A profitable and vicious triangular trade

Nathan writes*

France’s prosperity during the 18th century was mainly fueled by the colonial triangular trade. It was a vast trading system that linked Europe, Africa, and the French Antilles. One could argue that economists such as Adam Smith and David Ricardo based their concepts of “absolute advantage” and “comparative advantage” on this system. It is however important to emphasize the fact that it was built on a foundation of human exploitation, a reality that cannot be overlooked.

This system was self-sustaining: French merchants brought textiles, alcohol, and weapons to Africa, where they bought enslaved people to transport to the French Antilles, where they were traded for sugar, coffee, cotton, and tobacco, which was then brought back for sale on the Continent. Then the cycle began again.

France therefore linked three distinct markets with different demands for manufactured goods, labor, and commodities. Each part of the world specialized. Thanks to “low marginal costs” (slaves), French ports greatly expanded and industrialized. Those ports then built more and better ships, which increased trade flows even further, reinforcing the gains from trade. At the same time, the entire French economy flourished costs fell and colonial demand increased. The state and monarchy collected greater tax and tariff revenues at home and in its colonies. It is important to note a lot of this revenue supported lavish aristocratic lifestyles rather than the common French citizen, which led to problems later.

France’s financial sector also developed during this period. Transatlantic trading was risky; many ships sank. Banking and insurance companies flourished in Paris and the port cities as companies sought to reduce the risks of sinking vessels, spoiled goods and the death and diseases that struck the crew and slaves during transport. Financial market became more sophisticated.

These developments did not, however, affect everyone. As stated above, tax revenues were not used to develop the country; they only benefitted the richest bourgeoisie, nobles and merchants. The majority of the population  — rural, farmers — faced deeper social inequalities. This should go without saying, but this trade also happened at a great ethical and human cost considering how people were enslaved and treated.

Bottom Line: France’s triangular trade helped it become a global economic power in the 18th century. It fueled urban growth, strengthened industries, expanded financial networks, and led to strong institutions regulating and insuring trade. On the other hand, it left a lasting legacy of exploitation and inequality. Its consequences can still be seen in France’s economic and social structure and the social and economic problems in its ex-colonies.

* Please help my Real Donut Economics** students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice 🙂

** Why “Real”? In short, because (a) Raworth’s claims to being a “21st century economist” denies that all of her ideas were presented by others in the 20th century and (b) she presents no viable mechanisms (besides “be nice”) for achieving equality and sustainability. My students are more realistic. In long? Read this.