Britain had led the way. By the beginning of the twentieth century she was already a fully urbanized and industrialized nation. The landed aristocracy remained socially dominant, but the last vestiges of political power were being wrested from it by a House of Commons in which the two major parties competed for the votes, not just of the middle, but increasingly, as the franchise was extended, of the working classes. A liberal–radical coalition came to power in 1906 and began to lay the foundations of a welfare state, but it could not ignore the paradoxical predicament in which Britain found herself at the beginning of the century. She was still the wealthiest power in the world and the proud owner of the greatest empire that the world had ever seen; but she was more vulnerable than ever before in her history. At the hub of that empire was a densely populated island dependent on world trade for its wealth and, yet more important, for imported foodstuffs to feed its cities. The Royal Navy’s ‘command of the seas’ both held the Empire together and ensured that the British people were fed. Loss of naval supremacy was a nightmare that dogged successive British governments and dominated their relations with other powers. Ideally they would have wished to remain aloof from European disputes, but any indication that their neighbours were showing signs, singly or collectively, of threatening their naval dominance had for the previous twenty years been a matter of anguished national concern.
For over a century, between 1689 and 1815, Britain’s major rival for world power had been France, and it had taken nearly another 100 years for her to realize that this was no longer the case. France had lagged far behind in the economic development that could have made her a serious competitor. The Revolution of 1789 had destroyed the three pillars of the Ancien Régime—monarchy, noblesse, and Church—and distributed their lands among peasant smallholders who remained staunchly resistant to any development, whether reaction or further revolution, that threatened to expropriate them; and their pattern of life did not encourage either the growth of population or the accumulation of capital that made economic development possible. In 1801 the population of France had totalled twenty-seven million and was the largest in Europe. In 1910 it was still only thirty-five million, whereas over the same period that of Britain had risen from eleven million to forty million, while that of the newly united Germany was over sixty-five million and still rising. After its demoralizing defeat in 1870, the French army had found an outlet in African conquests that created friction with Britain’s imperial interests, as did traditional rivalries in the eastern Mediterranean, but for the French people these were marginal issues. They remained deeply divided between those who had profited from the Revolution; those who, under the leadership of the Catholic Church, still refused to come to terms with it; and an increasingly powerful socialist movement that wanted to push it a stage further. France remained both wealthy and culturally dominant, but her domestic politics were highly volatile. Abroad, the German annexation of Alsace and Lorraine in 1871 had been neither forgotten nor forgiven, and fear of German power made France anxiously dependent upon her only major ally—Russia.
The other continental rival feared by Britain in the nineteenth century was the huge Russian Empire, whose expansion to the south and east threatened both the route to India through the Middle East (which had led Britain to prop up the moribund Turkish Empire) and the frontiers of India itself. Certainly Russia’s potential was (as it remains) enormous, but it was limited (as it still is) by the backwardness of its society and the inefficiency of its government. Capitalism and industrialization came late to Russia, and then largely as a result of foreign investment and expertise. At the beginning of the twentieth century the Czars ruled over a population of 164 million, consisting overwhelmingly of peasants who had been emancipated from actual serfdom only a generation earlier. They still exercised an absolutism such as Western Europe had never known—supported by an Orthodox Church untouched by any Reformation, and through the instrumentality of a vast and lethargic bureaucracy. The educated elites were divided between ‘Westerners’, who, looking to Europe as a model, were attempting to introduce economic development and responsible government, and ‘Slavophiles’, who considered such ideas degenerate and wished to preserve historic Slav culture. But successive military defeats—at the hands of the French and British in 1855–6 and the Japanese in 1904–5—drove home the lesson learned by Peter the Great, that military power abroad depended on both political and economic development at home. Serfdom had been abolished after the Crimean War, and representative institutions of a kind introduced after defeat and near-revolution in 1905. Railway development had enormously boosted industrial production in the 1890s, bringing Russia, in the view of some economists, to the point of economic ‘take-off’.
But the regime remained terrified that industrial development, however essential it might be for military effectiveness, would only encourage demands for further political reform, and it suppressed dissidents with a brutality that only drove them to extremes of ‘terrorism’ (a term and technique invented by Russian revolutionaries in the nineteenth century), thus justifying further brutality. This made her an embarrassing, even if a necessary, ally for the liberal West. At the end of the nineteenth century the attention of the Russian government had been focused on expansion into Asia, but after its defeat by the Japanese in 1904–5 it was switched to south-east Europe, which was still dominated by the Ottoman Empire. There national resistance movements, originally based on the Orthodox Christian communities in Greece, Serbia, and Bulgaria, had traditionally looked to the Russians for sponsorship—first as fellow-Christians, then as fellow-Slavs. All three had established independent states in the course of the nineteenth century. But there were also large numbers of Slavs, especially of Serbs and their cousins the Croats, in Austria-Hungary; and, the more successful the new Slav nations were in establishing their identity and independence, the more apprehensive the Habsburgs became about the increasing restiveness of their own minorities, and the part played by Russia in encouraging it.
Overproduction vs. Underconsumption: Paradoxes of Capitalism
