American Political Science Review Vol.81 Political Effects of Declining intense exploiter of the only scarce factor, Exposure to Trade gains significantly and quickly tries to translate its gain into greater political When declining hegemony or rising control. costs of transportation substantially con- Urban-rural conflict is also predicted strict external trade,the gainers and losers for backward,land-rich countries under are simply the reverse of those under declining trade;but here agriculture is on increasing exposure to trade:owners of the defensive.Labor and capital being locally scarce factors prosper,owners of both scarce,both benefit from the con- locally abundant ones suffer.The latter, traction of trade;land,as the only locally however,can invoke no such simple abundant factor,retreats.The urban sec- remedy as protection or imperialism; tors unite,in a parallel to the "radical" aside from tentative "internationalist" coalition of labor-rich developed coun- efforts to restore orderly markets(Goure- tries under expanding trade,to demand vitch 1986,Chap.4),they must largely an increased voice in the state. accept their fate.Power and policy,we Finally,in backward economies rich in expect,will shift in each case toward the labor rather than land,class conflict owners and intensive users of scarce resumes,with labor this time on the factors. defensive.Capital and land,as the locally Let us first consider the situation of the scarce factors,gain from declining trade; highly developed (and therefore,by our labor,locally abundant,loses economic- earlier definition,capital-rich)economies. ally and is soon threatened politically. In an economy of this kind with a high Observe again,as a first test of the land-labor ratio (the upper left-hand cell plausibility of these results-summarized of Figure 1),we should expect intense in Figure 3-how they appear to account class conflict precipitated by a newly for some prominent disparities of political aggressive working class.Land and response to the last precipitous decline of capital are both abundant in such an international trade,the Depression of the economy;hence,under declining trade, 1930s.The U.S.New Deal represented a owners of both factors (and producers sharp turn to the left and occasioned a who use either factor intensively)lose. significant increase in organized labor's Labor being the only scarce resource, political power.In Germany,a depression workers are well positioned to reap a sig- of similar depth (gauged by unemploy- nificant windfall from the protection that ment rates and declines in industrial pro- dearer or riskier trade affords;and, duction [Landes 1969,391))brought to according to our earlier assumption,like power first Hindenburg's and then Hitler's any other benefited class they will soon dictatorship.In both,landowners exer- try to parlay their greater economic into cised markedly greater influence than greater political power.Capitalists and they had under Weimar(Abraham 1981, landowners,even if they were previously 85-115 and Chap.4;Gessner 1977);and at odds,will unite to oppose labor's indeed a credible case can be made out demands. that the rural sector was the principal Quite to the contrary,declining trade in early beneficiary of the Nazi regime (see, an advanced economy that is labor rich inter alia,Gerschenkron 1943,154-63; and land poor (the upper right-hand cell Gies1968;Holt1936,173-74,194ff.: of Figure 1)will entail urban-rural con- Schoenbaum 1966,156-63).10 Yet this is flict.Capital and labor,being both abun- exactly the broad difference that the dant,are both harmed by the contraction model would lead us to anticipate if we of external trade.Agriculture,as the accept that by 1930 both countries were 1126American Political Science Review Vol. 81 Political Effects of Declining Exposure to Trade When declining hegemony or rising costs of transportation substantially con￾strict external trade, the gainers and losers are simply the reverse of those under increasing exposure to trade: owners of locally scarce factors prosper, owners of locally abundant ones suffer. The latter, however, can invoke no such simple remedy as protection or imperialism; aside from tentative "internationalist" efforts to restore orderly markets (Goure￾vitch 1986, Chap. 4), they must largely accept their fate. Power and policy, we expect, will shift in each case toward the owners and intensive users of scarce factors. Let us first consider the situation of the highly developed (and therefore, by our earlier definition, capital-rich) economies. In an economy of this kind with a high land-labor ratio (the upper left-hand cell of Figure I), we should expect intense class conflict precipitated by a newly aggressive working class. Land and capital are both abundant in such an economy; hence, under declining trade, owners of both factors (and producers who use either factor intensively) lose. Labor being the only scarce resource, workers are well positioned to reap a sig￾nificant windfall from the protection that dearer or riskier trade affords; and, according to our earlier assumption, like any other benefited class they will soon try to parlay their greater economic into greater political power. Capitalists and landowners, even if they were previously at odds, will unite to oppose labor's demands. Quite to the contrary, declining trade in an advanced economy that is labor rich and land poor (the upper right-hand cell of Figure 1)will entail urban-rural con￾flict. Capital and labor, being both abun￾dant, are both harmed by the contraction of external trade. Agriculture, as the intense exploiter of the only scarce factor, gains significantly and quickly tries to translate its gain into greater political control. Urban-rural conflict is also predicted for backward, land-rich countries under declining trade; but here agriculture is on the defensive. Labor and capital being both scarce, both benefit from the con￾traction of trade; land, as the only locally abundant factor, retreats. The urban sec￾tors unite, in a parallel to the "radical" coalition of labor-rich developed coun￾tries under expanding trade, to demand an increased voice in the state. Finally, in backward economies rich in labor rather than land, class conflict resumes, with labor this time on the defensive. Capital and land, as the locally scarce factors, gain from declining trade; labor, locally abundant, loses economic￾ally and is soon threatened politically. Observe again, as a first test of the plausibility of these results-summarized in Figure 3-how they appear to account for some prominent disparities of political response to the last precipitous decline of international trade, the Depression of the 1930s. The U.S.New Deal represented a sharp turn to the left and occasioned a significant increase in organized labor's political power. In Germany, a depression of similar depth (gauged by unemploy￾ment rates and declines in industrial pro￾duction [Landes 1969, 3911) brought to power first Hindenburg's and then Hitler's dictatorship. In both, landowners exer￾cised markedly greater influence than they had under Weimar (Abraham 1981, 85-115 and Chap. 4; Gessner 1977); and indeed a credible case can be made out that the rural sector was the principal early beneficiary of the Nazi regime (see, inter alia, Gerschenkron 1943, 154-63; Gies 1968; Holt 1936, 173-74, 194ff.; Schoenbaum 1966, 156-63).1° Yet this is exactly the broad difference that the model would lead us to anticipate if we accept that by 1930 both countries were