The Cambridge Economic History of Modern Britain

INTRODUCTION

The two centuries since the French Revolution have been characterised by pivotal changes in the power relations between nations, the financing of wars, and the actual practices of warfare. European nations had already amassed great empires prior to that, but the real culmination of their political and economic aspirations occurred in the nineteenth century, in particular for Great Britain. The nineteenth century also featured the rapid advance of industrialisation, mostly in the West, which helped West European powers to acquire great military forces of unparalleled proportions. The naval supremacy of the West was proven beyond doubt during the opening of the Chinese and Japanese markets from the 1840s to the 1860s, and Great Britain played a leading role in these efforts, especially the Opium Wars. The age of total war that began in the modern sense with the French Revolution and Napoleon pushed European states to adopt more and more efficient fiscal systems in the nineteenth and twentieth centuries, essentially copying British practices, and enabled some of them to dedicate more than half of their GDP to the war effort during the World Wars. Whereas in the pre-nineteenth-century world military spending was typically the dominant item within state budgets, even thrusting the most eager rulers and nations towards default, the industrialised nations developed more efficient budgeting systems to cope with the threat and execution of wars.

The most successful fiscal model for European states to follow was the so-called British Model, which entailed developing an elaborate fiscal and financial system to support economic, political and military expansion, including the use of public debt to finance military endeavours. Subsequently, and with the emergence of modest welfare state priorities by the early twentieth century, the representative share of military spending both in terms of budgets and the economy as a whole started to decline very slowly (with the exception of the periods of the World Wars and the early Cold War); this was also the case for Great Britain.