The global political economy experienced a significant reappearance after a long period of dormancy. Politics have a substantial impact on economic trends by exacerbating economic insecurity. Pax Britannica and Pax Americana were periods that the United Kingdom and the United States experienced impressive economic and development growth levels in a common perspective of global cooperation beneath the American political, economic and army sponsorship. The hegemonic stability theory was established in 1970 to describe the growth and collapse of the Pax Britannica and Pax Americana. The theory stated that a sole dominant economic power was crucial and enough to aid in constructing and maintaining a worldwide liberal economy. World War 1 led to a diminishing of multi-decade expansion in global bonds that many people referred to be the first period of globalization. Also, the fall of globalization was triggered by the nationalist movements, great depression, and economic segregation.
High Economic Power
Both the United States and Britain have been top-ranked in the economic powers of the international economy. The U.S. overrode Britain in aggregate size in the 1880s and developed to the leading manufacturers. The development of the United States was due to technological improvements in various industries. The technological enhancements included engines, mowers, petroleum, sewing machines, phones, and cash registers. Britain rose to the peak of the worldwide economic system after the World War 1 (Eichengreen, 1998). Great Britain had the highest per capita income, a bigger portion in the international trade, and a significant percentage in the foreign investment. Great Britain's potential dominance happened in the 1880s, and its main striking was the world economic system, where the country's share of trading and international investment was doubling the shares of other countries. Great Britain was at the largest trading nation after the Napoleonic Wars, and the United States was the biggest and most improved nation economically after the World War 1, although the U.S did not reach the trading and investment peak Great Britain had accomplished until the Second World War.
The collapse of Pax Britannica and the basis of Pax Americana are both closely associated with global economics. The crisis that lasted about 30 years was primarily caused by a change in the balance of European power, mainly the growth of Germany (Eichengreen, 1998). Germany managed to grow its economy between 1870 and 1900 to become the largest in Europe. Therefore, it sought to expound on its territorial duties because of its wealth. From a constructionist perspective, the conflict was a result of the growing fear of Germany dominance and the challenges to the British hegemony. The economic prospective of the U.S. was impacted by a non-strong political and financial structure that occurred before the 1914 war. The economic depression experienced in 1873 and 1929 resulted in an extended economic depression period that adversely affected economic performance that caused world economic, the financial crisis (Frieden, & Broz, 2013).
Between 1820 and 1879, Great Britain was the first state to lower the trade obstacles. Great Britain participated in the open structure of the worldwide trade and signed the Cobden-Chevalier Tariff Agreement with France, which introduced a chain of mutual tariff deductions. Great Britain decided to utilize its inner elasticity and outer power to secure more open structure (Lake, 2002). In Britain, the open structure was supported by increasing industrialists. The rate of capital investment and technological development can inhibit the fall of the British agricultural incomes until after 30 years when the Corn Laws were abolished. Cobden offered the ideological justification for free trade, whose influence was experienced in the whole of Europe where Britain was the role model to some of the participants of the elite. The Cobden-Chevalier Agreement enabled Great Britain to strengthen its military by opening a lot of backward areas, opening of the interior of Africa through expansion of formal and informal colonialism, and Britain made India join the worldwide economic system (Lake, 2002).
Conversely, the United States did not participate in the open structure, and there was no rise in the U.S. ratio of trade to combine economic activity within the 19th century. The United States did not participate in open structure because its economy was large and technology was growing quicker than in Britain. The state power states that open architecture was only developed in the geographical place where the increasing economic hegemony was capable of exercising its impact.
