Historians make their names by persuading people to see patterns in the chaos. In the late 1970s, the French historian Fernand Braudel thought that one of those patterns was about to repeat. Braudel was a student of the slow-moving currents that shape events. He wanted people to pay less attention to great men like Napoleon and more to seemingly humble things like the potato, a New World import that made it easier for European farmers to grow more food than they needed; this surplus, in turn, gave a wider array of Europeans time to engage in new hobbies like complaining about their rulers. One might say that he regarded the potato as the cause of Napoleon.
In the third volume of his epic “Civilization and Capitalism,” published in 1979, Braudel explored the forces that made one city at a time the economic center of the Western world, from Venice to Amsterdam to London, and then inexorably lifted up another in its place. He wrote that cities rose as centers of commerce, and then, as they prospered, they began to invest their surpluses in building new centers, engineering their own declines. Commerce moved on, leaving a financial hub behind.
Braudel’s account ended with the decline of Amsterdam, the entrepôt of Europe through the 17th and into the 18th century, a city of astonishing wealth and diversity. Wide-eyed visitors wrote of its wonders with the same astonishment as later generations would write of New York. The young czar of Russia went home so impressed that he built St. Petersburg in its image. But as Amsterdam grew fat and happy, its merchants became bankers and began to seek better returns in fast-growing London. Amsterdam, Braudel wrote, became “a society of rentier investors on the lookout for anything that would guarantee a quiet and privileged life,” a society that had moved on “from the healthy tasks of economic life to the more sophisticated games of the money market.”
Braudel noted that London, too, eventually ceded its role, underwriting the rise of New York in the early 20th century. And in the late 1970s, he judged that New York was entering the “autumn” of its era as the center of the global economy. Commerce and industry were fleeing the city, leaving behind a thriving financial center — a sure sign in Braudel’s view that New York, and the nation it anchored, were on the edge of decline.
Donald Trump became Donald Trump in that city, building towers and bankrupting casinos as Wall Street boomed and the working class faded away, and he emerged with a similarly bleak view of America’s prospects. His career as a political figure has been built on his conviction that America is losing its wealth and its power. If Ronald Reagan filled voters with hope, Trump offers to keep them company in their misery. He has an intuition for the things that people fear and is comfortable saying what other politicians won’t. Where other presidents intone that it’s still Morning in America, Trump has touched a nerve by insisting that it’s not long before midnight.
To the president, the solution is straightforward, if drastic: building a wall of tariffs around the United States in order to neatly accomplish two of his primary goals at once. It would force companies to make products for the American market in the United States — thereby rebuilding the nation’s manufacturing base — and it would enable big cuts in income taxation. He claims that we wouldn’t even need income taxes if we just forced the rest of the world to pay our bills. What he’s really saying is that our problems are always someone else’s fault. The heart of Trump’s economic agenda, and his political agenda, is that other people are hurting the United States and that we can solve our problems by hurting other people.
Expanding manufacturing is a goal increasingly shared by elected officials across the political spectrum, but Trump is trying to overhaul the rules of global trade with all the finesse of a do-it-yourselfer living in a house while renovating it, and the disruptions are shaking the global economy. Shipping lines are canceling trans-Pacific voyages. Investors are moving money out of U.S. government bonds, no longer treating America as the ultimate safe haven. Trump’s actions appear to be hastening the decline of American manufacturing and even jeopardizing America’s afterlife as a financial center.
It’s easy to blame Trump. But Braudel, who died in 1985, probably would have regarded the president as nothing more than a cork bobbing on the currents of history. If he was right, no matter the president or policies, America’s era of economic domination is ending and its political hegemony is unsustainable. If he was right, it’s time to accept that our second-rate status is inevitable and irreversible. It’s time to get ready for life as London.
In the summer of 1944, the United States gathered its allies at a resort called Bretton Woods in the White Mountains of New Hampshire to claim what the State Department described as “the main prize of the victory” in World War II: the power to dictate new rules for the global economy.
Dominant economic powers have always demanded the freedom to trade. European nations had colonized much of the world to expand trade, including the creation of the little port of New Amsterdam. The United States, which built its economic strength behind formidable protective barriers, now was ready to reap the benefits. America and its allies agreed to establish the dollar as the basis of a new international monetary system, and they created a set of international institutions, dominated by the United States, that would work to dismantle trade barriers.
