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How Columbus Revolutionized the Global Economy

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Columbus Day this year brought with it the usual acrimony, and this Salon article hit the usual talking points by declaring European settlement of the Americas to be "the most massive act of genocide" in world history. 

Salon quotes historian David Stannard who writes: "[O]n average, for every 20 natives alive at the moment of European contact — when the lands of the Americas teemed with numerous tens of millions of people — only one stood in their place when the bloodbath was over.”

Figures like these remain hotly debated, but few disagree that, ultimately, the number of natives was extremely small when compared to the overall size of the Americas. In other words, the number of people relative to the amount of natural resources in the New World was tiny, and population density in the Americas continues to be low by global standards even today.

While many pundits and historians commonly debate the violent conflicts between tribes and settlers in the popular media, we hear far less from scholars who take a serious look at the economic implications of the relatively underpopulated lands in the Americas. 

The Americas are Different 

There is a growing scholarship on the economic history of the Americas and on so-called "frontier states." Over the past century, scholars have noted that frontier regions in places like the Americas, Australia, and Eastern Russia are, in fact, different economically, politically, and sociologically from other parts of the world where the local ethnic population has — in many cases — occupied the lands for centuries. 

This is not the case in the Americas where new groups of people settled on lands once held by completely different groups with different customs, economic practices, and institutions. The movement of peoples onto frontier lands, and the exploitation of natural resources there, has shaped the economic and political realities of today. 

This scholarship on frontier settlement arguably began with Frederick Jackson Turner and his "Turner Thesis," which was first advanced in 1893. 

Turner focused primarily on the experience of the United States, but Walter Prescott Webb would attempt to develop these ideas into a more universally applicable set of ideas in his 1951 book The Great Frontier. For Webb, "the great frontier" included not just North America, but also Australia, New Zealand, and South Africa. (Later historians would add Eastern Russia to this list.)

Since then, most historians working on the issues of frontier history have attempted to either build upon the work of Webb and Turner, or to refute them. In either case, however, there is a recognition that frontier states are something different, and that the high period of frontier settlement, from 1500 to 1900, revolutionized the global economy and global demographics. 

What is a Frontier State? 

Frontier states are — to use a definition employed by political scientist Roberto Foa — "countries that in recent centuries have extended rule over new territories adjacent to their core regions."

Economist Edward Barbier, in his book, Scarcity and Frontiers, adds that these regions are also characterized by a small labor force relative to the amount of land and natural resources available. That is, frontier areas are notable for experiencing labor shortages which lead to a wide variety of political and demographic outcomes. 

Immigration and Slavery 

Consider the problem a land owner faces in a frontier setting. He or she sees abundant farm land for crops, or mountain lands for mining. At the same time, there are few people in the area to plant and harvest the crops, or dig the mines. As noted by many historians of the native tribes, of course, the indigenous population had already been decimated by disease and military conflict. Unlike the situation in Africa, India, and East Asia, settlements in the Americas found themselves with large tracts of land inhabited by few people. 

The solution to this economic problem, of course, is to bring in more abundant labor. This can be done through several means. First, of all, an owner (whether the owner be a private party or a state organization) can convince settlers to voluntarily move to a new region. A variety of different strategies have been employed in the New World in this regard. In early decades, North American colonies often relied on indentures servants who were held to a period of servitude in exchange for the cost of transporting the immigrant to the New World. The laborer, of course, was drawn by the prospect of obtaining freedom at the end of the contracted period. Later, the US used the Homestead Acts and land-sales schemes to attract settlers to frontier lands. Canada employed similar tactics. In Argentina, on the other hand, the Argentinian state actively subsidized the migration of immigrants from Italy to South America in the late 19th and early 20th centuries. Throughout the Americas, settlers relocated from Europe in a search for relatively cheap lands or as a hoped escape from the social and economic ailments of the Old World. 

Today, surnames throughout the Americas remind us of the pan-European flavor of immigration in the region. One need only peruse a list of Latin American heads of state to see names such as Michelle Bachelet, Pedro Kuczynski, Cristina Kirchner, Vicente Fox, and others. 

Nor was voluntary migration limited to Europeans. By the 19th century, Chinese laborers attempted to take advantage of labor shortages in California, and Japanese laborers did the same in California, Brazil, and Peru. As slaves were emancipated in Cuba, tens of thousands of Chinese workers were imported to replace them. 

In many cases, though, immigration was not sufficient to bring down wages to a level preferred by owners and their government allies. Thus, the politically powerful turned to slavery instead. Naturally, imported slave labor would depress wages for both the slaves themselves and for the existing free population that preceded the slaves. This tactic was especially useful in cases where manual labor was particularly difficult, as in the case of the sugarcane fields of the Caribbean or the cotton plantations of the American South. The greatest importer of slaves, however, was Brazil where slaves would, for a time, greatly outnumber the European-descended population. 

