1

Our Time and History

Lately, historical comparisons have been made between our time and then 1930s.
This is mainly due to economic problems and the current rise of nationalism
and protectionism. While superficially plausible, it is mistaken. Instead, we will
show that our time is best compared to that of the 1870s. Though that may
seem more innocent, we will further show that the conclusion is just as ominous.

1.1

A Comparison to the Thirties

From 1925 to 1950 economic crises were abound across the world. From the
great stock market crash in the United States and subsequent banking crisis,
to the hyperinflation of the Weimar Republic and the financial crisis of the
Zaibatsu in Japan. This was the Great Depression.
The economic malaise was not the reason for war, however. In the United
States, where mismanagement from both Government through Roosevelts disastrous policies and the Federal Reserves unableness and unwillingness to liquify
solvent institutions prolonged and deepend the downturn, there simply did not
exist an expansionist and aggressor ideology. The same can be said for Great
Britain.
In Japan, the central bank managed monetary policy relatively skillfully,
speeding up the recovery. Yet Imperial Japan did not hide their continuing goal
of conquest.
In Germany, the hyperinflation ended in 1924. In 1930, a misguided policy of forced deflation did cause massive unemployment and by 1933 Hitler
was supreme dictator of the nation. The German National Peoples Party was
formed in 1918, however, and had their support from the Pan-German league
which predated its existence by 27 years. Thus nationalism and militarism long
predates the 1930s.
In the time leading up to the second world war, the idea of conquering territory to ensure economic self-sufficiency was common sense in the aggressor
nations. The great German people needed Lebensraum as they were so populous. The idea of trade as a way of ensuring prosperity would have been laughed
at. In Japan, the lack of natural resources was badly mismatched with a now
heavily industrialized nation. The path to prosperity inevitably, it seemed, involved conquest of natural resource rich areas.
At this time, protectionism and autarky was favored over trade. The interests of different nations must always be opposed, because what one nation has
within its territory is not accessible to other nations, save for heavy penalties.
Nationalism had arisen as a natural response to the complete failure of socialism, and the citizens of the comparatively less well off nations were ready
and willing to support their omnipotent leaders war efforts.
But it is different in our time. In moral philosophy, racism and nationalism
have been long since debunked. In the public sphere, there is no support for war
efforts. In a liberal world, the idea of invading a nation with whom you exchange

goods and services, and whose nature and landmarks you enjoy visiting, and
whose hospitality you remember, appears absurd. And rightly so.

1.2

The Failure of Liberalism in 19th Century Germany

In the 19th century, the teachings of Adam Smith was embraced in all countries
that subsequently industrialized and attained levels of prosperity not known to
man prior. Tariffs did exist, but mostly as a form of revenue for governments
as other taxes either did not yet exist (such as the income tax in the United
States) or were limited.
It can be argued that the 1850s was the high point of free trade. With these
ideas also came the ideology of liberalism. In Germany, a small but growing
middle class became educated and embraced liberal ideas. In 1861 they united
in the German Progress Party. They strived for free trade and parliamentary
rule. But their opponent, Otto von Bismarck, defeated them by winning a
series of wars and uniting Germany. The liberals were convinced that, in the
end, Bismarcks actions would only harm them temporarily and that the general
populace embrace of liberalism was inevitable.
But that did not manifest. Instead, following the Prussian victory in Koniggratz,
the liberal party lost influence and found no new recruits. The generation of
Germans that followed did not even know the meaning of the word.
Instead, the people chose only between conservative nationalism and socialism, with the horrible mutation that followed.

1.3

Return of Protectionism

In 1879, under pressure from the Junkers (landowners) and the industrialists,
Bismarck introduced the iron and rye tariff.
This was largely a response to increased competition due to globalisation
and deflation from technological progress occurring between 1870 and 1879.
The economy of the United States was more mechanised than that of Europe
and the worldwide transportation revolution of railways, steam shipping and
refrigeration meant that price gaps around the world had to decrease, putting
pressure on German competitiveness.
It is understandable that the affected people saw appeal in being protected
from this competition. The tariff backfired, however, as all tariffs do. The
response from other nations was to introduce similar tariffs. Rather than an
antidote, this implicit trade war benefited no one.
The nationalists became increasingly convinced that Germany was the greatest nation on earth and its people superior. The socialists were under the delusion that economic conditions were an inevitable outcome of the broken system
of capitalism, and that they would replace it with socialist utopia some day
soon.

1.4

The Current Backlash of Liberalism

In the period 2002-2007, liberalism reigned supreme. The only talk of trade
deals were the advancement of them. Open borders and open economies were
the accepted end result of any successful nation. The anti-globalism movement
was revealed as morally corrupt and economically illiterate. The people, their
income and wealth having risen consistently, were content.
Following the financial crisis of 2008-2009, there has been a build up to a
marked shift in public opinion. As central bank induced economic inequality
has grown and been exacerbated by mercantalist policies of China and other
nations, the public are not as convinced of the benefits of trade anymore.
Similarly, the massive inflow of migrants has exposed the bureaucratic staleness of European labour markets, further causing tension between low-skilled
workers of different culture and geographic origin.
The events of 2016 are clear signs of this. After Brexit followed the victory
of Trump and only a little later the defeat of Matteo Renzi. In 2017, the fate
of France and Angela Merkels Germany will reveal if this trend continues.

1.5

A Comparison to the 1870s

Much like the 1870s, trade has caused manufacturing in industrialised nations
to continue their decline since the 1950s. This is only exacerbated by increased
automation. The people in the United States have now elected a man who unapologetically wishes to see tariffs of up to 35% imposed. It should be noted that
on the Democratic side, a self-confessed socialist almost won the nomination.
While standing without intellectual support, nationalism is again on the
rise. This can be seen primarily in the votes cast for either outright or quasi
nationalistic parties in Europe. It is not impossible that Marine Le Pen gets to
lead France going forward.
Following Russian aggression and provocation close to its western border,
rearmament following the collapse of the Soviet Union is occurring. Even Japan,
with a constitution explicitly forbidding a national army, is building its military
force and even actively increasing its participation in foreign conflicts.

1.6

Conclusion

There is no world war three close in time. Rather, the conditions of the present
are pitting the economic and moral soundness of liberal ideas against the same
old tried and failed ideas of nationalism and socialism. This time around, we
have the evidence of history to guide us in the right direction.