war.
In the 1920s, the British empire spanned 25 percent of the world’s habitable landmass and contained nearly 25 percent of its population. But against this, the British empire produced less than nine percent of the world’s industrial output. This was the economic weakness which eventually led the British government to default on its war debts to the USA – provoking the 1934 Neutrality Act in response, thereby cutting Britain off from US supplies in the early years of the Second World War.
The inter-war years also saw the validation of Norman Angell’s claim about the futility of conflict, that the acquisition of the German colonies came with no economic benefit to Britain, but, on the contrary, added new and expensive costs of administration, policing and defence. And it is far from clear – despite modern religious idiocy – that obtaining the former German colonies in any way benefited Welsh coal miners, Geordie steel workers, London dockers or Glaswegian shipbuilders, whose taxes were raised to repay the government debt taken out to administer the new imperial outposts.
This though, raises another thorny question about imperialism – Cui bono?
What we might today call the military-industrial complex certainly benefitted. The need to police and defend colonies and the shipping routes connecting them certainly obliged governments to fund and equip modern armies and navies. But there is little evidence that the military-industrial complex was aggressively pursuing imperial expansion – whose risks were high compared to the potential benefits. Nor, as Angell demonstrated, was there much to be gained by the investor classes whose ability to profit from South African gold mines and Argentinian beef farms was unchanged by formal annexation. Indeed, since they – along with the workers – had to fund it all via those taxes they couldn’t avoid, they were arguably worse off.
The lesson some factions within Britain had fumbled their way to between 1776 and 1783 was that it is impossible to rule an empire at the point of a bayonet… particularly one 3,000 miles away in an age of renewable energy alone. In their way, these factions learned the maxim probably wrongly attributed to Henry Kissinger:
“Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world.”
In an industrial age, it was money rather than guns which decided the outcome. Whereas colonialism had involved the forcible dispossession of native peoples to make way for European settlers, who produced goods (often using slave labour) for export to the European states, imperialism sought to use financial power to dispossess the native people in a more subtle manner. This was the imperial wealth pump – the system of currency control which favoured the issuer of the currency at the expense of its user. As Britain industrialised, so demand for industrial goods grew around the world. But to access the products of British industry, the rulers of less developed states (whether within or beyond the empire) had to obtain British currency. This, in turn, meant somehow accessing the banking and financial system which had grown up within the British empire – “The Sterling Bloc.” This gave Britain – or rather, Britain’s banks – what would later, under a new empire, be referred to as “exorbitant privilege.” While everyone else across the world economy had to produce wealth at least equivalent to a pound (in weight) of sterling silver for every pound (in currency) of debt they wished to repay, the banks could simply print pounds for the cost of the paper and the ink.
Once an imperial currency system like this has matured, it is easy to believe that “who controls money can control the world,” because that’s how it looks to those on the inside. But the system only works so long as the industrial power which allowed it to exist to begin with continues to grow and, crucially, continues to out compete any industrialising rivals. And, of course, Britain’s brief reign as the world’s leading industrial power was already waning in the 1860s. Although it was not until the 1880s that serious – although often over-stated – concerns were raised in the mainstream about the growing challenge from German industry. Nevertheless, by the beginning of the twentieth century, the industrial base which had propelled Britain to greatness was falling behind its competitors.
This is best illustrated by a calculation of energy use per capita relative to the rest of the world, by the economist Blair Fix:
“For most of the 19th century, Britain effectively ruled the world. It created a sprawling, global empire upon which the ‘sun never set’. But, like all empires, the sun eventually did set on the British Empire. In fact, the rise and fall of Britain was more spectacular than the rise and fall of Rome. The British Empire burned more brightly and more briefly…”
By the outbreak of the First World War, Britain’s sterling bloc had been joined by a dollar bloc, a franc bloc and a German gold bloc – each seeking to optimise wealth via a discrete and exclusive system of currency. And arguably, the collapse of the British empire owes more to the disputes with Henry Morgenthau in his role as Secretary to the Treasury over US access to the sterling bloc than to the ravages of the German military. Among other things, Morgenthau effectively bankrupted Britain in 1940-41, paving the way for Roosevelt’s insistence that Britain grant independence to the states in its empire in exchange for American aid in the war.
Three years later, Morgenthau concluded the destruction of the British Empire with the introduction of the Bretton Woods currency system which transferred the “exorbitant privilege” once enjoyed by Britain to an emerging American empire… in its way an historical anomaly, since it is rare for an empire to unravel as quietly as the British did. Most likely because the British ruling class had spent the final years of the nineteenth century and the first part of the twentieth marrying its daughters to the new American industrial and financial elite. Along, of course, with the more mercenary absorption of the City of London banks into the emerging Wall Street system.