At the retreat, the British economist John Maynard Keynes argued that the new system should include a mechanism for limiting trade imbalances, but the United States rejected that idea. The Roosevelt administration could foresee that after the war, with Europe and Japan in ruins, the United States would enjoy a period of unrivaled economic supremacy. The arsenal of democracy would return to making consumer goods, and the United States did not want to constrain its ability to sell those goods in foreign markets.
Many Americans, very much including Donald Trump, look back on the decades that followed as a golden age of profits so abundant that even blue-collar workers were lifted into the bliss of middle-class life: car, house, vacation. But the American empire, though distinct in many ways from its predecessors, was not immune to the forces described by Braudel. Dominance brought about decline.
The dollar’s role as the world’s currency made it more valuable than it would have been if it were just a national currency, because everyone needed dollars. That allowed Americans to purchase imported goods more cheaply; it also made American exports more expensive. American companies began to pour money into foreign markets, building global businesses. And the United States expended vast resources fighting hot and cold wars while the nations that lived under its protection invested in themselves. Toyota’s president said that American military contracts for cargo trucks during the Korean War saved and revived his company, to the eventual chagrin of General Motors and Ford.
Trump was 25 in 1971, when the United States ran its first trade deficit since the late 19th century. He was raised in an era of American economic hegemony, only to enter adulthood as that extraordinary era was reaching its end. By the late 1970s, Braudel’s view that America was entering its “autumn” passed for optimism. It felt more like winter. The year after Braudel’s book appeared, the American author and illustrator David Macaulay published “Unbuilding,” in which he imagined the deconstruction of the Empire State Building by a Saudi prince who intended to ship the parts to the Arabian Peninsula. In place of the building, New York was left with a park commemorating the building.
Barely a generation had passed since Americans came firmly into the idea that their nation had surpassed Europe, that New York had replaced London as the center of the world, and Americans already feared their sun was setting. It was in those years, in that atmosphere, that Trump started talking about his conviction that other nations were taking advantage of America — not just surpassing us but cheating us.
Trump has the chassis of a typical Republican businessman: willfully blind to his dependence on government, resentful of taxes and regulation, convinced that what’s good for his business is good for the country. But where most country-clubbers of Trump’s generation viewed the rest of the world as patsies ripe for exploitation, or more generously as patsies in need of American know-how, Trump has long been distinguished by his belief that Americans are the patsies. In 1987, Trump paid $94,801 for full-page ads in The Times and two other papers. In an open letter addressed “To the American People,” Trump proposed that the United States should bill nations including Japan and Saudi Arabia for America’s military spending, which he said would reduce federal deficits and allow for tax cuts. The letter concluded, “Let’s not let our great country be laughed at anymore.”
Trump’s political message found little purchase during the 1990s and early 2000s. Those were years of plenty and the promise of more. The consensus among American elites in the second half of the 20th century was that the nation’s defense budget was the price of power, and trade was the reward. The collapse of the Soviet Union was taken as a proof text. America’s leaders saw little reason to fear the migration of manufacturing to China. They treated job losses as a tragedy for factory workers and factory towns, but not as a harbinger of national decline. They encouraged the rise of finance and tech companies as new engines of prosperity. American pre-eminence seemed secure.
As Braudel anticipated, finance replaced manufacturing. In the late 1970s, factories produced about 45 percent of U.S. corporate profits while finance produced about 15 percent. Over the last two decades, finance has consistently produced the larger share. I like to imagine that if Braudel had lived long enough to witness the astonishing rise of cryptocurrencies as one of America’s national pastimes, he would have died laughing.
But financialization also helped to postpone the reckoning. We lived like the scions of successful businessmen, spending the family money and borrowing against the family’s good name. Then in the wake of the Great Recession, as hopes curdled, Trump started recycling and updating his longstanding grievances — and finding larger audiences.
I know a lot of educated and prosperous Americans, and I know that they generally find it difficult if not impossible to understand why Trump’s bleak view of the American economy resonates with so many of their countrymen. I’m an educated and prosperous American, and I have trouble understanding it, too. But the anger is real. People see a nation in which the rich got tired of paying Americans to make things and replaced them with cheaper foreign workers. A nation in which the rich built nice houses in nice suburbs and then refused to make room for anyone else. A nation in which it is harder to get an education, harder to earn a living wage, harder to afford housing. Three-quarters of Americans born in 1950, in the early years of the baby boom, ended up earning more than their parents, but for Americans born in the 1980s, only half have ended up doing better. Americans now experience less economic mobility than in much of Western Europe. American society is less egalitarian than Denmark, and they have an actual king.
