Correlli Barnett on Britain and Free Trade

By Hunter Wallace

Here is a massive excerpt that I saved from Correlli Barnett’s book The Collapse of British Power:

“This swift decline in British vigour at home and the failure to exploit the empire were not owing to some inevitable sensecent process of history. They shared a specific cause. The cause was a political doctrine; a doctrine blindly believed in long after it had ceased to correspond with reality.

The doctrine was liberalism, which criticised and finally demolished the traditional conception of the nation-state as a collective organism, a community; and asserted instead the primacy of the individual. According to liberal thinking a nation was no more than so many human atoms who happened to live under the same set of laws. From such a belief it followed that the State, instead of being the embodiment of a national community as it had been under the Tudors and the Commonwealth, was required to dwindle into a kind of policeman, standing apart from the national life, and with the merely negative task of keeping the free-for-all of individual competition within the bounds of decorum.

Liberalism, like evangelical religion, flowed from a late-eighteenth century intellectual spring. Like evangelical religion again, it was a manifestation of the middle-class mind, and arose with the middle classes before 1850 and with them prevailed. Indeed liberalism and evangelical Christianity were head and tail of the same idealism, often expoused by the same persons, as in the case of Richard Cobden, and fueled from a common reservoir of moral passion.

Central to liberalism was the belief that human progress and human happiness were best assured by leaving individuals to compete freely with each other: laissez-faire; let them get on with it. What was socially necessary could be safely entrusted to spontaneous creation by private initiative. As Adam Smith, the founder of liberal economics, put it in 1776: ‘By pursuing his own interest [an individual] frequently promotes that of society the more effectually than when he really intends to promote it.’ It was Adam Smith who formulated the doctrine of Free Trade, keystone of liberalism, which was to exercise as long-lived and as baneful effect on British power was Wesley and Whitefield’s preaching. Adam Smith attacked the traditional ‘mercantilist’ belief that a nation should be generally self-supporting: ‘If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it them with some part of the produce of our own industry employed in a way in which we have some advantage.’

Therefore the State should not protect home markets or industries from competition:

To give the monopoly of the home market to the produce of domestic industry, in any particular art or manafacture, is in some measure to direct private people in what manner they ought to employ their capitals, and must, in almost all cases, be either a useless or hurtful regulation.

Adam Smith thus looked forward to a division of labour between different countries, whereby each specialised in certain trades and industries, and therefore became dependent on one another. Nevertheless he agreed that the State should continue to regulate shipping so that the nation might always be sure of a supply of seamen, ships and naval stores, because ‘. . . defence, however, is of much greater importance than opulence’. This vital distinction was totally forgotten by the nineteenth-century apostles of Free Trade. Indeed Richard Cobden so lost sight of national security that he believed that Free Trade was ‘the international law of the Almighty’, and that ‘the honest and just interests of this country, and of her inhabitants, are the just and honest interests of the whole world’.

In any event, Adam Smith erected a ‘scientific’ theory out of the passing circumstances of his own era. He could not forsee that national defence would come to depend not just on seamen and naval stores, but on total industrial and economic capability. He could not forsee the effects of the most revolutionary technological developments in the history of mankind, just beginning when he was writing. Thus, to give one small example, he believed that Free Trade could not ruin British cattle-raising because it was impossible to transport enough meant on the hoof into the country. Yet a hundred years after this confident judgement refrigerated steamships began to bring in meat in immense quantities from all over the world.

Nevertheless Adam Smith’s doctrine of Free Trade was to win unqualified acceptance by 1850, and British economic policy – or, rather – non-policy – was henceforth to be based on it, without giving the least priority to defence over opulence. It was part of the general triumph of liberalism, which confidently left all social and industrial questions to solutions by private individuals by private initiative — the layout of towns, the future of industry and agriculture, the housing, health and education of the people.

The doctrines of liberal individualism were congenial to the English temperament. Since the early seventeeth century the English had nourished a deep suspicion of the state that had hardly diminished with the waning of monarchical power. As foreigners noted, the English were anarchical and quarrelsome, renowned for their love of liberty. [b]’Liberty’, put another way, meant dislike of being organised; a dislike vividly manifested by the extraordinary illogic and localism of English institutions in the eighteenth century. Liberal doctrine provided a new and ‘scientific’ justification for this English dislike. The English therefore entered the industrial era — the era of organisation — with a deep-seated horror of organisation, and the larger the organisation the greater the horror.

