We have just seen how the period of the first globalisation sets the bases for market integration and subsequent convergence among the economies involved. However, the case of the US goes far beyond convergence, to the point of overtaking GB as the first economy in the world: by 1913, the US had already surpassed GB in terms of industrial output per capita. As we will see, the reasons for this emergence can be found both in institutional and geographical factors.
HISTORY & INSTITUTIONAL FRAMEWORK
Slavery and indenture servitude
The first British settlements on the East coast of the United States date from the early XVIIth century. Settlers developed an economy based on plantation due to their main advantage: the huge land at disposal. The main handicap in this economy was the evident shortage of labour, for which a double solution was found.
Mainly in the North, men and women were brought from England, their expensive transport being paid by landowners in the new American colonies in the need for labour force. These new colons became indenture servants there: they paid back with their work and, with time, they had the chance to become free men and women, and even landowners themselves.
Mostly in the South the lack of labour force was solved with the introduction of slaves coming mostly from Africa. These slaves didn’t have the chance to become free men and women, or landowners, of course.
This double system worked up to the Civil War: Lincoln’s Declaration of Emancipation and the passing of the XIIIth amendment to the Constitution, finally ended slavery in the US as an economic option in 1864. During this time, the implications of each of the systems where grave: whereas the indenture servitude system allowed for a relatively fair distribution of land, slavery restrained it severely; which made inequality far more important in the South than it was in the North (a similar inequality in the distribution of land can be observed in other American colonization processes, like Brazil). But with the Civil War, the southern system collapsed.
The political system
A big issue when considering the factors that led to the success of the US is its political and legal framework. In order to understand the institutional structure of the US we must remember that pilgrims settled on the East Coast seeking the religious freedom they couldn’t find in Europe in the first place; also, the causes for the American independence must be taken into consideration. These issues would later shape the very foundations of the US political and legal system.
GB was a colonial power that insisted on keeping colonies’ commerce under the control of the metropolis; furthermore, while taxes were imposed to the colonies, no representation was allowed in the British parliament to defend their interests. With the War of Independence, the Thirteen Colonies of North America sought the emancipation from a power that was seen as tyrannical, and wanted to establish a political and legal system that were an example of liberty and justice; hence, the principles expressed in the Declaration of Independence (1776).
The US institutional framework was designed to allow the empire of law, ensure political stability and avoid tyranny. One of the major contributions was the effective separation of powers within a republic federation led by a president, and with a dominant parliament (the Congress) that guaranteed the executive constraint. Furthermore, it allowed for the rapid spread of the US towards the West, and the instauration of a legal framework for the development of the economy and the later creation of the thriving American banking system and the large American corporations. Protectionism was also instituted.
The political and legal system of the new US provided them a clear political stability, only disturbed by the Civil War. This situation was favourable for the early flourishing...