Part VIII. Slavery and Imperialism Did Not Enrich Europe

It follows from the unimportance of foreign trade that parts of foreign trade were unimportant, too — at any rate in explaining the doubling of per capita real income in the eighty years from 1780 to 1860 and especially in explaining the subsequent explosion on the way to the factor of sixteen. For example, the trade in slaves, quite a small part of Britain’s or Europe’s trade, could not have been the cause of British or European prosperity. As Stanley Engerman and Patrick O’Brien showed, contrary to Inikori, the so-called profits were too small.¹” To attribute great importance to a tiny trade would make every small trade important — we are back to the brass industry as a cause of the modern world.

As another leading historian of the trade, David Richardson, puts it, “comparisons between earnings from slaving voyages [which Richardson himself has researched on a large scale] with general estimates of eighteenth-century British investment generally suggest, almost without exception, that slave-trading profits could have contributed at best only small amounts to financing early British industrial expansion.”² The economic reasoning backing up Richardson’s laboriously acquired facts on particular slaving voyages is that entry to the trade was free, and therefore marginal entrants could expect no more than the normal rate of return. Any merchant ship could turn to slaving, as earlier any armed ship could turn to piracy, or indeed as any ship whatever could arbitrage between this market or that, in view of the freedom of the seas. By 1750 there would be few enough non-marginal positions in the slave trade to be seized. It is therefore no surprise to find that the total profits of the trade were by the late eighteenth century a minute portion even of total British investment generally, not to speak of total income. And in any case we have seen that “British investment generally” only accommodated innovation, and did not cause it. Capital fundamentalism works no better for eighteenth and nineteenth century Britain than it worked for late twentieth century Ghana. As David Eltis and Stanley Engerman concluded in 2000, in a thorough review of the possible influences, “if the value added and strategic linkages of the sugar industry are compared to those of other British industries, it is apparent that sugar cultivation and the slave trade were not particularly large, nor did they have stronger growth-inducing ties with the rest of the British economy.”³

The emotional problem is that we properly regard the slave trade as terrible (though it should be noted that in 1700, before the bourgeois clergymen got to it, practically no one viewed it as anything but a God-given misfortune to the slave). We are rich. The populist, with his zero-sum and moralistic theory of the economy, and his wants to attribute our riches to the impoverishment or even enslavement of someone else, just as he attributes every down-turn in capitalism to the “greed” of rich people on Wall Street. The noblest expression of the sentiment is Lincoln’s Second Inaugural: “If God wills that [the War] continue until all the wealth piled by the bondsman’s two hundred and fifty years of unrequited toil shall be sunk, and until every drop of blood drawn with the lash shall be paid by another drawn with the sword, as was said three thousand years ago, so still it must be said ‘the judgments of the Lord are true and righteous altogether’.” In his economics, if not in his ethics, Lincoln was wrong. Even in 1865 the wealth of the nation, if not the South, had little to do with slavery.

Imperialism, too, was another part of trade, and again an obviously evil one. But imperialism, it can be shown, did not much help the British, or the First World generally, to an Industrial Revolution and modern economic growth. True, the doctrine that imperialism made the West rich at the expense of the East and South is held passionately by the left in the West, and by nearly everybody elsewhere. But understand: the counterargument does not praise imperialism, or excuse it. The counterargument claims that it was economically stupid.

The simplest and historical argument is that the West did not really get going in its imperial adventure until it had innovated in steam, steel ships, cartridge rifles, and machine guns — that is, after the Industrial Revolution, not before. As Goldstone puts it, “It was not colonialism and conquest that made possible the rise of the West, but the reverse — it was the rise of the West (in terms of technology) and the decline of the rest that made possible the full extension of European power across the globe.”⁴ Lenin had it right: imperialism, the last stage of capitalism.

The modern corollary of the historical argument is that the prosperity of the West depends not at all, or at its worst very little, on exploiting the Third World. Imperialism was bad. But being bad is not invariably profitable for the bad man. Crime does not always pay. Admittedly such a corollary runs against the grain of much anti-imperialist thinking. A local fount of unreflective anti-imperialism in France was said to be the philosopher Maurice Merleau-Ponty. Raymond Aron complained in his Memoirs that when Merleau-Ponty wrote in 1947 “as though it were an obvious truth, that ‘the moral and material civilization of England presupposes the exploitation of colonies,’ he flippantly resolves a still open question.”⁵ Thus in 1996 André Comte-Sponville, a teacher of philosophy at the Sorbonne, who doesn’t claim to know much about economics, felt nonetheless confident in declaring without argument that “Western prosperity depends, directly or indirectly, on Third World poverty, which the West in some cases merely takes advantage of and in others actually causes.”⁶ On the other side, David Landes, as though admitting the loot theory of Western prosperity, dismisses “those who feel the West has gained its edge by domination and exploitation” by accepting their proposition as true but urging the whiners to grow up and get used it: “to this age-old anti-imperialist lament I can only say that this is world history as it has been played out, without any moral assessment of ‘good’ or ‘bad,’ ‘just’ or ‘unjust’.”⁷

