By Kung Chan and Zhijiang Zhao

With the current surge of anti-globalization, the world is witnessing significant structural changes. An interesting question arises: as the overall global market space may fracture into regional or relatively independent market spaces, giving rise to different regional hegemonies. By then, will a return to isolationism lead the U.S. toward decline? ANBOUND’s founder Mr. Kung Chan believes that answering this question requires examining the Gilded Age in American history, and the outcome may be quite the opposite.

The Gilded Age generally refers to the period from the 1870s to 1900, which was the time between the end of the American Civil War and the beginning of the U.S. overseas expansion. The term “Gilded Age” is derived from Mark Twain’s novel of the same name. Twain’s satire describes the superficial economic growth of the U.S., along with corruption and social inequality, reflecting the myth of wealth in the U.S. during this period. In this era filled with speculation and wealth accumulation, the American economy witnessed tremendous wealth generated in industries such as railways, steel, and oil, giving rise to many well-known industrial magnates of the time, such as railroad tycoon Cornelius Vanderbilt, oil tycoon John D. Rockefeller, and steel tycoon Andrew Carnegie.

Historical data shows that from 1860 to 1900, the value of American manufacturing increased from USD 1.9 billion to USD 11.4 billion, railway mileage increased from 30,000 miles to 250,000 miles, coal production increased from 10 million tons to 212 million tons, and steel production increased from less than 1 million tons to 11 million tons. In 1860, the total industrial output of the U.S. was less than half of that of Britain, but by 1894, it had surpassed Britain. According to statistics, the period from 1871 to 1913 was crucial for the U.S. to surpass Britain economically. During this period, its GDP grew 5.26 times, while Britain’s only grew 2.24 times. By 1913, the U.S. ranked first in both per capita total output and total industrial output, indisputably becoming the world’s leading economic power. At the same time, the phenomenon of “the poor getting poorer and the rich getting richer” also played out in American society. Excessive wealth concentration exacerbated social inequality. By 1893, 9% of American families owned 71% of the national wealth. The issue of race during the Gilded Age had also become serious; the Civil War did not completely “free” black people, and the Chinese Exclusion Act was also a product of this era. This is why many draw parallels between contemporary America and the Gilded Age because events like “Occupy Wall Street”, the “Floyd incident”, and the rise in hate crimes against Asians have occurred in history in different forms.

Noteworthily, during the Gilded Age, the “Westward Expansion” of the U.S. reached its peak. With the rise of the Second Industrial Revolution, the U.S. intensified its efforts to develop the western region. The Great Plains region quickly developed into a vast “ranching kingdom”. It not only provided a domestic market, food, and raw material base for the development of American capitalism but also promoted rapid transportation. It also attracted massive foreign investment, leading to simultaneous and vigorous development in mining, ranching, railway construction, and other industries. Data shows that between 1865 and 1898, wheat production increased by 256%, corn by 222%, and coal production by 800%. Meanwhile, the development of railway trunk lines during the same period connected the southeast, northwest, and southwest of the U.S., transforming the country into a unified large market. In a certain sense, the western region embodies the American spirit of the “frontier”, serving as the core of the American economy and the driving force behind the development of American capitalism.

It should be noted that during the Gilded Age, the U.S. basically pursued isolationism in its foreign policy. Political leaders in this period were more concerned with domestic policies rather than overseas situations. Overall, the U.S. had a friendly, non-ambiguous, non-aligned foreign policy during the Gilded Age. However, as its economy and national strength grew, the country gradually began to break away from isolationism in diplomacy. This process was not unrelated to the outbreak of World War I. With President Woodrow Wilson advocating for the liberal democratic system in Europe, the U.S. bid farewell to the isolationism of the Gilded Age and stepped onto the world stage. In the era of globalization, American manufacturing relocated overseas, expanding its markets with capital logic. At the same time, it also unreservedly exported its culture and ideology. At this point, anyone advocating for “isolationism” would be seen as backward and conservative, disregarding America’s future. The recent resurgence of American isolationism, represented by figures like Donald Trump, has been viewed by many countries and international organizations as a global political and economic risk, akin to conflicts such as the Russia-Ukraine conflict or the Israel-Hamas war. Therefore, in today’s era of deglobalization, America’s return to isolationism is seen as a “decoupling” that not only causes the breakdown of the global order but also leads to its own decline.

That being said, reality may not be as straightforward. Even if the U.S. returns to isolationism and “decouples” from the outside world, its global layout and investments over the past century ensure that the country will not immediately weaken. Moreover, from the Gilded Age to the present, the U.S. has become a heavyweight industrial power, possessing a manufacturing system that others cannot fully replicate. The world production map under deglobalization drawn by ANBOUND shows that the U.S. belongs to a region of high-tech development and systematic output, with the highest level of systemic production methods. While the U.S. may lack sufficient domestic assembly plants and qualified mid-to-low-end human resources, it does not mean that it lacks manufacturing or a strong industrial core. Mr. Kung Chan has pointed out that one should not assume that American manufacturing industry will not rise again, or even regain its dominant position in global manufacturing. Even if the U.S. becomes an isolationist country in the future, right-wing and conservative forces will vigorously promote various conservative production methods and integrate conservatism with technological innovation and production methods again, striving to create new economic successes. In the new situation of deglobalization, it is increasingly likely that more and more products labeled “Made in the U.S.A.” will emerge, becoming more and more apparent. For Americans, there is the possibility of economic prosperity even in their own self-contained world, as has happened in the Gilded Age.

Final analysis conclusion:

Some opinions suggest that in an era of deglobalization, with countries vying for dominance and regional hegemonies emerging, the U.S.’ return to isolationism will lead to a decline. However, by analyzing the economic performance and foreign policy of the U.S. during the Gilded Age, the outcome may not be so straightforward. Even if the U.S. truly embraces isolationism again, its mature and developed capital markets and manufacturing systems that others cannot replicate would enable it to prosper and develop.

• About the authors: Kung Chan is the founder of ANBOUND, an independent think tank.
• Zhijiang Zhao is a Research Fellow for Geopolitical Strategy programme at ANBOUND, an independent think tank.