The Anxious Triumph

by Donald Sassoon

  Yet some ‘laggard’ countries caught up in what might seem to be unpropitious circumstances. Finland, for instance, had been part of the Tsarist Empire as a Grand Duchy since 1809. The country was poor. In 1860, Finland’s per capita GDP was 25 per cent lower than the European average. Only 4 per cent of the population was engaged in manufacture. Then industrial output grew by more than 5 per cent every year.55 By 1914 it had caught up with the average European GDP per capita, thanks to the growth of agriculture and, above all, forestry.56

  In Russia a different pattern emerged. Russian and Ukrainian peasants, more mobile than it is usually thought, migrated towards the Asian parts of the expanding Russian Empire, east of the Urals (particularly Siberia and Kazakhstan). These colonists did not, on the whole, destroy the local populations (these, unlike indigenous Americans, were not prone to the diseases the settlers brought with them). By gradually colonizing large areas of Asian Russia, the migrants could sustain an increase in population without having to make major changes to their way of life. They did not need to try to limit the size of their families; they did not need to migrate overseas; they did not need to innovate; they could remain backward. The persistence of Russian peasant society, ‘that was still very much evident in 1897 was, to a large degree, a consequence of peasant migration and the settlement of Russia’s frontiers between the mid-sixteenth and late-nineteenth centuries’.57 There were, of course, major areas of the Tsarist Empire that were taking off into industrial growth and they coexisted with the backward zones, as in other parts of Europe.

  The fate of ‘laggards’ in history is somewhat curious. They are impinged upon far more by the external world than the so-called pioneers. They are supposed to catch up yet they cannot replicate exactly the action of the pathbreakers, for the latter operate in an environment in which, by definition, they have few or no competitors. If you are on top and no one challenges you, there is no need to try to change anything (though perhaps you should). There is a reason why old elites are conservative. It is one thing to initiate change, as Britain did; it is another to have change thrust upon you. One needs to react. Laggards cannot wait for entrepreneurs to materialize out of nothing. The state must take the lead. In eastern Europe, the socio-economic pull of the West was such that it was the old elites which, however half-heartedly, tried to lead the industrial and political revolutions.58

  The language used to describe the process of ‘catching up’ (just like the expression ‘laggard’) assumes a vision of stages: from under-developed to developed, from inferior to superior, from backward to advanced. Inevitably, this ‘stagist’ and determinist view tends to simplify a complex process. After all, British industrial growth followed a fairly lengthy period of agricultural progress and an equally remarkable period of commercial expansion. ‘Stagist’ views have been common throughout history. Ideas of progress based on the replication of past successes were held by Marx and many of his followers: ‘The country that is more developed industrially,’ asserted Marx in the Preface to Capital, ‘only shows, to the less developed, the image of its own future.’59 A similar position has also been held subsequently by anti-Marxists such as Walt Rostow in The Stages of Economic Growth: A Non-Communist Manifesto (1960), or by pre-Marxists such as Friedrich List (who envisaged a progression from pastoral life to agriculture to manufactures, etc., as set out in The National System of Political Economy). Adam Smith in the first of his Lectures on Jurisprudence (December 1762) suggested ‘four distinct states which mankind pass thro: – 1st, the Age of Hunters; 2dly, the Age of Shepherds; 3dly, the Age of Agriculture; and 4thly, the Age of Commerce’.60 By the time of The Wealth of Nations (1776) he was down to three stages of ‘natural’ development. During the first, ‘the greater part of capital of every growing society is, first, directed to Agriculture’, then to manufactures, ‘and, last of all, to foreign commerce’. However, he then added, ‘this natural order of things’ has, in all the modern states of Europe, been ‘entirely inverted’.61 Distinguished economic historians, such as Karl Polanyi, Alexander Gerschenkron, and Barrington Moore, were committed to a developmental conception, even though they all agreed that the ways out of under-development could be varied.62 Policy differences so dependent on different conjunctures might explain why the search for a ‘bourgeois’ revolutionary model has proved so controversial and so fruitless. Barrington Moore’s famous Social Origins of Dictatorship and Democracy (1966) was groundbreaking because it tried to construct a typology of evolution into industrialization and democracy by distinguishing three cases:63

  Capitalist democracy (USA, UK, and France) resulting from the conflict between the industrial bourgeoisie and landed interests.

  Authoritarian regimes (Germany and Japan) where the landed elites remain dominant and conduct a ‘revolution from above’.

  Communist regimes (Russia and China) resulting from a peasant revolution for land.

  There is something rather Western and rather modern (i.e. post-Enlightenment) in such a developmental conception. As Patrick O’Brien pointed out, historians of economic development, traditionally, have found it difficult not to use the category of stages.64 To demarcate the precise moment when one leaves a stage and enters a new one is far from simple, yet in the popular literature, the press, and in everyday political discourse the idea of stages (pre-this and post-that) is as strong as ever.