In fact it proved impossible to carry out liberal doctrines in unsmirched purity; awkward realities would keep breaking in. For example Acts of Parliament were passed controlling the hours and conditions of work and female and infant labour in factories, to be enforced by government inspectors. Local government was reformed. Public sanitation was undertaken. Yet such matters as these were only incidental details, and under the young Victoria the British State abandoned any pretence of generally guiding the national destiny or expressing a collective national will. As Matthew Arnold, intellectual, poet and Her Majesty’s Inspector of Schools, expressed it in 1869:

. . . we are left with nothing but our system of checks, and our notion is of its being the right and happiness of an Englishman to do as far as possible what he likes, we are in danger of drifting towards anarchy. We have not the notion, so familiar on the Continent and to antiquity, of the State, — the nation in its collective and corporate character, entrusted with stringent powers for the general advantage, and controlling individual wills in the name of an interest wider than that of individuals.

Thus religious moralism and political liberalism advanced together, and in foreign and home affairs alike the conception of the nation and the national interest was lost to sight. Worse, liberal doctrine, which had begun as speculative theory, ended as a national faith with a truly religious force. Yet liberal doctrine did not accord with fact. What liberal theorists saw as the beneficent working of a free market was in reality (as is now well known) appalling industrial anarchy — wasteful, redundant, scrambling effort, often small in scale and local of vision.

“During the same period as liberal economic and social doctrine came to prevail, a national myth was being woven according to which British leadership in the Industrial Revolution was owing to the British being innately better engineers and businessmen than foreigners. This too was nonsense, glorifying a generation of resourceful, ingenious but often ill-educated men — jumped-up craftsmen, greedy entrepreneurs of narrow mind. For the spirit of the amateur inspired the character of British industrialism from the beginning. Both the machinery and the business methods of which the British were so proud were crude and primitive, put together by rule-of-thumb and trial-and-error — hardly surprising since this was only the first stage of the industrial era. It was not superior native genius that put the British in the lead after 1760 but a happy set of historical and geographic coincidences — the combination of abundant investment capital, absence of internal trade barriers, abundant water power, coal and iron conveniently adjacent to each other and plenty of labour because the destruction of the peasantry by enclosure of the old common fields.

The British faith in the ‘practical man’ who had learned on the job was therefore, like liberal doctrine, based on a congenial but fallacious reading of events. But he faith was not the less absolute for being misplaced. By 1860 the British were committed hears and minds to the already passing primitive phase of the industrial era — they were like calvarymen continuing to believe devotedly in the horse despite the advent of the machine-gun and the tank.

The cult of the ‘practical man’ led to a positive distrust of the application of intellectual study or scientific research to industrial problems. In 1850 The Economist could write that ‘the education which fits men to perform their duties in life is not got in public or parish schools but in the counting-house and lawyer’s office, in camp or on board ship, in the shop or factory’.

It was otherwise in Europe. In following Britain into the Industrial Revolution, European nations operated on different political and economic principles. Whereas the British had solved the problem of the inefficiency of the State by abolishing the State as far as possible, European countries like Prussia instead modernised the State and made it efficient. Whereas the British dissolved the nation into individuals and left their destiny to the free market, European countries stuck to the old notion that the State should embody the collective will of the people and guide the national development. Whereas the British believed in unrestricted international trade, European countries imposed tariff regulations to protect their infant industries, home markets and agriculture. In a word, countries like Prussia still believed, like Elizabeth I and Cromwell, that a nation was a single strategic and commercial enterprise and that the national interest as a whole came before private profit.

So European industries grew up in partnership with the State. Railways for example were planned as national systems to serve national purposes, social and strategic as well as economic. European industry was conceived from the start on a much larger scale than the small, highly individualist firms of Britain. Countries like Prussia, which had always valued good large-scale organisation in the army and the State, naturally created it in industry.

The most important — indeed in the long run decisive — contribution of the European States to their countries’ industrial progress lay in elaborate and coherent systems of national education — elementary, secondary, technical and university. From the beginning European (and American) industry was served by thoroughly well-trained, well-informed, high-quality personnel — from boardroom to factory floor. Its operations were based on sophisticated intellectual study, and above all on close liason with scientific research.

