Political Coalitions: Class War, Rural-Urban Conflict and Free Trade (Part 1)

From Elhanan Helpman's The Mystery of Economic Growth:

"In a Heckscher-Ohlin analytical framework...improved conditions on world markets, which may result from falling trade costs or reduced foreign protection, benefit inputs that are abundant in a country, because they are used intensively in the production of exportable products. Inputs that are used intensively in the production of import-competing products lose.

Rogowski* examined the effects of the first wave of globalization in the last part of the nineteenth century on the formation of political coalitions. Contrasting Britain, Germany, and the United States, he noted that both Germany and the United States were capital-poor at the time in comparison with Britain. But while Germany was rich in labor and poor in land, the United States was rich in land and poor in labor. The expansion of trade, therefore, benefited labor in Germany and threatened the income of capital and land there. As a result, labor supported free trade while capital and land formed the infamous 'marriage of iron and rye' to oppose free trade. In the United States, labor and capital united into a protectionist coalition, while landowners favored free trade. The result was rural-urban conflict. [emphasis mine] Finally, in Britain, which was rich in capital and albor, a coalition of capital and labor supported free trade while landowners supported protection."

*In Commerce and Coalitions, Ronald Rogowski, 1989, Princeton University Press