  And there is a further problem: the vision of a First/Second/Third World was always one closely connected to the Cold War. The First World was the West, the second was the Communist world, and then there was the Rest. In reality the term Third World quickly came to assume the same meaning as under-developed, so that in fact there were two worlds: the developed and the under-developed or, to put it bluntly, the West and the Rest. But the ‘Rest’ was always far too wide-ranging a concept. As Colin Leys pointed out, one ends up putting very different countries in the under-developed basket: Haiti, Thailand, Rwanda, and China – all in this all-encompassing ‘Third World’ category.65 The United Nations General Assembly has attempted to be less blunt, and in 1971 it listed the world’s ‘least developed countries’ or LDCs. It was envisaged that this would work like some kind of football league table, with countries graduating from the status of ‘least developed’ to the less dismal ‘developing’. Very few graduated and, at the bottom of the pile, according to almost any listing (see the IMF World Economic Outlook Database), virtually all the bottom countries are African. But the central assumption of development theory was still the ruling one: eventually, in the fullness of time, if they worked hard, developed a strong bourgeoisie, got rid of backward landlords, eliminated corruption, etc., they would be able to join the happy world of the better off.

  Counterpoised to the idea of stages is that of cycles. The former asserts a vision of progress; the latter asserts that who is up must come down, that empires come and go, the United States declines and China returns. It is almost as if the idea of cycles reinforces our idea of natural justice, with the underdog rising while the top dog bites the dust. The idea of progress may be antithetical to the idea of cycles in history but they both share a deterministic element: the first believes that one can only go up, the second that what goes up must come down. Chinese historical culture was deeply committed to the idea that there was a natural cycle of flourishing and decay: the first chapter of the most widely read of Chinese classics, the fourteenth-century The Romance of the Three Kingdoms, opens with the announcement that ‘The Empire, long divided, must unite; long united, must divide. Thus it has ever been.’66 The prophecy, of course, may turn out to be true. The beauty with cyclical views is that they cannot be falsified. If one waits long enough the downside may well appear. If it doesn’t, it simply means we have not waited long enough. Cyclical views, however, cannot really explain novelties such as industrialization. Nor can they explain what one must do to move away from pre-capitalism. One thing is certain: no country has done so entirely through the spontaneous workings of the markets – not even En
gland.

  The idea of a more or less fixed path to development, where each laggard catches up by replicating what the pioneers have done before, may seem commonsensical. It is, after all, the basis of what came to be known as the Washington Consensus (see Chapter 5). Such views, because of their seductive simplicity, have been adopted by many commentators who thought that a country could escape poverty if it followed the formula: privatization, small government, deregulation, free trade, etc.

  Historians have been scathing about this for a long time. The simplistic reduction of developmental differences to a mathematical formula was criticized in 1952 by Charles Kindleberger, the economic historian, commenting on World Bank missions and their ‘country reports’. Decades before the formulation of the Washington Consensus, he wrote, somewhat sarcastically, that these were ‘essays in comparative statics. The missions bring to the underdeveloped world a notion of what a developed country looks like. They observe the underdeveloped country. They subtract the former from the latter. The difference is a program.’67 His conclusion was that though the authors of these reports may have learned much from the countries they have visited, ‘they do not yet know much about the process of economic development. I hasten to add that neither does anyone else.’

  Not much new here. In the nineteenth century it was common practice for laggard countries to compare their economic structures with those of more successful models (usually an idealized version of Great Britain). The stages of English economic development seemed ‘so inescapable that whenever a developing country in the West happened to dispense with some of the prerequisites or to bypass some of its stages, its performance was usually presented as an exception proving the rule’.68 Britain remained a model for a long time, even though there is little reason to suppose that the British road could be replicated or even that it was the ‘best’.69

  The problems of ‘laggard’ countries were seen to be for them to resolve. Thus in France it was common to blame the excessively individualistic mentality of local entrepreneurs, their dour rurality, their obsessive concern with family, their inability to ‘think big’, their narrowness of mind derived from their peasant roots, etc.70 French banking, in comparison to the British, was said to be primitive and unable to provide industry with the necessary capital.71 Also blamed was the scarcity of labour due to the low birth rate, the attraction of public employment, which, allegedly, starved the private sector of labour, and the multiplicity of small firms.72 This was all the more surprising since France was regarded throughout Europe as politically advanced thanks to its revolution. Besides, the French Second Empire (1852–70) had laid the foundations for the regular and rapid development of industry in the decades following its demise. French industrialization followed a model suited to France, adapted to a large peasant population without a great surplus for consumer expenditure, a wealthy urban market, and export markets that absorbed the high quality goods for which France was long renowned.73

