First published in FEED, 07/99.

Britain’s Tory party’s use of ecommerce as an argument for retaining the pound is a new high-water mark in the internet’s influence on politics. Britain has been sitting on the fence for years about whether to scrap the pound in favor of the euro, and there has always been a significant block of British “euro-skeptics” who fear that economic convergence equals loss of sovereignty and national character. The Tories would love
to embrace these euro-skeptics (and their votes) by pandering to their sense that a strong pound stands for a self-sufficient Britain, but have been wary of doing so because rejecting the euro looks like a vote for economic weakness. With the rise of ecommerce, the Tories now think they can have it both ways — by mixing “new economy” optimism
with flag-waving they can embrace economic expansion while defending their cultural traditions against international dilution, a position likely to resonate well with the euro-skeptics. They are certainly right that a borderless economy could help preserve the pound, but if their aim is to defend Britain’s cultural identity, they will rue the day they ever heard the word ecommerce.

National character is driven by economic barriers. What a citizen eats, reads, drives, watches, and wears is shaped simply by what’s available, and what’s available is shaped by borders. Tariffs and customs sharply restrict the movement of both goods and services, so countries differ from one another in part because each population has different
limits on their choices in the marketplace. Any cross-border commerce — McDonald’s, Louis Vuitton, Jackie Chan movies — breaks down these cultural limits on choice to a degree, but ecommerce makes national borders so permeable that now it isn’t even necessary to open a shop in another country to start doing business with its citizens.

In an age of falling geographic barriers, culture is just another word for “arbitrage opportunity.” Until recently, geographic borders protected local businesses from serious international competition, but cross-border commerce is changing all that. Britain is currently seeing this in the form of a price war in consumer goods, precipitated by Wal-Mart’s entry into a market that has never seen a low-cost retailer before. The euro-
skeptics have grasped that joining the euro will expose Britain to far more of Wal-Mart’s style of ultra-efficient price-driven competition, but they have not grasped that keeping the pound and embracing ecommerce is no solution. Differing currencies are no longer much of a barrier — with online currency converters, foreign ecommerce companies offering cheaper goods to British citizens can switch prices from euros to pounds
instantaneously.

The Tories are relying on the pound’s symbolism as a barrier to foreign competition. But what they don’t mention is that embracing ecommerce and rejecting the euro will increase international competition faster than embracing the euro and fighting ecommerce. There are of course uniquely British products which are safe from competition — blood pudding, bagpipes, marmite — but these aren’t much of a counterweight to those products where quality and price matter far more than national origin — computers, books, cars, not to mention airline tickets and stock trades. By vastly increasing the width of choice offered to British consumers (and therefore the depth of competition faced by British producers), ecommerce will make the pound as a symbol of an aloof Britannia irrelevant through other means. No matter what currency their goods are priced in, a borderless economy will weave their island inextricably into the fabric of the world.