Empire of the ocean against empire of the continent : An economic analysis of strategy
Part of : Αρχείον οικονομικής ιστορίας ; Vol.XVIII, No.2, 2006, pages 5-26
Issue:
Pages:
5-26
Author:
Abstract:
This paper presents an extended Aristotelian thesis, which relates sea power to the emergence of new institutions and organizations, which affect, in turn, economic performance. Institutions embody new knowledge, leading to innovation, “the making” economy more efficient and growth promoting. The Continental System introduced by Napoleon Bonaparte, is analysed as a case study of two different systems in conflict: France, a mainly land based power with a centralized government and an economy directed by the state, and Great Britain, a seapower relying mainly on a market economy, with strong trade, industry and relatively efficient financial institutions and organizations like the Stock Exchange, joint-stock companies, banks etc, dominated by private economic interests. Preconceived economic ideas by Napoleon are analysed as to their influence in shaping the Continental System. The papers goes on with an economic analysis of strategy that concludes, as follows: France, not being able to subdue Great Britain through a direct military confrontation, due to Great Britain’s mastery of the sea, adopted an indirect strategy of trying to ruin her economy, first by the endeavour to reach her main source of wealth (as conceived by Napoleon) India by an overland route (the Egyptian expedition) and second, by the imposition of economic blockade, ie the Continental System. This ended again in failure because the seapower was inherently economically stronger, and because the Continental System imposed more costs than benefits to Napoleon’s Europeanallies, mainly Russia. A continental blockade would be only efficient in the long run if it was“watertight”, ie encompassed all of Europe. In order to achieve this, Napoleon was led to wrong strategic decisions, first fighting a two front war (Portugal–Spain and Austria–Russia) and then undertaking the disastrous Russian campaign of 1812. The case study is concluded by generalizing it as a two-player game with asymmetric starting conditions and asymmetricstrategies, which is dominated by the strategies of the "naval" player.
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Subject (LC):
Keywords:
Institutional change, game theory, strategy, Continental System
Notes:
JEL classification: N0, N4, C7, C0
