Imagine Napoleon Bonaparte (or any other would-be autocrat), military genius, master strategist, but apparently no economist* - standing in his study in 1806, dreaming up ways to ruin Britain without a single musket fired.
What did he come up with? A trade war so ambitious, so wildly misguided, it became a textbook example of how not to run an economy.
Enter the Continental System, an embargo that turned Europe into a giant ‘No British Goods Allowed’ sign. This included trade with most of the American colonies (your war of 1812 was still 6 years away - mind you, it's not like this whole mess didn't add a lot of fuel to that revolutionary fire but in 1806/7, America still took its orders from the British Crown, and they were embargoed from trading with the French). *Spoiler alert: It didn’t end well for Napoleon. In his defense, I’d like to point out that economists had barely been invented yet. In fact, while the ‘science’ of economics as a formalised discipline is generally dated to the publication of Scotsman Adam Smith’s The Wealth of Nations in 1776, he based his foundational opus on the ideals put forth during the age of French enlightenment - the very ideals that inspired the French Revolution and precipitated our little dictator’s rise to power in the first place. Ironic, right?
All that, however, was yet to occur. In this post, i’ve concerned myself with the cautionary tale of a dictator with massive overreach, who ignited a trade war and attempted a variety of trade embargoes (including import tariffs) - that failed spectacularly and proved far more ruinous for his own people (i.e. the French, the French allies, and France’s newly conquered territories) than his enemies - because here’s the thing about refusing to trade with existing customers: They can (and the British did) take their business elsewhere.
Guess where? (Pssst - can you spell irony twice????)
Birth of a blunder
In theory, Napoleon’s plan was brilliant: choke off British trade with continental Europe, collapse their economy, and sit back while the British begged for mercy. It was economic warfare on a grand scale, announced via the Berlin Decree in 1806. Every French ally, client state, and reluctant participant in Napoleon’s empire was commanded to cut ties with Britain entirely. No British imports. No letters. Not even a cheeky smuggled tea bag.
Unfortunately for Napoleon, Britain controlled the seas. So, while his blockade meant fewer British goods in European markets, it also meant that British merchants simply turned their ships westward, flooding the Americas with their wares and even smuggling their goods back into Europe. Yes, the British smugglers had a field day, sneaking textiles, sugar, and more into Napoleon’s very own empire via American ships (or American-flagged ships). Malta became a smuggler’s paradise, southern Italy turned into a British goods bazaar, and England's royal navy laughed all the way to the high seas.
Economic cannibalism: Napoleon vs. Himself
The Continental System didn’t just fail to break Britain - it set Napoleon’s allies and his own empire on fire, economically speaking. Southern France's thriving port cities like Marseille and Bordeaux? Decimated by the loss of trade. The Dutch economy, historically built on commerce? Crushed.
Prices of essential goods across Europe soared, and entire industries - shipbuilding, textiles, and more - collapsed. As hunger and unemployment rose, Napoleon’s empire began to look less like a superpower and more like a smouldering ruin.
Napoleon realised his blunder and quietly backtracked. In 1810, his St. Cloud Decree loosened restrictions, allowing limited British trade into France and reopening commerce with the United States. It was a tacit admission that his plan had hurt him more than his enemy.
The Friendly Fire of Trade Wars
But wait, it gets worse. Napoleon’s insistence on enforcing the blockade at all costs led to disastrous invasions. Portugal’s refusal to comply triggered the Peninsular War, a quagmire that drained French resources for years.
Russia’s quiet reopening of trade with Britain infuriated Napoleon, prompting his ill-fated 1812 invasion The result? A frozen army retreating from Moscow and the beginning of the end for the French emperor. (I covered this travesty of a military manoeuvre here.)
Napoleon’s Continental System was like trying to sink a ship with a water pistol—ambitious, dramatic, and utterly ineffective. It barely scratched Britain’s economy, as clever merchants simply turned their sights to global markets and continued profiting while Napoleon fumed. The brief economic hiccup Britain experienced in 1811-1812 owed more to bad weather and the impending war with America than to Napoleon’s grand plan.
Meanwhile, France’s economy took a nosedive, smuggling flourished, and Napoleon’s obsessive enforcement led to disastrous military campaigns that ultimately toppled his empire. To add insult to injury, the Continental System left European industries so far behind Britain that they were still playing catch-up decades later. In the end, Napoleon didn’t cripple Britain. He gave it a headstart into the nineteenth century.
Lessons from the Continental System
Napoleon’s trade war against Britain shows why economic aggression often backfires spectacularly. The aggressor rarely accounts for unintended consequences - like the collapse of their own industries, smuggling spiraling out of control, or their enemies simply finding new trading partners.
Trade wars, as history repeatedly shows, don’t produce winners. They produce misery on all sides, especially for the instigator.
So, if you’re considering an embargo, remember Napoleon. Some dictators might think they're playing economic 4-dimensional chess, but chances are they're just hitting themselves - and all of their countrymen - in the face with their own homemade boomerang.
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