What can we learn from Britain’s rise and fall? And what lessons might this hold for today?
Perhaps the most important point is that during the imperial growth phase, the empire is focused on domestic productivity and international trade. War is a far less important concern. Indeed, while Britain was involved in the Napoleonic Wars just as its empire was accelerating, the extent to which it fought is overstated. For the most part, Britain simply funded the bigger armies of its allies, while hiring mercenaries and conscripting Irishmen to don the red uniform of the British army.
The switch from economic to military concerns from the beginning of the twentieth century is a sign of gathering weakness rather than imperial strength. As Blair Fix explains:
“During its century of dominance, Britain was able to maintain global peace (of a sort). As the unchallenged superpower, Britain acted as the world’s police — a Weberian ‘peacemaker’ that reserved the sole right to use violence. Perhaps paradoxically, this long peace began to unravel as a series of ‘ententes’ were formed.
“In hindsight, this is understandable. Strong empires don’t sign peace agreements. They enforce their will unchallenged. So the series of ententes that Britain signed at the turn of the 20th century signalled the weakening of its empire.”
The big and often overlooked “cause” of the First World War, then, is that Britain had lost the ability to force its will upon its rivals – although this was seemingly lost on the small but powerful war faction within the British government. But far from rescuing the empire from decline, even small colonial wars like the ones in South Africa sapped the economic strength of the empire even further. And the big wars 1914 to 1918 and 1939 to 1945 finally sucked the life out of the ailing empire.
Which ought – but apparently doesn’t – ring alarm bells on the other side of the Atlantic today. The USA’s war faction is easy enough to recognise. George Bush senior called them “the crazies in the basement.” His son invited them into the administration, where they promptly engineered wars in Afghanistan, Iraq, Libya, and Syria. They were the “chickenhawks” (because each, despite their apparent appetite for bloodshed, had dodged the Vietnam draft in their youth). They were the people behind the Project for the New American Century, who took seriously the old joke about America’s resources lying beneath other people’s countries. And following the fall of the Soviet Union were determined to bring those resources home – whether by open warfare or – as happened in Libya and Ukraine – by engineering coups so as to install pro-USA regimes.
But contrary to the wet dreams of the current crop of neocons pulling Biden’s strings, the high point for the American empire was 1945 not 1991. Just as happened to Britain from the 1860s, by the late-1960s the USA was facing growing competition from more productive competitors including the two states it had defeated in the Second World War – Japan and Germany. The difference was that Britain had not had to face a competing system on the scale of the USSR during the peak of its empire.
Insofar as there is a parallel with Britain’s resort to quasi-alliances at the beginning of the twentieth century, it is in the Nixon administration’s attempt to woo communist China away from the Soviet sphere. It is notable that by the time Kissinger went to China, the USA’s oil dominance had peaked, and the Bretton Woods currency system was falling apart. Waiting in the wings were defeat in the Vietnam War and OPEC oil dominance. And as had happened in Britain, the American response was primarily military following the success of the war faction in the Reagan administration – massive state-funded rearmament in the “second cold war” providing an inferior economic revival from that achieved via productivity and trade.
It is notable that nobody within the US intelligence (sic) agencies saw the collapse of the Soviet Union coming. Rather, the second period of détente following Reagan’s meetings with Gorbachev was expected to continue indefinitely. But the Soviet Union had never fully recovered from the German invasion 1941 to 1945, which created a demobilisation problem that it never overcame… turning swords in to ploughshares, it turned out, was far harder than imagined, and the demands of the unproductive military prevented investment in the productive economy – something also distorted by central planning and bureaucratic ineptitude. So that, when Gorbachev attempted to liberalise the Soviet economy, he merely accelerated the internal collapse.
It is a measure of American weakness that from the 1990s, instead of the much-touted “peace dividend,” with its implied return to free trade, the neocon faction succeeded, bringing destruction to those states unfortunate enough to find themselves sat on top of America’s resources. But “the war on terror” proved to be as costly for the USA as Britain’s imperial wars had been a century before. And like the British at Isandlwana, the Americans all too often had their asses handed to them by tribesmen who, on paper at least, were militarily inferior. And even where the Americans were not thrown out, the cost of maintaining the network of more than 600 military outposts around the planet has proved a drain on a state which has run up an unrepayable $34 trillion in debt.
But probably the two biggest mistakes made by the US neocons were first, to attempt to liberalise China by admitting it to the World Trade Organization, and second, to pursue a foreign policy which drove Russia and China into an alliance. So that, while much of the establishment media focus has been on Russia – its refusal to allow US corporations to help themselves to its resources, its military guarantee of Syria (and by implication Iran) and more recently its military response to Ukraine’s US-sponsored attempt to join NATO – as with all imperial developments, the real action is taking place in the theatre of production and trade.
