[PEN-L:11660] Re: Role of Total Foreign Trade

["J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>]

Ricardo,
     One reason why these ratios are not as impressive
in the direction you mean them to be is that the rise
of industrial capitalism is all about the development of
certain technologically advanced and mechanized
sectors that carried forward that revolutionary process.
Those sectors were a minority of the GDP well into
the late 1800s, but that does not mean that the revolution
did not happen and was not important.
      In fact your numbers can easily be interpreted to say
that exports were very important for the development of
that leading sector and that the most important part of
those exports and that leading sector was related to
cotton imports.  Now, I have not been one of those who
have argued that slave trade profits were a key to all this
(am agnostic on that issue).  But cheap cotton made by
slaves certainly looks to have played a role, and possibly
an absolutely crucial one.  I believe that this point was made
by Brad De Long way back in the early stages of this discussion,
which he has absented himself from for some time.
Barkley Rosser
-----Original Message-----
From: Ricardo Duchesne <RDUCHESN@xxxxxxxx>
To: pen-l@xxxxxxxxxxxxxxxxxxx <pen-l@xxxxxxxxxxxxxxxxxxx>
Date: Friday, September 24, 1999 3:48 PM
>Subject: [PEN-L:11652] Role of Total Foreign Trade


>In contrast to anyone else here, I have put together data that do not
>favour my interpretation, which is/should be the true mark of all
>scientific enquiry.  Science does not consist in the simple gathering of
data
>in justification of one's pre-determined views, but in looking for data
that
>may falsify one's interpretation.
>
>Last post  I summarized some of  the basic arguments about the "vital"
>role of total trade in the industrial revolution. Now, in addition to
>the points already presented against the primary role of the colonial
>trade, I would like to put forward the counter arguments, which show
>that foreign trade was an important component of Britain's
>industrialization, but not the "vital" sector.
>
>If we consider the ratios of exports to gross national product for
>the British economy over the 18th century, we have the following
>numbers: the proportion of exports relative to GNP was
>about 8.4% in 1700, growing  to 14.6% in 1760, falling to 9.4% in 1780
>and then increasing to about 15.7% in 1801 (Engerman, 1994).
>(Remember these numbers are on total exports - not the considerably smaller
>colonial exports)
>
>Now, there is indeed a rapid rise in the ratio of exports to GNP in
>the period 1780 to 1800. Moreover, considering that most exports were
>manufactured goods, the shares  of exports in industrial output were
>higher than the shares of exports in national output. However, most of
>these exports were textiles of cotton, wool and linen, which amounted
>to almost 3/4 of  the value of exports around 1800, with cotton
>textiles increasingly taking the lead. And cotton represented only 1% of
>industrial production in 1770, and only 8% in 1815.
>
>Moreover, these stats would seem to say that removing the export trade, say
in
>1801, would have resulted in a lowering of the national income by 15.7%.
>Yet, this argument forgets that, if resources had not been used in the
>foreign trade sector, they would have found employment elsewhere.
>This is just a simple fact about the way the market operates;
>every activity has a substitute (Thomas& McCloskey, 1981; Mokyr, 1985).
>If they did  not export cotton - keeping in mind, too, that at lower prices
>the home market would have consumed some of what was  exported -
>the British could have engaged in another economic
>activity, like paving new roads, constructing new buildings, or
>making beer. As McCloskey reminds us, "exports are not the same thing as
>new income. They are new markets, not new income" (1994).
>
>All this talk about whether trade was a necessary or a sufficient
>condition is meaningless unless we make a distinction between
>slave profits, the colonial trade, and total foreign trade. My
>conclusion, given the findings and arguments I have forwarded so far,
>is that *slave profits*  played an insignificant role. Not only were such
>profits *not* a sufficient cause; they were not necessary either:
>Europe would have industrialized anyways.
>
>Now, the *colonial trade* played a statistically moderate, not too
>significant, role. Europe would also have industrialized  without it -
>although at a lower rate, and at a later date.
>
>Total foreign trade was significant but was not the major cause.
>
>