What began as a basic labor-shortage "solution" would evolve over time into a major sociological and political issue that colors politics to this day. And, contrary to what many naïve American leftists seem to think, the issue of slavery and racial politics is anything but unique to the United States. It is a characteristic of frontier states across the globe. Moreover, we might note slavery in the Americas was hardly attributable to the settlers being especially inhumane in their practices relative to other societies at the time. What was different in the Americas was this: the relative abundance of land and capital relative to labor made slavery pay much more relative to other parts of the world. There's a reason the Spanish home country abolished slavery decades before slavery was abolished in Cuba. It simply paid more in the Caribbean. 

Effects on Europe 

The new lands themselves weren't the only areas affected, of course. As Webb noted, the Europeans were "transformed" by the settlement of these new lands. This became all the more obvious as Western Europe's population began to explode in the Early Modern period and into the 19th century. The abundance of land in the Americas created an easy "solution" for European politicians who could simply encourage (either through exhortation or financial subsidization) troublesome social classes to emigrate across the ocean. The British actively shipped criminals to their colonies across the sea, and certainly the large scale movement of laborers from desperately poor places — like southern Italy and Ireland during the 19th century — transformed the demographic and political realities of those regions. 

Even in the face of imported slave labor, the relatively low density of workers in the New World allowed for a constant re-adjustment of wages in both Europe and the colonies as the population exodus to the New World increased workers scarcity — and therefore wages — back in the countries of origin. 

Meanwhile, those who remained in Europe took advantage of the vast raw materials found in the Americas, including the region's many fisheries, mining operations, and plantations. 

Implications for Today

We continue to see the effects of the New World's frontier origins in modern politics. Given the relatively recent histories of their populations, the social dynamics of the Americas are quite different from that of Europe. 

In spite of recent claims that Europe is being erased by immigration from the Near East and Africa, the fact is that Europe remains far more culturally uniform than is usually the case in any modern post-frontier state. While the United States is, for example, 70-percent European in origin, most European countries remain at least 90 percent "white." Not even Canada, which is is much more "European" than the US — with only 19 percent of its population listed as "visible minority" — comes close to the sort of cultural uniformity that is today common in the nation states of Europe. 

Latin America, of course, is far more diverse still, with Brazil, for example, reporting less than 40 percent of its population as being primarily of European ancestry. The legacy of imported slaves and surviving indigenous populations remains an undeniable factor in Brazilian politics today. Only Russia — itself a recent frontier state — comes close to experiencing a similar situation in ethnic demographics. 

Thus, it is "cute" when Europeans lecture Americans (including Latin Americans) about "tolerance" and "openness" when history suggests that it is the denizens of the New World who know far more about such things than the Europeans who stayed home and attempted to exploit those who made the hard journey to frontier lands. It was, after all, the European regimes that exported their political problems to the New World and happily profited from the exploitation of slave labor to supply Europe with sugar and other staples. It was the residents of the Americas themselves who had to deal first-hand with these issues, including broader demographic trends. The fact that the US population quintupled between 1830 and 1900, for example, was certainly no small affair. As historian Jon Grinspan notes, during this period, "at least 18 million immigrants arrived from Europe, more people than had lived in all of America in 1830." Given the propensity for world war displayed by Europeans over the past century, one can only guess with extreme trepidation how a similarly destabilizing situation would be faced by Europeans in the modern world. 

But many other issues in New World political realities are a legacy of its frontier past as well. Foa writes

Frontier zones are found to have ongoing lower levels of public order and deficient public goods provision. Several theories [may] explain this discrepancy, including internal resettlement, costs of monitoring and enforcement, and the relationship between settlers and the indigenous population. 

When American states are criticized for being "low-trust" societies, lacking social cohesion, and experiencing relatively high crime rates, these all stem from the realities of the New World's lack of cultural uniformity and common history among residents. Non-frontier societies have had centuries to become more uniform and more cohesive. New World societies still have a long way to go. 

It's a safe bet that Columbus had no idea the social and economic revolution he was setting off by beginning Europe's drive toward the "Great Frontier." He just wanted to get rich. But, we are still living with the legacy of Europe's expansion to these new lands today. 

Ryan McMaken is the editor of Mises Wire and The Austrian. Contact: email, twitter.


Contact Ryan McMaken

Ryan McMaken (@ryanmcmaken) is a senior editor at the Mises Institute. Send him your article submissions for the Mises Wire and Power and Market, but read article guidelines first. Ryan has a bachelor's degree in economics and a master's degree in public policy and international relations from the University of Colorado. He was a housing economist for the State of Colorado. He is the author of Breaking Away: The Case of Secession, Radical Decentralization, and Smaller Polities and Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.

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