Free trade is not the primary reason for these trends. It’s not even the biggest reason manufacturing employment has declined; technology has eliminated a lot more jobs than China. But Trump’s fixation on trade resonates with many Americans because it captures something fundamental about the way that American elites have betrayed the social contract. Economists argued that trade could benefit everyone, but even if that was true, it required the government to redistribute the gains — and for the most part, it didn’t.
Trade made the rich richer, and it reduced the earnings of the 70 percent of workers who didn’t have college degrees. “The argument was always that the winners could compensate the losers,” the economist Joseph Stiglitz told me in 2015. “But the winners never do.” Trump didn’t need an economist to tell him that. He felt it in his bones. The crowds at his campaign rallies knew it, too. But it meant something to hear it from a rich man.
Amsterdam prospered as a banking center even as it declined as a center of manufacturing and commerce. By the late 18th century, Europe no longer wanted Dutch fabrics or Dutch fish, and it no longer needed Dutch ships. In 1783, a group of Dutch merchants sent a gift of salted herring to George Washington, requesting his endorsement and, presumably, seeking a new market. Washington responded that the herring was “undoubtedly of a higher flavour than our own,” but that America had plenty of fish. What remained in demand was all the money the Dutch had made from trade. The merchants and princes of Europe flocked to Amsterdam to negotiate loans. The following year, 1784, the fledgling American government joined them, arranging to borrow 2 million florins.
But prosperity increasingly was concentrated in the hands of an elite. Amsterdam, and its satellites, no longer needed as many workers. The population of Holland actually shrank in the 18th century, even as much of Europe experienced a population boom.
Moreover, Amsterdam’s pre-eminence as a financial center did not long survive the end of its hegemony as the center of European commerce. In the city’s heyday as a trading port, it shook off financial upheavals. Commerce was the main event; even the indelible spectacle of the tulip bubble in the 1630s was just a sideshow. But as the city’s economy became more dependent on finance, it become more vulnerable. One historian has calculated that by 1782, half of Amsterdam’s capital had been lent to foreigners. Instead of financing its own development, Amsterdam was betting on other countries, and it started losing too many of those bets. A culminating blow came in August 1788, when the French government of King Louis XVI, on the verge of collapse, defaulted on its debts. As Amsterdam’s economic power declined, so did its political autonomy. During the final two decades of the 18th century, the Dutch state descended into civil strife and endured humiliating defeats at the hands of the British and the French. In 1810, Napoleon annexed Holland to his empire.
Braudel focused on the long run of history precisely because he didn’t want to make too much of short-term pain or setbacks. It was an approach that he said he developed to maintain his equanimity during the five years that he spent in German prisoner-of-war camps during World War II, refusing to make too much of “daily misery” or the latest scraps of news. And in his view, what was most significant about Amsterdam’s life after hegemony was not the turbulence in the immediate aftermath, but the long-term resilience of the Dutch economy. Amsterdam never fell that far, and what Braudel wrote in 1979 remains true: “It is still today one of the high altars of world capitalism.”
The arc of London’s story is much the same. It is not a city anyone would think to pity. The United Kingdom and the Netherlands have plenty of problems, of course, but each remains among the most prosperous nations on Earth. It’s important to note, however, that Amsterdam had the good fortune to cede its supremacy to a city, and a nation, that shared many of its basic values. Indeed, Braudel observes that Amsterdam lost its supremacy in part because some of the richest Dutch merchants preferred to live in London, a Protestant, capitalist city they regarded as more fun. London, in turn, yielded to a city and society that even shared its language.
The center of global industry now sits somewhere in southeast China, and perhaps the most powerful argument for radical efforts to reclaim manufacturing supremacy is that the United States — and other nations that have prospered under its hegemony — ought to fear the consequences of ceding power to an illiberal and increasingly hostile country.
You can read Braudel’s book as an argument that the rise of Shanghai is inevitable and that the question that ought to be preoccupying American policymakers is how best to preserve American interests during the impending Chinese century. But the past is an imperfect guide. Forty-six years after it was published, Braudel’s account still feels fresh in part because the French historian was wise enough to avoid predictions. He judged that New York, and the United States, were in decline, but he did not tell us what would happen next.
Read by Malcolm Hillgartner
Narration produced by Tanya Pérez and Krish Seenivasan
Engineered by Steven Szczesniak
Source photographs for illustration above: Etienne Girardet/fStop, via Getty Images; Douglas Sacha/Getty Images.
Binyamin Appelbaum is the lead writer on economics and business for The Times editorial board. He is based in Washington.
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