But we can do better than Merleau-Ponty, Comte-Sponville, or Landes. British imperialism was about protecting the sea routes to India. Yet India itself yielded no economic benefit to the average person in Britain. It had therefore no economic point. By the time Victoria became Empress of India the thieving nabobs — Clive of India (the victor of Plassey) and Warren Hastings and all that — were long gone. In 1877 there remained no additional straightforward opportunities for thievery by the British (Clive remarked that in the face of his opportunities for seizing loot “by God. . . I stand astonished at my own moderation”). William Cowper, a contemporary, could complain of the scandal of the nabobs that “thieves at home must hang; but he, that puts/ Into his over-gorged and bloated purse/ The wealth of Indian provinces, escapes.”⁸ But such thievery cannot account for British wealth. Rich as Clive had (briefly) been, the enrichment of him and his fellow nabobs was very small in national terms — Clive’s stock of capital of about a million pounds was under 1 percent of the annual £115 million flow of U.K. national income. And to translate the stock into the comparable flow, the income from a million pounds invested in the funds would be, say, 5% of the million, or £50,000 a year, which would be only 1/2300 of annual national income.⁹ Such a sum would be nice to have, an immense personal income in eighteenth-century society. But the loot was a trivial enrichment of the nation. In fact by 1877 the British East India Company had long gone, losing its police powers in 1857 after the First War of Indian Independence, and closing entirely in 1871. (The Dutch equivalent, the Verenigde Oostindische Compagnie, had gone bankrupt and become state property much earlier, in 1798.) A private company, most people believe, is a more focused institution for looting than a responsible government. The directors of John Company would dearly have liked to have known of opportunities for super-profits to be gotten from India by 1857 or 1871. They themselves had not been able to discover them in time.

Britain in 1871, and in 1771 or for that matter in 1971, traded with India. But trade is trade, not thievery — this contrary to Marxian notions of unequal trade. (Another Marx, Groucho, turned down with cruel wit a Marxist friend looking for work in the hungry 1930s: “George, I wouldn’t want to violate your Marxist principle and exploit you by . . . hiring you.”) Admittedly, when even an economist buys a house she is left with vague populist feelings that the seller robbed her. After all, he could have sold it to her, a very nice person, for thousands of dollars less. And certainly she feels instinctively that the realtor, a middleman, is a thief. The Soviet Union gave expression to the feeling (which can be found also in Adam Smith) by setting services at zero value in its accounting of national income. But the house-buying economist, being an adult bourgeoise, corrects herself, and takes the wider, bourgeois view that made for modern economic growth, and nowadays is enriching India itself.

In 1871 Bombay sent jute to Dundee, and Manchester sent dhotis to Calcutta. Such trade could have been achieved on more or less the same terms if India had been independent. It would have likewise if India had become a French rather than a British colony — a more plausible counterfactual than entire independence considering the disorders of the late Mughal Empire and the briefly superior military technology of all the European powers in the eighteenth century and the absence of national feeling in an India broken into scores of principalities (nationalism came, as it commonly has, from the very imperialism it fought against). If a French colony, India would have traded through Marseille, and in consequence Dundee probably would not have become a great center for the making of burlap bags out of imperial jute. Some Scottish millionaires in Dundee would have had to seek other opportunities, now taken up by French millionaires in, say, Dunkirk, and the ordinary Scottish worker would have gone to work elsewhere in the Scottish economy, or in England, or in Kentucky, at less loss to them in percentage terms than to the millionaires.

If imperialism was so very subordinating of Indian interests to British, furthermore, why were Indian cotton textile factories allowed to grow in the late nineteenth century? “Given the widespread impression that India’s industrial development was impossible because of implacable British hostility to Indian competition,” writes Om Prakash, “India’s cotton-mill history seems paradoxical: it flourished despite competing against the most important, the most internationally aggressive and politically most powerful industry in Britain. Its rapid expansion began only after 1870, but by 1910 the Indian industry had become one of the world’s largest,” presaging a deep depression for the British industry after the Great War.¹⁰ (A somewhat similar point could be made, about the Japanese cotton textile industry, which again belies the infant-industry notion, especially popular in Germany earlier, that late industrializers had no chance against Manchester’s might.)