Just as Britain’s turn away from free trade at the end of the nineteenth century was a sign of imperial decay, the tariffs and trade restrictions imposed by Trump (and continued by Biden) and the deliberate shrinking of global trade following the pandemic lockdowns mark a further downward turn in American imperial fortunes. Far from making America great again, the end of free trade will merely – and only temporarily – gloss over America’s growing economic weakness.
Only in recent months has the western establishment media begun to take notice of the growing BRICS bloc – which originated as little more than a convenient label for the handful of economies likely to grow following the 2008 crisis. However, the incorporation of India, Saudia Arabia and the United Arab Emirates into the bloc means that it now controls the majority of the world’s resources and trade. So that, despite unfounded and somewhat hysterical neocon claims that China is bent upon war, China has already eclipsed the USA and its western vassals through its development of trading relations across Asia and the global south:
This is not to suggest that China is now a global hegemon in the sense that Britain in the 1830s and the USA in the 1950s were. Although ultimately the coming century is likely to be dominated by China and its allies as American and western power continues to collapse. Indeed, the big threat to a largely exhausted west, having burned their bridges with Russia and having failed to adjust to Chinese trade ascendancy, is that they find themselves on the wrong side of an energy-resource “iron curtain” with BRICS members and allies who wish to keep the world’s remaining resources to themselves.
Nor – despite some lurid media commentaries to the contrary – is a new BRICS currency about to crash the Eurodollar system. This is because, despite being denominated in US dollars, the Eurodollar system is essentially one of exchange… in effect a giant, fibre optically linked computerised global book-keeping system which encompasses the network of global banking and finance institutions which borrow dollars into existence beyond the purview of the US Treasury and the Federal Reserve. The fact that it currently operates in dollars is only due to the perceived safety of dollars as collateral against the debt created by the system. However, there is no reason why, in the course of time and with the share of US trade decreasing, this banking and finance network shouldn’t opt to trade in whichever currencies are considered safe, so that some form of international BRICS system might well develop alongside and away from the scope of the central banks of individual BRICS members.
If we were looking for an historical parallel with where we find ourselves today, we might look to the inter-war period. The British and French empires were still in place but greatly weakened, while the Emerging USA had yet to arrive on the global stage. The pound sterling remained central to world trade, but British war borrowing had severely weakened it in comparison to a US dollar which was growing in value. But while the USA had the potential to emerge as a world leader, the financial excesses of the 1920s, followed by a dangerous spike in coal prices (which drove up prices across the economy) in 1927 paved the way for the Wall Street Crash in October 1929 and the decade of depression which followed. And, just like today, that economic weakness and uncertainty gave rise to several forms of political extremism as the various parties and states sought a means of restoring prosperity.
The result in the 1930s was a seemingly inevitable drift to war. And we cannot rule out war today either… not least because the US neocons seem bent on starting as many as they can get away with. But any direct conflict between the USA and Russia, China – or possibly Iran – would result in nuclear – and possibly chemical and biological – annihilation. And as we are witnessing in Ukraine, attempts at proxy wars which pit western fiat currency against Russian and Chinese energy and resources simply do not end well for the west. And so, the more likely future is merely a continuation of current trends, in which America and its western vassals simply continue to decline (a process which has already begun across Europe) even as trading relations between the BRICS and their global south partners continue to grow – sometimes at direct cost to the former European colonisers.
This poses an interesting question concerning peak oil and related energy and mineral shortages. Most of the thinking around energy and resource depletion assumes an economic world as currently constituted. But in the event that the western economies were to collapse, and the “golden billion” people who live there to have to accept living standards akin to the global south, there would – particularly if the Siberian shale deposits were exploited – remain sufficient resources for the BRICS to enjoy another decade or so of industrial prosperity growth… which they would easily justify by pointing out that Europe, and especially the USA, have been consuming more than their fair share for centuries.
Furthermore, while western scientific thinking has atrophied – many would say it has gone into reverse – a newly empowered BRICS might offer the last possibility of developing workable and more energy-dense power sources rather than the Green-Industrial-Complex scams that the west had been duped by in recent decades. Because it is increasingly clear that the western states are signally incapable of addressing any of the raft of overshoot crises currently washing over us.
It may well be that the only question left to be resolved is whether the American empire will collapse slowly as the British and French empires did, or whether it will follow the Soviet path and collapse suddenly and unexpectedly.
As you made it to the end…
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