Understanding International Relations, Third Edition

Understanding International Relations

---

that could only exist as part of a complicated web of exchanges, in which
textiles, machine tools and machinery were exchanged for cotton, and later
grain, from the United States, beef from Argentina and mutton and wool
from the Antipodes. This was possible because of changes in the technology
of communication and transport. The railroads, steamships and refrigeration
made possible the transport of perishable goods over long distances, and
the telegraph made the creation of a genuine market possible. Many of
these innovations depended also on the export of capital – American and
Argentinian railways were largely financed by British capital, and the British
shipbuilding industry and British shipping fleets met the demand for sea
transportation directly. As the twentieth century arrived, so did competitors
to Britain in the form of the new industrial powers of Germany and the
United States. Although these newcomers dominated some industries, chemi-
cals for example, until 1914 Britain remained at the centre of the system – but
it was clear to far-sighted observers, including the British political class, that
this dominance was unlikely to survive much longer. The two world wars of
the twentieth century brought it to an end, and the geographical core of the
system moved to the United States with the tacit approval of British capital,
the old core state defining its interests in terms of retaining close relations
with the new core – a common pattern, earlier demonstrated by Anglo–Dutch
relations which, after a shaky start, eventually became very close.
What is particularly striking about the emergence of this complicated
structure of exchanges of money, goods, services and people across national
boundaries is the extent to which it emerged unplanned and unprepared for.
Questions such as how can a large-scale division of labour work in a world
based on territorial states, what difference does crossing a political border
make to economic activity, and how has this world economy changed inter-
national relations were not answered because they were not posed. The
system seemed to regulate itself; indeed, was widely believed to have grown
as fast as it did not in spite of, but because of, the absence of planning.
However, after 1914 and the outbreak of the First World War and subsequent
failures to re-establish the old system, it becomes clear that these questions
are, actually, unavoidable. The institutional solutions to these questions were
sketched in Chapter 7 – but now some extended consideration needs to be
given to a more theoretical response, because how we actually think about
international economic relations has been, and remains, as important as the
institutional structures we create.