Different Economic Methods
Though the Pax Americana and the Pax Britannica attained similar goals, they did so use different structure and international tactics. Pax Americana is in no small extent due to American politico-military influence; however, it differs from Pax Britannica due to its multilateralism. Great Britain is a military and economic power; they utilized these structures to maintain peace between 1815 and 1914 using a unilateral approach (Lake, 2002). Conversely, the U.S had a dominance in the political and military perspective but lacked the economic supremacy; hence, they assumed a more multilateral tactic to sustain global stability. Factors that indicate that global liberalism is likely to stand include the lack of proper imperialism, the developing structure of the post-hegemonic global economy, the adequate level of global economic uncertainty, institutionalizing substantial global economic governments, the intersection between safety and economic concern areas, and the significance of external direct investment (Ruggie, 1982).
Leadership in both Eras
The Pax Britannica was primarily a result of three factors that include a more integrated global economy, similar interests amongst principle powers and British's power. Between 1815 and 1914, a shared interest among European rulers regarding repressing the revolution played a significant role in overcoming their political differences. Moreover, considering that the majority of the European was autocratic, it was instinctive that the monarchs opted to collaborate through the formation of the Holy Alliance in 1815 and later the concert of Europe ((Frieden, & Broz, 2013). When differences in power existed, the British would often align on the weaker coalition. Therefore, the power balance exemplified by Britain's foreign policy was the primary reason for the Pax Britannica. From a liberal perspective, peace resulted from the integration of world economies with a significant number of shares globally.
Increased trade and industrial revolution gradually made Britain a market leader globally. Therefore, they acquired enough resources to expand its military and political influence by providing shipping routes to other countries hence creating good political collaboration. The complete hegemony during Pax Britannica does not entirely exist during the Pax Americana era; thus the main technique to maintain order globally is through a multilateral corporation rather than unilateral dominance. Recently, the free flow of goods and services globally exceeds what existed before the pre-world war one time (Frieden, & Broz, 2013).
The Paths of Decline
The decline of Pax Britannica and Pax Americana followed different paths. At the end of the 19th century, Great Britain was faced competition from the rapid and vibrant growth of the U.S. and Germany. Germany was established as Britain's primary challenger for hegemony due to its geographical position in Europe. It is the United States that helped Britain to diminish the vital economic sector of Germany. After the collapse of the worldwide economy that occurred in the war, Britain and the U.S. experienced challenges of reconstruction and generation of high global economic uncertainty that shortened. The problems led to reduced time horizons and post-war cooperation became significantly hard. Lack of collaboration led to unresolved conflicts on reconstruction and the global economy later collapsed in the Great Depression. The most significant structural threats to continued cooperation are not lacked partners with the ability to have combined management, but it is excess partners, and the equivalent perspective for freeriding that is created (Lake, 2002)
A shift in the global economic power resulted in changing in political interaction. The United States providing aid and security assistance to other countries as well as maintaining a substantial of the county's spending of defense has significantly stabilized the American predominance.
Moreover, globalization has resulted in economic interdependence, the U.S imports a variety of goods from China while India is the biggest importer of U.S weapons. The success of the current economies significantly depends on each other; hence, Pax Americana is unlikely to be similar to Pax Britannica. The modern-day problems are entirely different than the British experience. The absolute hegemony bestowed during the British era is not present in the American situation who believe in multilateral cooperation in maintaining peace rather than unilateral dominance.
Eichengreen, B. (1987). Hegemonic stability theories of the international monetary system. (DOI): 10.3386/w2193
Eichengreen, B. J. (1998). Globalizing capital: a history of the international monetary system. Princeton University Press.
Frieden, J., & Broz, J. (2013). The Political Economy of International Monetary Policy Coordination. Handbook of Safeguarding Global Financial Stability, 81-90. doi:10.1016/b978-0-12-397875-2.00003-9
Lake, D. A. (2002). British and American hegemony compared: lessons for the current era of decline. In International Political Economy (pp. 137-150). Routledge. Retrieved from http://repository.umpwr.ac.id:8080/bitstream/handle/123456789/3779/international-political-economy.pdf?sequence=1
Ruggie, J. G. (1982). International regimes, transactions, and change: Embedded liberalism in the postwar economic order. International Organization, 36(02), 379. doi:10.1017/s0020818300018993
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