Empire Loyalists

Douglas Carswell came in for some stick this week for his erroneous claim that the sun, rather than the moon, causes tides. While the sun does exert a weak pull on the oceans, producing the effect of spring tides when aligned with the moon, the major force behind the swell of the seas is lunar, whch is why high tides can occur at night. What has got lost in the fun is that the original point by Paul Nightingale, that the moon is dominant, was an analogy for global trade. Distance matters as much as size, hence trade with Ireland (5.5% of the UK total) is larger than trade with China (4.5%). While Carswell's critics have seen this as more evidence of the war on expertise, this ignores that while the solar system is unlikely to change in the near-term the same does not apply to trade flows. But while Carswell's argument, that an increase in global trade can substitute for a reduced relationship with the EU, may not conflict with the laws of physics, it's not clear how this new state of affairs would be achieved, even allowing that the EU share of UK trade has declined in recent years.

The underlying problem is the idea that trade is essentially a matter of government choice, a belief that has been promoted by both leavers and remainers with their emphasis on trade agreements and the scarcity value of negotiators. The uncertainty over what Brexit entails is interpreted by many as incompetence because it is thought to reflect the inability of the government to make up its mind. It would be better to see it as uncertainty over the nature of the UK economy and thus an admission of the limits of government diktat. Just as the sun can amplify the pull of the moon during a spring tide, so the state can affect trade, e.g. by tariffs or embargo, but the underlying determinant is supply and demand (a point that Liam Fox was clumsily alluding to in his criticism of "lazy" British businesses). It should also be noted that among the levers available to government to boost trade, bilateral agreements are not necessarily the most effective. Investment in technology and infrastructure, to reduce transport costs, can often be more helpful in increasing trade volumes.

What this superficially trivial issue highlights is that trade has once more become a primarily political matter, much as it was in the hundred years between 1840 and 1940. In the postwar era, trade was essentially depoliticised in Western Europe, first by the equation of "open markets" with liberty, i.e. in contradistinction to the communist regimes of the East, and then by the emergence of the EEC/EU as a technocratic project that elevated trade above domestic politics. Whereas trade was once indivisible from foreign policy, it became an apolitical fact of life during the era of globalisation, no more controversial than the weather, which was an example of neoliberal hegemony. The political salience of trade has been on the increase since the late-90s, but this has been marginalised as the concern of lefties and paranoiacs obsessed with TTIP and TPP. What the EU referendum vote has done is reintroduce trade to the mainstream of politics, but in a curiously antique form.

It has become clear that the popular understanding of trade, even among politicians who should know better, is stuck in the past, hence the ready recourse to tales of swashbuckling mercantilism and the revival of trade ties with Australia and Canada. This could be dismissed as popular prejudice, but the condition of public opinion is probably more down to ignorance about prospective growth markets for British goods and services than racism. Most Brits would guess that China is the largest country by population, because that is emphasised with monotonous regularity by the press (playing on an old fear of Asiatic hordes), but few would guess that Pakistan and Bangladesh are both in the top 10 (let alone that Indonesia is in the top 5), essentially because media coverage of those countries is largely reduced to terrorism and natural disasters, which leads us to underestimate the size of their middle class and thus their spending power.

Fewer still have are aware of the gravity model of trade - i.e. that Australia is a poor prospect because it is both far way and has a population smaller than North Korea - even though this is one of those elements of economics that precisely coincides with fabled "common sense" (unlike, for example, the fallacy of the household budget analogy). What is stronger than common sense is nostalgia, which is why the belief that we can re-establish the trade ties of an earlier era, rather than make nice with the Chinese, is a more attractive proposition to those who advocated Brexit. This is usually expressed as a revival of the Commonwealth, but it's clear that what many advocates are lusting after is the revival of the British Empire, albeit in an informal arrangement in which the City and sentimentality are favoured over the military.This is not merely an attempt to ignore the tide of history, but a denial of the reality of the historic ocean, i.e. the nature of that empire.

The colonies were not the UK's chief trading partners during "peak empire" in the late nineteenth century. Continental Europe, then as now, was a more important destination for British manufactured goods, while the Americas were far more important in terms of raw materials (e.g. cotton from the USA and minerals from the South). At the apogee of 1910, the empire accounted for only 35% of UK trade, which was little advance on the 30% it accounted for in 1820. In part this reflected the very nature of empire: raw materials, like sugar, would be imported at low cost from the colonies, processed and then sold on as finished goods to markets, like Europe, willing to pay a relatively high price. But it also reflected both the distance of the colonies, which favoured high value / low weight commodities (e.g. Australian wool), and their sparse populations, which meant relatively smaller markets for British manufactured goods. If you were going to design an optimal trading area, one where "the sun never sets" wouldn't be your first idea. Proximity, after all, was one of the compelling arguments for joining the original common market.

One reason why the myth of empire trade has proved persistent is that it has, at different times, appealed across the political spectrum. David Davis may once have fancied himself as leader of the Conservative Party, but he is ultimately more the inheritor of Cobden than Churchill and remainers are unwise to ignore the resonance of that in the appeal to leave voters. Free trade was undoubtedly beneficial to the working classes in the nineteenth century, from the repeal of the Corn Laws to the gradual reductions in tariffs combined with cheaper transport costs as the century progressed. According to one study, "almost one half of the total real wage gains recorded in Britain in the late 19th century can be attributed to the impact of international transport cost declines". The consequence of this coincidence was that many Britons accepted the propaganda that cheap food was the product of empire. In fact, Britain's prosperity in the nineteenth century owed far more to the informal empire of the Americas and the willing market of Europe than it did to any special relationship with Australia or Canada.

While free trade arguments remained central up until the 1975 EEC referendum, thereafter the emblematic role of food in politics shifted to waste (butter mountains) and bureaucracy (apocryphally straight bananas), while the middle classes lauded the availability of olive oil in Waitrose as the advance of civilisation. We are now in the era of the Great British Bake-Off's Victoria sponge, which suggests a search for the comforts of old and a hankering after the supposed certainties of "our finest hour" (when the defence of a rotten empire was elided by the fight against Fascism), which you can see peeping through the demand for a "Hard Brexit". But this ignores the lesson of the tides, that our little world is inescapably influenced by others. This is the paradox of Brexit: a desire to take back control has resulted in us relying on the comfort of strangers, but in a far more risky sense than the Canadian Mark Carney envisaged.