How does the concept of the “imperialism of free trade” explain the rise and fall of the British Empire? Essay

In the middle of the eighteenth century, Josiah Tucker, a free trade mercantilist, had argued that a manufacturing Nation not only can become richer but maintain its superiority over the poorer ones through a free trading system. (Semmel, 1970, p. 204) It was by means of this kind of argument, supplemented by the trade theory of the later classical political economy, that the British established a system of free trade. Indeed it became essential in the meteoric rise of Britain as an imperialist. On the one hand, David Hume (1876) was one of the most vocal critics of Tucker’s theories, arguing that despite all the apparent advantages, there would come a limit, a ‘ne plus ultra’, at which point, by begetting disadvantages, the progress of the rich nation would be halted. (p. 581) The fears of David Hume will be substantiated by the decline of the British Empire amid the imperialism of free trade.

This paper will examine how the concept of the “imperialism of free trade” explains the rise and fall of the British Empire.

Imperialism of Free Trade

In order to present this paper’s arguments clearly, it is imperative to define imperialism in relation to free trade so parameters will be drawn. According to Richard Pares, imperialism in relation to free trade is first of all a process and a policy which aimed at developing complementary relations between high industrial technique in one land and fertile soils in another. (p. 144) The new industrialism of the late eighteenth century created conditions which increased, substantially, the economic intercourse between countries at widely differing levels of social and economic development. This complemented the territorial expansion of the colonizers such Britain wherein products and goods are freely circulating and traded within the empire. The British policy makers were able to transform Britain into a commercial and industrial state, tying the country’s destiny to manufactures and to foreign trade. They, in effect, created an informal empire wherein the colonies spurred growth by becoming both a market for England’s goods as well as a producer of goods that is traded within the realm. London was the center of this trade with

The Rise of the British Empire

Britain was a latecomer in terms of the conquest of colonies and the global power struggle. Spain, Portugal and the Dutch have already established their own respective colonial empire and that it was particularly difficult for Britain to displace these European powers from their established positions at the crossroads of the world commerce. What made things change, however, was when a new synthesis of capitalism and territorialism emerged. This was brought about by the French and English mercantilism in the eighteenth century. The very first British economic policy aimed at taking advantage of the new concept of free trade was when the corn laws were abolished in order to create a vast English market for foreign grain.

The abovementioned new synthesis, wrote Giovanni Arrighi (1994), had three components: settler colonialism, capitalist slavery, and economic nationalism – variables that established the system of the free trade. (p. 49) All three were essential to the reorganization of the world political-economic space but the settler colonialism became the pivotal element out of three. For instance, in the budding spirit of free trade, Britain came to increasingly rely on the private initiative of their subjects in the area of overseas expansion. Nadel and Curtis (1964) offered an interesting commentary:

Although they could not match the Dutch in financial acumen and in size the size and efficiency of their merchant fleet, the English believed in founding settlement colonies and not just in ports of call en route to the Indies… Besides joint-stock or chartered companies the English developed such expedients for colonization as the proprietory colony analogous to the Portuguese captaincies in Brazil, and Crown colonies nominally under direct control. What English colonies in America lacked in natural resources and uniformity they made up for in the number and industriousness of the colonists themselves. (p. 9-10)

Settler economy would then spur the development of the slave trade as colonial expansion triggered the shortage of labor power, which could not be satisfied by relying exclusively, or even primarily, on the supplies engendered spontaneously from within the ranks of the settler populations or extracted forcibly from the indigenous populations. The slave trade – the capitalist enterprise engaged in the procurement (primarily from Africa), transport, and productive use of slave labor – established

Trade in Imperialism

The later growth of British industry made new demands upon British policy. The latter addressed this by formulating policies that linked areas with British foreign trade and, in so doing, moved the political arm to force entry into markets closed by the power of foreign monopolies.

