For centuries, empires protected the commercial activity of Europeans overseas and secured their access to crucial resources and markets. Commerce requires protection to flourish, officials and merchants understood. At home, laws and courts assured capitalists’ property and governments blocked working-class threats to accumulation. States sought to protect merchants and planters abroad too—to shield them from competitors, the men and women they enslaved, the indigenous peoples they displaced, and rival states that might seek to conquer them. Empire projected sovereignty overseas to throw a defensive carapace around commerce.
But a fatal weakness crippled the overseas empires of early modern Europe: it cost more to protect them than they were worth. Wars among European powers for colonial and commercial stakes created mountains of public debt and ratcheted taxation ever higher. Financial blowback from conflict would destroy prosperity, many Europeans feared, strangling the economic vitality wars were supposed to assure.
Officials tried fitfully to reform empires to rebalance costs and benefits. (One ham-handed effort to make empire pay ignited the American Revolution.) Officials reined in subordinates on occasion to check empire-building. They dreamed of new arrangements to protect trade abroad. Allies might supply the necessary safeguards, liberating commerce from the overheads of sovereignty. Free trade might reduce conflict among imperial powers while invigorating imperial commerce. Federations of ex-colonies might protect the trade of a former mother country as effectively, and more cheaply, than empire had. Heralds of the future, few of these schemes were realized before most early modern colonial empires collapsed.
In the nineteenth century, Europeans established colonies once again and found ways to do empire on the cheap. The key to success? The great powers stopped fighting one another for overseas possessions and markets. Instead of excluding foreign merchants, the largest of the imperial powers, Great Britain, opened its colonies to their trade. The result was a protection regime for global capitalism based on empire but without the defect of the eighteenth-century system. Predictably, however, as inter-imperial war revived in the twentieth century and the costs of securing empire exploded anew, formal empires fell apart once more.
Officials, merchants, and shareholders used to worry incessantly about protecting overseas trade and investment. Mostly, we do not. Commerce needs protection today as much as ever. But investors and companies can take it for granted because it’s delivered at low cost by a protection regime more conducive to capitalism than past empires. Independent sovereign states safeguard commerce, coordinated by international institutions like the WTO, which reflect the interests of developed nations. States provide the same protections to foreign investors and corporations that they accord to their own nationals. Under a kind of mutual non-aggression pact, they renounce the most invidious ways of treating foreign commerce. Trade war has become a metaphor, and protection has mostly slipped below the horizon as a problem.
Global trade and investment have flourished as never before under this arrangement, but will it last? It has been shaken by Brexit, by trade conflict between the United States and China, and by disputes over maritime rights in the Mediterranean, the South China Sea, and the Arctic. States are increasingly skeptical of the existing, jointly determined regime for international commerce. If in the future we return to a world in which competing protection regimes prevail—one sponsored by the US, say, and another centered on China—protection costs will soar and officials and CEOs will worry about protection once again.
Could we see a return to formal empire? It seems far-fetched. But earlier imperial collapse gave way eventually to new phases of empire building. And there are signs that we’re heading in this direction again. Consider Russia’s annexation of Crimea and the influence this gives it over the shipping lanes, pipelines, fiber-optic cables, and oil and gas fields of the Black Sea. Could the soft protectorate the US has established over Taiwan harden were it necessary to secure the source of half the world’s semiconductors? Empire would begin to make sense again in a world of competing protection regimes for global commerce—a world where the security of one power’s trade might mean ruin for a rival. The resurgence of formal empire might appear implausible right up to the moment when it becomes inevitable.
John Shovlin is associate professor of history at New York University and the author of The Bordeaux–Dublin Letters, 1757 and The Political Economy of Virtue.