Empires have been the most historically stable form of government. The purpose of historical empires was to create and secure an economic zone.

Empires were not about the acquisition of land, much less looting. It just extended a unified political and legal system over new territory and provided the means to defend it against criminal and foreign predatation. Societies need an economy of scale and specialization needed to create a complex economy.

Most Empires were centered on agricultural production and gathering natural resources, so they needed to acquire landmass.

The real purpose is to facilitate trade between economic regions. That provides long-term growth.

Balkanization limits economies of scale. It is easier to trade within 1 political-economic zone than to cross over and trade between 100 political-economic zones. Transaction costs are high between regions because each area has a different government, legal system, and language. Then there are coordination problems. Small kingdoms create protectionist policies and are also much more likely to wage war against other small kingdoms. Trade is more frequently interrupted.

Empires created a free trade zone while allowing most regions to retain some form of local autonomy. Empires prevented small kingdoms from raising tariffs or prohibit trade.

Trade routes were more extensive in empires than outside empires. The trade made imperial subjects wealthier which reinforced the empire’s position and ability to protect trade. Empires pooled capital and taxation to build large public works and create armies to protect trade routes. This led to more advancements in transportation and communication systems – like highways, larger naval and merchant fleets – than small kingdoms could have created

The Silk Road was a massive trade route passing through the empires of China, India, Persia, and Rome. Within each empire, the imperial armies guarded trade routes to defend them from bandits, raiders, and barbarian invasions.

If empires could protect it.

When the armies failed and the barbarians penetrated the frontiers, civilizations collapsed. Each economic sector would be isolated, specialization and mass production would end, and regions reverted back to primitive self-sufficient autarky and poverty.

Empires were abandoned in the 20th century and replaced with free trade networks and organizations like the WTO.

The idea was, it would be cheaper to just trade for goods than having to imperially conquer lands and compete with other empires. It didn’t work out that way in practice. States should have been responsible for their domestic security and would collective share the burden of defending the commons. Instead, diffusion of responsibility meant most states were free riders.

Today, the US hegemony defends and enforces the global economic trade regime. The problem here is one that traditionally faced old empires – understretch. Empires faced limits on how much territory they could control and how much they could spend on defense.

The US faces these same problems – the potential threats greatly outweigh what the US can spend. The US is only spending 4% of its GDP to protect hundreds of trillion of dollars in the world economy. These trade routes and specialized economies remain as vulnerable as ever.

Advertisements