Britain was able to penetrate foreign monopolies and was able to further expand through mercantilism. Raffles, for example, broke the Dutch monopoly of the spice trade in Java by opening free trade in the island. P.J. Cain and Mark Harrison, further documented Raffles’ outing:

He began the informal British paramountcy over the Malacca trade routes and the Malay Peninsula by founding Singapore. In South America, at the same time, British policy was aiming at indirect political hegemony over new regions for the purposes of trade. The British navy carried the Portuguese royal family to Brazil after the breach with Napoleon, and the British representative there extorted from his grateful clients the trade treaty of 1810 which left British imports paying a lower tariff than the goods of the mother country. (p. 251)

These exploits were also replicated in China. We have the argument posited by Robin Winks (2001), which stressed that in China, as in Latin America, the imperialism of free trade took the form of seeking a fair field and no favor in opening world markets on equal terms to international trade, which occasionally led to violence but no formal political control. (p. 390) This kind of imperialism pursued a purely economic interest but the British could use force if necessary to achieve limited objectives not just in the protection of the British merchants, as in the case of the two Opium wars.

The British governments also sought to exploit the colonial revolutions to shatter the Spanish trade monopoly and to gain informal supremacy and the good will which would all favor British commercial penetration. The previously mentioned informal colonial empire based on trade and mercantilism was responsible for the prodigious British expansion, redressed the Old World balance of power and restored British influence in the New.

D.K. Fieldhouse (1973), in his book Economics and Empire, 1830-1914, concluded that the abovementioned events constituted what came to be known as the imperialism of free trade, with economic objectives taking precedence over the political with no annexation involved. To quote: “colonialism was not a preference but a last resort with the imperial process a temporary expedient to bridge the time-gap between modernized Europe and a pre-capitalist periphery.” (p. 476-477)

Free Trade and the British Decline

The 1850s and the 1860s are the final period of change for the British Empire. We have the accounts of contemporaries and the historians who are in unison in saying that technical changes of the period such as that of the steamship, the telegraph, the railway, and the developments in tropical medicine, all brought the Britain and its colonies closer together and drove the effects of the world economy deeper into the periphery. The move to free trade and responsible movement finally found the decline of the old colonial system as a consequence. These developments along with the British setbacks during the First World War finally triggered the historiography of the British Imperial decline. Anti-British revolt sparked in Ireland, India. Egypt, and Iraq. The consequence of a closer world brought about by technological development and free trade made the spread of Bolshevism abroad a threat to British interests both overseas and at home.

More specifically, scholars point to decolonization as one of the central elements in the decline of the British Empire. Here, the relationship of this concept to free trade is underscored by the incidence of a closer world that is encouraged by technological, communication and transportation development. It brings us to the more significant issue of the collapse of the global infrastructure which supported the British and other European imperialists. Decolonization is to be seen as the breakdown not just of colonial rule but of a much larger complex which John Darwin as the ‘global colonial order’. He elaborated on this interesting perspective:

Although European colonialism had a long history, it was not ‘globalized’ until the late nineteenth century, when the world was effectively partitioned into spheres of influence and informal domination by the European powers and their two junior partners, United States and Japan. Underlying this division of the world was a conception of international order which explicitly repudiated self-government for ‘backward’ societies and tacitly recognized forcible intervention in them, or the assertion of authority over them, in pursuit of national interest of ‘civilized’ powers. (p. 543)

One should remember that the British empire’s colonial order was founded upon the free trade economy with a division of labor which allot production of commodities to the colonial and semi-colonial world and the functions of banking, investing, and manufacturing to Britain. However, the principles that guide this system increasingly became a hindrance for the growing sophistication of international trade. Big businesses that came out of the free trade increasingly regarded the perpetuation of colonial government as both an obstacle and a threat, blocking the way to an accommodation with the new nationalist politicians waiting in the wings. Darwin argued that these big businesses view the old system in terms of two significant facts:

Continued political frustration was likely to drive otherwise pliable colonial politicians into anti-foreign and anti-capitalist extremism.