And even if the trade with India contained some element of exploitation, which is unlikely, and certainly has never been proven, the trade was lower than Britain’s trade with rich countries like France or the German Empire or the United States. In 1899, Angus Maddison reckoned, the U.K. exported goods (that is, excluding services and bonds) to Imperial India of $153 millions worth (9.5 percent of all British commodity exports). Exports to Europe and the U.S. at the time were $728 millions, nearly five times the Indian total. Even confined to manufactures (and thus excluding steam coal from South Wales, for example) the India trade was well below half of British exports to countries who themselves were big exporters of manufactures (the same Europe and the U.S.), and was merely 14 percent of all British manufacturing exports.¹¹

The way the issue is usually discussed speaks of the “drain” from India, said to be the excess of Indian exports over Indian imports, the trade surplus. (Notice that in strict mercantilist theory, such as that practiced by the Japanese over the century past, a trade surplus is supposed to be good, not bad. The drain theory is a little more sensible, considering that Japanese consumers are indeed made worse off, not better, if Japan exports in value terms more in Toyotas than it imports in soybeans. The Japanese nation is made worse off. (The mercantilism would be especially damaging to the Japanese if the assets the Japanese bought in the United States to square the balance of payment were paid back in depreciated dollars [about a half in the event] or if like the Japanese purchase of Rockefeller Center the assets did not pay back at all. After the American anti-oriental hysteria during the 1970s over the Japanese Invasion, all these misfortunes for Japanese consumers and investors in fact came to pass.) One might suppose in parallel, then, that the export of raw jute and cotton from India in, say, 1900, is to be taken as a national loss to the degree it is greater than the imports of railway engines and steel. According to Angus Maddison’s careful calculations, it was on the order of 1 percent of Indian income, and likewise (at any rate before World War I) about 1 percent of British income (Britain was richer but smaller).¹²

But anyway there is something wacky about the concept of the drain. The Indians got gold and silver and British bank accounts in pounds sterling for having a trade surplus — unless the exports were simply stolen from them, which after the age of the nabobs is nowhere alleged, and is not beyond reasonable doubt even for the nabobs, as the trial of Warren Hastings showed. Unlike the mercantilist Japanese seeking to have higher exports before anything in the 1970s, the Indian creditors of British firms demanded payment. Now consider. The goods-and-services account, called also the trade balance, is exports minus imports — not merely goods but, say, Indian imports of British services, such as insurance. The overall balance of payments, which is the goods-and-services account together with the capital-and-monetary account, must always balance, to the last farthing. You pay for your groceries either by paying from income you have earned by selling your labor or by borrowing from your bank and then paying. In either case your overall balance of payments — dollars of expenditure minus income, which is dollars of earned income plus borrowing — is exactly zero, always. That is a matter of accounting, not economics. It is always true, by definition of the accounts. Unrequited payments — gifts or thefts — are accounted payments for “services” of benevolence or malevolence. An Indian firm exports tea to England, for which someone in India is paid in sterling. Its Indian owners, its suppliers, and its workers spend the money thus acquired in part to buy British goods, such as steel or boots. If such Indians (or other Indians having no connection with the tea exports) do not buy enough in Britain or elsewhere they keep the pound notes or bank accounts or the IOUs or the gold that paid for the tea. The Indians are free to spend the money on British goods. They might choose not to. But their choice does not transform the money balances they retain into a measure of a hurtful “drain.”

Think again of your own balances of payments. You export more labor services to your employer than the labor services you import from him (none, probably). You have a balance of trade surplus in labor with your employer. Do you feel “drained”? Of course you would prefer to get food and shelter for no expenditure of your labor at all, in the manner of a Mughal prince, or the divided princelings whom the British kept in power. But, no, in a world of trade you are not drained. You take the money paid by your employer and spend it at the grocery store (and the store, too, has a “drain,” a surplus of exports over imports, relative to you: does that make you the exploiting Raj over the grocery store?) Or else, like the Indians, you keep your money in gold necklaces in Pushkar or bank balances in London. The world is composed of such “drains,” between your house and the neighbors, between Ealing and Hampstead. All exchange, 100 percent of it, becomes on balance a shameful exploitation. That’s what I mean by “wacky.”

In short, the average person in Britain got little or nothing out of the British Empire. Yet in 1876 Queen Victoria loved becoming an Empress and Disraeli loved making her one, and so imperial India was born (and in the same year five million Indians died of famine).