British industry and its ‘practical’ men were no more fit to meet this formidable attack than the British militia would have been to meet the Prussian army . . .

The decade of the 1860s marked a great watershed in the fortunes of British industry. In 1860 Italy was unified into a nation state. In 1865 the United States emerged from the Civil War and embarked on an enormous industrial expansion. In 1868 Japan began her astonishing leap from the Middle Ages to modernity. In 1870 Prussia beat France, a victory leading in 1871 to the unification of Germany under Prussia’s formidable leadership. This was the most ominous development of them all. Matthew Arnold wrote of the Prussian victory over the French:

We have been lately witnessing in the elasticity with which every branch of Prussian organisation bore the tremendous strain upon it by the war, fruits of the effectiveness of the German University system. Our breakdown at the Crimea is distinctly traceable to the ineffectiveness of our superior [i.e. higher] eduction.

All these nations were bent on becoming great industrial powers — all based their development on the thorough exploitation of science and technology and on a high degree of organisation. All possessed (or in the case of Japan was swiftly creating) first-class education system geared to serve national progress.

According to liberal doctrine, the entrepreneur was supposed to respond to the competition of a more efficient rival by changing his methods and becoming in his turn yet more efficient still. Unfortunately British industry between 1870 and 1914 failed to react as expected. It was now led by the sons or grandsons of its ruthless founders — too often fatly complacent men, constipated with inherited wealth. Not merely in the boardrom but throughout industry the successes of the past induced a fatal smugness. Existing methods and products evoked a devoted and emotional loyalty. The British in general could not even see that their industrial techniques were outmoded, fit for scraping; instead they saw a way of life that was eternally valid. They inactively watched foreign invasion of the British home market itself. Inded, British machine-tool makers, for example, were content to act as agents for advanced machines from Germany and the United States. So the response of British industry to the challenge of foreign competition and of ever more rapid technical change was too little and too late.

Since British enterprise signally failed to be enterprising, the alternative lay in some form of government action. This might have followed the German example — a broad economic strategy to encourage and guide industrial progress in the national interest by tariffs, subsidies and rebates.

[/b]But to suggest in Britain in the late nineteenth century that the government should guide the industrial and commerical life of the nation was like suggesting medical treatment to a Jehovah’s witness. When cheap wheat from the rich virgin soils of North America began to flood into Britain in the 1870s, British agriculture was ruined despite its own high standards of husbandry. Yet such was the hold of free trade doctrine that this national disaster was acquisced in without thought of action. On the contrary, it was thought that, thanks to this beneficient operation of Free Trade, British industrial population was now provided with cheap food. And it was true that cheap food enabled British industry to compensate to some extent for its excessive operating costs by paying low wages. British industry was therefore partially shielded from the consequences of its own inefficiency by means of allowing the ruin of British agriculture.[/b]

Thus after 1870 liberal economic doctrine was the most catastrophically inappropriate of all the outdated components of Britain’s economic equipment. Like an enchantment, liberal doctrine seemed to blind British eyes and paralyse British willpower. The most the nation could manage in the late nineteenth century was a serious of immense reports by royal commissions and other bodies on various aspects of the ever more urgent need for national reorganisation. The sombre evidence of such reports and their recommendations were either ignored or acted upon years of delay; and then often only timorously, shadows of the original proposals.

Education was a key to industrial — indeed national — progress and efficiency. In 1870 England still had no national education system. There were the ‘public’ schools; there was an assortment of private schools and ancient grammar schools, but there were no State secondary schools at all. Technical education took the form of a scanty patchwork of locally or privately supported technical industries. Lastly there were the State-aided elementary schools set up in 1861 on the rock-bottom standards of the workhouse. None of these types of education stood in any organic relationship with another. Between therefore the cult of the ‘practical man’ on the one hand and the high-minded pursuit of knightly ideals by the public schools (and the day schools that imitated them) on the other there was virtually nothing. It was just where there was this immense void in England that in Europe there were harmonious structures of elementary, secondary, technical and commercial, and university education; the whole designed to promote national efficiency.”

Ibid., pp.91-99