International Trade and Political Institutions: Instituting Trade in the Long Nineteenth Century

Published by EH.NET (July 2002)

Fiona McGillivray, Iain McLean, Robert Pahre and Cheryl Schonhardt-Bailey,

International Trade and Political Institutions: Instituting Trade in the

Long Nineteenth Century. Cheltenham, UK and Northampton, MA: Edward Elgar,

2002. x + 242 pp. $80 (hardback), ISBN: 1-84064-690-X.

Reviewed for EH.NET by John V.C. Nye, Department of Economics, Washington

University in St. Louis.

This stimulating and well-written volume is based on the papers originally

presented at a mini-conference held at Washington University in St. Louis.

(Which, it should be noted, I now regret having missed.) The four lengthy

essays plus a substantial introductory essay and conclusion share the common

theme of analyzing the link between political institutions and the history of

European — especially British — trade policy in the century between the

Napoleonic wars and the coming of the First World War. This unity of theme

makes for something more than a hastily assembled collection of conference

essays. Furthermore, some of the methodological issues that are addressed

should prove of additional interest for economic historians trying to balance

the demands of social scientific reasoning and historical detail.

The nineteenth century is, of course, of central importance for historians of

international commerce as the latter half of the century provided the first and

arguably the only true period of relatively free trade among the major European

powers. Furthermore, the special role of Britain as apologist for and most

prominent nation in the drive towards freer trade commands the attention of

theorists in international relations as well as the political economy of trade

policy.

The opening essay — in its own way perhaps the most impressive piece in the

book — points to the tensions that arise between those who focus on the

narrowly political details of a particular historical event or political

transition and the desire to construct more generalizable theories of political

economy and trade relations. Furthermore, even among the theorizers, there is a

real clash — almost a culture clash — between those who favor international

level, states-as-single-actors explanations of policy common to the work in

“Realism” and the theory of “Hegemonic Stability” and the more economically

oriented explanations (overlapping with work in public choice theory) that

focus on the role of domestic interests in competition with one another.

The former approach seems to be the more traditional “political” approach

focusing on policy strategy and power relations, while the latter — often

called Endogenous Tariff Theory (ETT) — is more economistic, drawing on the

metaphor of politics as interest group competition derived from ideas of

economists such as Olson, Buchanan and Tullock, or North. Indeed, the latter

approach is especially congenial to economic historians who have played no

small role in advancing the state of knowledge in this area.

The latter approach, while often faulted for its tendency to oversimplify or

ignore important historical detail, can count as its achievement the production

of a body of theory and empirical evidence that is unmatched in the literature.

As is noted in the introduction, “It is unlikely that any other approach could

boast a comparable number of logically interrelated testable propositions” (p.

9) with strong empirical support. In contrast, proponents of the work in the

various areas of Realism “disagree even about the main assumptions and central

claims of the theory” (p. 9) which to this reviewer seems to be an incredibly

damning indictment of that body of research.

But a greater problem occurs from the desire to reconcile work that focuses on

material interests — common to ETT and to other “economic” approaches —

versus studies that concentrate on the role of ideas or on political ideology.

This contradiction is not resolved and if anything is deepened by the examples

given in this book.

Pahre’s long essay on tariff treaty regimes in the nineteenth century is the

most general work in the book and is itself a fine demonstration of the

benefits to be derived from even a simplified special interest model. Focusing

on competition between importers and exporters in a reduced form political

model in which the ruler or state throws his support to one faction or the

other, Pahre gives us an analysis of the movement towards trade liberalization

in the nineteenth century which does not suffer from the tendency of many

writers to over-emphasize the role of Britain. As this reviewer has argued in

other work, France and Germany should be viewed as the major figures in the

spread and eventual retreat of liberal trade policies in the century. British

tariff reform early in the century was neither as dramatic as has been

presented to us nor did it engender a response in the major trading partners.

Only the 1860 Anglo-French Treaty of Commerce and other events having little to

do with unilateral moves on the part of the British spurred the spread of freer

trade through bilateral treaties with third parties contrary to the arguments

of purist free traders.

Any such model will be bound to have multiple caveats ranging from the reduced

form concerns to the non-incorporation of economic conditions to the relatively

simplistic political model employed. Even at the level of his analysis Pahre

has some difficulties with the empirical tests finding, for example, that

openness measures work better than average tariff levels for his hypotheses.

But nothing in his model really gets at openness per se, and openness, unlike

tariff levels, is as much a function of the underlying economic fundamentals of

the countries as of any political decisions that could have been made by the

tariff setting authorities. Nonetheless, the effort is still impressive, and

there is much in the overview for political scientists and economists to chew

over.

McGillivray’s work focuses on the issue of U.S. tariff policy in the first few

decades after the Revolution. She uses recent work in economic history to

reject the claims of some political theorists that “under the Articles of

Confederation, states adopted beggar-thy-neighbour tactics towards each other”

(pp. 96-97). She points to the decentralized nature of the state system and the

prevalence of agricultural interests to explain why interstate trade flourished

among the states while the Republic found itself unable to create a unified

tariff regime which could be used to retaliate against the British. Though

employing neither formal theory nor detailed statistics, this essay shows how

suggestive arguments can still be developed with some rigor if they rely on

careful argument from theory and pay attention to the theoretically-relevant

findings of the historical literature.

A bigger problem arises when comparing Pahre’s work to the two essays by McLean

and Schonhardt-Bailey. McLean provides a nuanced, albeit fairly traditional,

account of the ideological aspects of the debates over repeal of the Corn Laws.

However, given that repeal of the Corn Laws did not decisively produce free

trade in Britain, and given the observations by Pahre and others regarding the

irrelevance of British tariff liberalization on the eventual spread of free

trade on the Continent, one is left to doubt the central role assigned to the

political debates by McLean. The struggle over the Corn Laws is no doubt

interesting in and of itself, but if Britain was neither the magnanimous free

trader of lore nor the successful free-trade hegemon of international relations

theorists, then this singular political event loses its central importance in

the historiography of nineteenth- century commercial policy.

Though broader and more analytic, Schonhardt-Bailey’s study of how ideas can be

strategically employed to nationalize what might have been seen as merely local

or narrowly ideological interests shares the same problem of overemphasis of

the role of the Corn Laws repeal. There is no attempt to distinguish between

political debates that were salient as politics versus the objective weight of

a given policy in the overall structure of British trade or tariffs. However,

the broader theoretical discussion of how ideas are generalized and the attempt

to use Continental examples in addition to the British back story make this

work rather more complementary to the Pahre essay than the work of McLean which

tends to stick out from the rest.

Indeed, the conclusion by Schonhardt-Bailey tries to reconcile all these papers

by arguing that they are complementary and co-exist by virtue of their

differing levels of analysis. While no one can argue with this sage and fairly

general claim, the case would have been better made if the four essays at least

took care to coordinate the background narrative or stylized facts that overlap

among them. If any claim is going to be made for the virtues of promoting these

differing levels of analysis we would benefit from seeing how they can all

combine to produce a whole greater than the sum of the parts. Sadly they lost a

great opportunity and the numerous contradictions among the component parts

leave the promise of the concluding chapter unfulfilled.

Nonetheless, none of these criticisms should detract from the value to be

derived from reading this remarkable volume. I do not exaggerate in saying that

this should be standard reading for international relations theorists as well

as economists and economic historians interested in the political economy of

trade reform.

John V. C. Nye specializes in French economic history and industrial

organization. His publications include “The Myth of Free Trade in Britain and

Fortress France: Tariffs and Trade in the Nineteenth Century” Journal of

Economic History (1991).