The war between capitalism and central-planning was won in 1989, or so I keep being told. The free-market forces of the West overcame the stagnant, centrally-planned economy of the USSR and heralded a new era of wide-spread market liberalisation and economic prosperity: factories once producing T-34s and Ladas began churning out what people actually wanted: refrigerators and washing machines.
But was it really the first time that capitalism had triumphed over its catastrophically devised nemesis? Exactly two-hundred years earlier, the French Revolution, under the calls of ‘Liberté, égalité, fraternité’, led to the last hurrah of mercantilism, the dimwit grandfather of socialist economics.
Napoleon saw economics as a zero-sum game, the sole aim of which was the acquisition of bullion. In 1806 Britain was blockaded and the Continent sealed – all to achieve economic autarky. If, however, Napoleon had taken the time to read Adam Smith’s Wealth of Nations, which was published only thirty years previously, he would have seen that his plan was doomed from that start. Smith said:
‘It was not by gold or by silver, but by labour, that all wealth of the world was originally purchased.’
Instead of squeezing Britain till the pips squeaked, Napoleon only destroyed his Empire’s economic viability. As Britain retaliated and forbade trade with the Continent, raw material prices rose, labour became scarce and many industries were crushed under the weight of ever-increasing costs. An important factor in Britain’s triumph was the Royal Navy, which prevented Napoleon from ever fully implementing his aims.
Although an organ of the British state, the Royal Navy possessed something that other navies lacked: the profit motive. Through the incentive of prize money, whereby the booty taken from captured enemy ships was distributed amongst the victorious ships’ crew, the sailors in the Royal Navy had an inspiration unmatched by the slaving away for the glory of jumped-up Corsican or the Comintern’s latest directive; the ability for a sailor to earn extra wages. These ultimately had tangible benefits to the men, improving the living conditions of their families and providing a safety-net upon inevitable demobilisation. It was a far greater attraction than the merely aiding a despot’s lust for power.
These men who sought their own improvement did so whilst defeating a power on the Continent that, through the lust for power of one man, created total war. The often vilified profit-motive has in the past been the deciding factor in the victory against despots and dictators, be it Napoleon’s France or the USSR, and it will hopefully continue to do so in the future. As for the ability of nominally communist states like China to survive, it may – as Zhou Enlai replied when asked on the consequences of the French Revolution – be too early to tell.