Prompt self-government would install a new ruling class ready to collaborate with international capital and preserve a congenial environment for their operations. (p. 545)

Thus, we have the perspective advanced by scholars who believe that the British imperial decline is partly, if not entirely, a product of a conspiracy of commercial interests. This is particularly significant with the fact that the British imperial sway is derived mainly from profit-sharing with business and power-sharing with indigenous elites overseas. According to Louis Roger (2006):

At the country level, the system relied on unequal accommodations with client rulers or proto nationalists, who multiplied British power locally with their own authority for their own advantage. Contracts could not be too unequal or else collaborators would lose their constituents and the system would break down. As local subcontractors became better organized, the terms for cooperation turned progressively in their favour.

As international trade and political landscape developed, local bargains could no longer be struck to imperial advantage anymore especially with the entry of other Great Powers competing for the bidding.

The US Factor

Another plausible reason set forth that seek to explain the decline of the British Empire the older story of free-trade imperialism but this time with America at the helm. The facts are there, by 1900, the US had surpassed Britain as the world’s leading producer of iron, steel, coal and textiles. Mergers around the turn of the century made US industry the largest in the world. Denis O’Hearn (2001) pointed out that this increase in the American economic power was accompanied by an ideological shift away from protectionism to an informal imperialist program of opening door for US expansion. (p. 109) This is reminiscent of the old British imperialist approach. O’Hearn listed pivotal developments in the American destiny which saw the shift of power from Britain to the US:

Beginning with the 1897 Dingley Tariff and the Open Door notes of 1899-1900, policy makers began to recognize that US supremacy was better served by freer global markets… After the First World War, Woodrow Wilson’s administration extended US influence abroad… During the 1920s and 1930s, the US made limited incursions against European control of colonial resources. American oil companies gained a foothold in the Middle East while the US stopped British plans to create a rubber cartel. (p. 109-110)

In the aftermath of the Second World War, Britain was bankrupt and hard-pressed in maintaining its overseas colonies. It mainly depended on the United States for financial help. In the British government’s view, the American loan is important to meet the political and military expenditure overseas and that without it large scale withdrawal from the British responsibilities overseas was inevitable. Now, it has become apparent how the British status has shifted. Taking from the earlier definition of British imperialism anchored on free trade, America this time is the stronger of the two and Britain, the dependent. With its own plans for global free trade, the United States agreed to underwrite Britain and the Empire if the imperial economy is to be dismantled. Louis recounted how America began its role as the new world hegemon:

During the eighteen months between the end of the hot war and the beginning of the cold, most Americans regarded empires as obsolete. British claims to world power seemed pathetic. To save their wartime ally from starvation corner, Congress wrote off the Lend-Lease debt, but saw no reason to rescue the Empire. In return for a dollar loan of £3.75 billion, which the Canadians topped up to £5 billion, the British were forced to make the pound convertible into dollar within twelve months. (p. 455)

The British history and now the American experience tell us that free trade endorses and supports imperialism. From the chronicle of the British Empire, which is characterized by its rise and decline, one can learn that imperialism and empire-building were necessities if the industrialization of a country was to survive and it could also be the source of its decline because it is fragile as illustrated by the collapse of the British imperial system in the 1940s. As this paper has established, in the nineteenth century, free trade was an imperialist policy because it claimed the right to expand its reach everywhere. We see how the US has been using the same strategy with the establishment of its own imperialist system across the globe today. According to Richard Price (1999), the hegemony of free trade is taken to rest on its superior intellectual merits to any other theory on offer and that it is also a cultural force based on its ability to moralize economics.


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Cain, P.J. and Harrison, M. (2001). Imperialism: Critical Concepts in Historical Studies, Taylor Francis.

Darwin, J. (2001). Decolonization and the End of Empire. In Robin Winks (ed.) The Oxford History of the British Empire, Oxford: Oxford University Press.

Fieldhouse, D.K. (1973). Economics and Empire, 1830-1914, London.

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Louis, R. (2006). Ends of British Imperialism: The Scramble for Empire, Suez and Decolonization, I.B. Tauris.

Nadel, G. and Curtis, P. (1964) Imperialism and Colonialism, Macmillan.

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