  Between 1865 and 1895 French growth rates were low (an average of 0.6 per cent against 1.5 per cent in the preceding twenty years and 1.6 per cent in the next thirty years, and 1.9 per cent in the period 1929–63). There might not have been as sudden a sustained take-off, but at least development was more harmonious than elsewhere.74 The low birth rate and consequent scarcity of labour, inevitably, caused wages to remain higher than in other countries.75 Although consistently behind Great Britain and Germany, France was ahead of almost everyone else in the development of railways, telegraphs, and shipping – the pillars of industrialization (not that this calmed down French uneasiness at not being first). Besides, the low level of population increase meant that growth was largely due to an increase in productivity.76 The Germans, just as prone as the French to exhibiting angst for not doing as well as others, regarded France as the main modern state on the continent, as their natural rival, and admired the speed at which France had recovered, economically and politically, from the defeat of 1870.77 The country seemed richer than Germany.78 Their banks, such as Crédit Lyonnais, the Société Générale (run by an English banker, Edward Charles Blount, from 1886 to 1901), the Banque de Paris et des Pays-Bas, were more powerful than the German ones. The Paris Bourse rivalled the London Stock Exchange. French capitalism was the capitalism of small firms only when compared to the United States and the United Kingdom. By defining ‘giant’ firms as those employing more than one thousand workers (of which there were some 3,000 in the world at the beginning of the twentieth century) and calculating the proportion of employees in manufacturing in the ‘giant’ firms, France ranked just below Germany and Sweden.79

  Yet even in France the liberals looked up to Britain as the model to follow. French liberals not only admired the Manchester School but also political liberalism and its leading representative, William Gladstone. Gladstone has pride of place in the coverage of the Revue des deux mondes throughout the 1870s. Paul-Armand Challemel-Lacour, a leading French liberal, and a supporter of leading politicians Léon Gambetta and Jules Ferry, celebrated Gladstone as one of the few politicians able to see further than the short term and as a statesman who endeavoured to eliminate class differences ‘due to the selfishness of the ones and the ignorance of the others’, ready to use ‘the public purse to help the working classes and to pacify them with equitable laws and plenty of employment’.80 Another leading liberal, Léon Say, held the British parliamentary system to be the model France should follow if one wanted to create a great French Liberal Party.81 There was little competition on the monarchist right, which produced no serious economic thought, at least until the end of the century.82

  That Britain should have been a model is not surprising. The British themselves were quite conscious of this. It was not just a matter of greater wealth but also of a more modern way of life. In The Progress of the World in Arts, Agriculture, Commerce, Manufactures, Instruction, Railways, and Public Wealth (1880), the Irish author Michael Mulhall, in a work dedicated, without irony, ‘to the press of Great Britain, which so zealously promotes the moral and material progress of the age’, noted that the country was not just more prosperous (‘our people are better fed, can do more work, and possess a greater amount of national wealth, than any other nation’) but more civilized, less ‘barbaric’. Mulhall celebrated the growth of schools and libraries, the expansion of institutions, the drop in crime rates (64 per cent between 1840 and 1877), the fact that 3 million women ‘now earn their living’ instead of ‘depending on the men for support’, and the increasing prosperity of the working classes.83 Mulhall’s comparative statistical work, one of the first of its kind, provided empirical substance to what everyone knew: though not as wealthy as the United States, Britain was, in 1894, the richest country in Europe and, by far, the foremost trading nation in the world.84 It is no wonder that Anglophilia was strong on the continent, particularly among elites who were using the British model of liberalism to advance a specific programme of economic development.

  Montesquieu had been an early Anglophile (he thought the British monarchy was the nearest to a real republic). Germaine de Staël, in her posthumous Considérations sur les principaux événements de la Révolution française (1818), compared England favourably to France. Thanks to its freedom and its stability England was spared the terrible experiences suffered by France in the preceding decades. England produced real heroes such as William Wilberforce, the champion of the abolition of the slave trade. England was far superior to France in the extent of press freedom, the respect for religion, the openness and depth of its culture, and the solidity of its political institutions. England was a country where merit prevailed over birth.85 François Guizot, statesman, Protestant, historian, and admirer of England, in a letter written in 1857, piled on the praise, declaring that ‘England is the avenue of dignity and human freedom. No nation, since the beginning of time, has become so great and wealthy without anger and bribery. She owes it to her Protestant Christianity and her parliamentary regime.’86

  Learning lessons
from ‘abroad’, namely from Britain, became the watchword. In Germany the most influential commentators on the British political scene – such as the economists and social reformers Lujo Brentano and Gerhart von Schulze-Gaevernitz – admired everything British, including the trade unions, because, unlike the German ones, they were non-political, busied themselves with improving wages and conditions, and had no intention of subverting capitalism.87 Friedrich List, conscious of Germany’s laggard status, writing in 1841, was effusive in his admiration for Great Britain:

  In all ages there have been cities or countries surpassing others in manufactures, trade and navigation; but the world has never witnessed a supremacy to be compared with that existing in our time … Far from having been stopped in its progress by England, the world has received from her its strongest impulse. She has served as a model to all nations in her internal and external policy; in her great inventions and grand enterprises of every kind; in the advancement of the useful arts; in the construction of roads, railways and canals; in the discovery and cultivation of lands in a state of nature, particularly in displaying and developing the natural wealth of tropical countries; and in the civilization of tribes, savage or subsiding into barbarism. Who can tell how far the world would have been behind if there had been no England? And if England even now should cease to exist, who can say how far mankind would retrograde?88

  List was not a narrow nationalist. On the contrary, he wanted all nations to reach a similar level of prosperity and of common peaceful coexistence. Britain’s early success had enabled its manufactured goods to invade much of Europe, eliciting the kind of envious and worried comments that later would be made of German, American, or Chinese products.