Acquiring Cape Town in 1814 was an important part of protecting the sea routes to India, of course, as was messing about in Egypt from 1869 on, and various other imperial projects from Gibraltar to Suvah Bay. But such ventures were no more “profitable” than India itself. True, some British investors, such as Cecil Rhodes, made a lot of money out of southern Africa — and Rhodes was by no means the most financially successful of the lot. But that does not mean that the great British public made a lot of money, too. “It is at least certain,” wrote Rousseau in 1755, before Europe’s pro-imperialism had hardened into convention, “that no peoples are so oppressed and wretched as conquering nations, and that their successes only increase their misery.”¹³ The cost of protecting the Empire devolved almost entirely on the British people at home. (A century earlier the British people had likewise paid for the defense of the first empire. Notoriously, the colonials in North America refused to pay even a little for imperial defense against the French and Indians.) British taxpayers at home 1877-1948 paid for the half of naval expenditure that was for imperial defense, a by-no-means negligible part of total British national income each year.¹⁴ *** Give the figure They paid for the First War against the Boer republics (1880-1881, lost but cheap) and the Second (1899-1902, won but expensive). They paid for the imperial portions of World Wars I and especially II. They paid for protection of Jamaican sugar during the eighteenth century and special deals for British engineering firms in India during the nineteenth. They paid in fatalities, 800,000 in the First World War and 380,000 in the Second, and lost all their foreign assets, too. For the great British Empire the great British public paid and paid and paid.

What were the vaunted benefits to the British people? Essentially nothing of material worth. They got bananas on their kitchen tables, as I said, that they would have got anyway by free trade — the Danes did, via London or Amsterdam — or at a slightly higher cost if trade had not been entirely free. They got employment for unemployable twits from minor public schools. Above all — to go beyond the material realm — they got the great joy of seeing a quarter of the land area on world maps and globes shaded in British imperial red.

Economically, materially, it did not matter. Standards of literacy exceeding those of Southern Europe mattered a great deal more to later British economic growth, as did a tradition of industrial and financial innovation exceeding those of Germany, and a free society in which to innovate exceeding that of Russia, and above all an early shift to a rhetoric of bourgeois virtues exceeding most of the world. Look at the accounting and the magnitudes. Most of British national income was and is domestic. This is true of all countries much larger than Luxembourg or Singapore. And what income there was from abroad was largely a matter of mutually advantageous trade having nothing to do with empire — Britain invested as much in places like the United States and Argentina as in comparable areas of the Empire, and there is no evidence in any case that returns to investment in the Empire were especially high.¹⁵

The British worried in 1776-1783 and in 1899-1902 and in 1947 about the loss of their various bits of empire. But is the average British person worse off now than when Britain ruled the waves? By no means. British income per head boomed after losing colonies in 1783 and 1947, and stagnated in 1902-1914 after expensively keeping the Boer Republics in the Empire. Nowadays, after the tragic loss of maps painted red, British real national income per capita is higher than ever, and is among the very highest in the world — in 2007 a little bit above, adjusted to purchasing power parity, that of France, Germany, Italy; though a good deal below its former and terribly exploited colonies Hong Kong, Singapore, Ireland, and the United States. Did the acquisition of Empire, then, cause spurts in British growth? By no means. Indeed, as I said, at the climax of imperial pretension, in the 1890s and 1900s, holding sway to the east and west of Suez, the growth of British real income per head notably slowed.

---

1. [back] Engerman 1972; O'Brien 1982.
2. [back] Richardson 2003, p. 512.
3. [back] Eltis and Engerman 2000, abstract.
4. [back] Goldstone 2009, p. 69.
5. [back] Aron 1983 (1990), p. 216.
6. [back] Comte-Sponville 1996 (2001), p. 89.
7. [back] Landes 2006, pp. xvii-xviii. Compare Landes 1998 (p. 19), where he characteristically tweaks the nose of "a new 'multicultural'' world history [which] finds it hard to live with a Eurocentric story of achievement and transformation," and proudly calls his argument politically incorrect.
8. [back] Cowper 1785, The Task, Book I, "The Sofa."
9. [back] National income in the mid-eighteenth century is crudely estimated as the mid-point of Maddison's real-dollar figures of per capita income in 1700 and 1820 (Maddison 2006, p. 264) and the mid-point of his population estimates in the same years (p. 241), and then the ratio of this notional mid-century figure to the 1700 figure applied to Maddison's version of Gregory King's pound figure of £54 million in 1688 (p. 395) for England and Wales alone, providing something like a lower bound: £115 million. I openly confess that I rely on Wikipedia for Clive's fortune (capitalizing for example his £27,000 annual Indian quitrents at 5%, added to £300,000 plus £70,000 to be inferred from the article.
10. [back] Prakash 2003, p. 32.
11. [back] Maddison 1965, Tables A1 and A3 (exports f.o.b. from/to at current prices), pp. 426 and 430.
12. [back] Maddison 2007, p. 122.
13. [back] Rousseau 1755, p. 20.
14. [back] The locus classicus for these calculations is Davis and Huttenback 1988.
15. [back] ***Edelstein statistics from Floud and McC

Name (required)

Mail (will not be published) (required)

Website