Imperialism and Capitalism, Volume I

Historical Perspectives

Dipak Basu, Victoria Miroshnik

• Publisher: Palgrave Macmillan
• Year: 2020
• Print ISBN:
  9783030473679
• eBook ISBN:
  9783030473686
• Topic: Economics
• Subtopic: Development Economics
• Index: Economics

This book examines the history of empire and its influence on capitalism. Taking inspiration from Vladimir Lenin's essay Imperialism, the Highest Stage of Capitalism, the thoughtful chapters explore how workers and resources in Africa, Latin America, and Asia were exploited by capitalist colonizers. Particular attention is given to the empires of Great Britain, Russia, Japan, the Netherlands, and the United States.

This book aims to trace the historical development of capitalism and its reliance of colonialism, and is relevant to those interested in economics, development studies, international relations, and global politics.

© The Author(s) 2020

D. Basu, V. MiroshnikImperialism and Capitalism, Volume Ihttps://doi.org/10.1007/978-3-030-47368-6_1

Begin Abstract

1. Idea of Imperialism and Capitalism

Dipak Basu¹ and Victoria Miroshnik²

(1)

Nagasaki University, Nagasaki, Japan

(2)

Reitaku University, Chiba, Japan

End Abstract

The current globalization, which began in the 1990s, is not unprecedented: between 1870 and 1914, the opening of national economies went hand in hand with a rapid expansion of trade and investment beyond national borders. The period also saw financial crises comparable to those of the late twentieth and early twenty-first centuries.

As for goods markets, the first globalization was characterized by a growth in trade despite the adoption of protectionist measures in most advanced economies. As for capital markets, the first globalization saw the growing financial integration of the advanced economies. This process was promoted by the exchange-rate stability made possible by the gold standard.

Between 1870 and 1914, the opening of developed and less advanced economies was associated with swift growth in trade, investment, and financing beyond national borders. This period, described as the first globalization, displays similarities with the second globalization, which began in the 1990s.

The first globalization was also characterized by the lack of trade-policy reciprocity and coordination. In countries under colonial domination, home-country products were favored over other goods (British policy of “Imperial Preference”). European countries engaged in uncoordinated tariff revisions in the 1892–1914 period. While Britain practiced free trade, its manufactured products were denied free entry into the European markets. This lack of reciprocity fostered the emergence of “fair trade” campaigns in Britain for the adoption of retaliatory tariffs against countries imposing duties on British imports.

The exposure of developing economies manufacturing sectors to competition from more mature economies coincided with the collapse of manufacturing output in those countries. Home-country products enjoyed free access to colonial markets, whereas trade treaties between Britain and independent countries (Latin America, China, Thailand, Middle East) called for the elimination of customs duties or the capping of import duties in developing countries at modest levels—typically, 5% of the value of imports. The inflow of cheaper British and European products entailed the collapse of manufacturing output in the Ottoman Empire, India, and—to a lesser extent—China.

India, a net exporter of textile (cotton) to Europe in the eighteenth century, was importing two-thirds of its textile consumption by the late nineteenth century, chiefly from Britain. After the abolition of the East India Company’s trade monopoly in 1813, which had banned textile imports to India, the Indian market was flooded with textile products manufactured more cheaply by the developed countries. This opening hastened the decline of the local textile industry.

Britain did bring free trade to India and China. Britain had extracted large surpluses from India, and forced it into a free-trade pattern, which obliged India to export commodities and become a dumping ground for British manufactures. Historians estimate that the net transfer of capital from India to Britain averaged 1.5% of GNP in the late nineteenth century. The wealth transfer was financed by a persistent trade surplus of India, which was sent back to Britain or spend to expand the British Empire. India’s export–import ratio was 172.5% in 1840–1869, 148% in 1870–1912, and 133.4% in 1913–1938. This export orientation was a tool of colonial exploitation, and free trade a British ploy to force its manufactures on India and crush the domestic industry.

Instead of enriching the world, the British Empire impoverished it. The empire was run on the cheap. Instead of investing in the development of the countries they ruled, the British survived by doing deals with indigenous elites to sustain their rule to extract maximum amount of revenues for Britain itself, which the British historians now deny. Whether in eighteenth-century India, nineteenth-century Egypt, or twentieth-century Iraq, the story is the same. As long as taxes were paid, the British cared little about “the rule of law.” They turned a blind eye to Indian landlords who extracted rent by coercion or indigo and opium—planters who had forced Indian farmers to cultivate and their products were forced upon the Chinese. Unable to sell anything to the Chinese, Britain sent in its gunboats, seizing Hong Kong and opening up a market for opium grown in India (Davis 2001)

India is the prime example. Ruled by Muslims before the British, India was a prosperous, rapidly commercializing society. The Jagat Seth, India’s biggest banking network and financier of the East India Company, rivaled the Bank of England in size. British rule pauperized India. The British restricted Indian weavers’ ability to trade freely and the result was a drastic drop in living standards. Dhaka, now the capital of impoverished Bangladesh, was once a state-of-the-art industrial city. Its population fell by half during the first century of British rule.

Rabindranath Tagore wrote in 1941, “The chronic want of food and water, the lack of sanitation and medical help, the neglect of means of communication, the poverty of educational provision, the all-pervading spirit of depression that I have myself seen to prevail in our villages after over a hundred years of British rule make me despair of its beneficence” (Tagore 1997).

The Impact of British Rule in India

As Davis (2001) concludes: “If the history of British rule in India were to be condensed to a single fact, it is this: there was no increase in India’s per capita income from 1757 to 1947.” In fact, incomes may have declined by 50% in the last half of the nineteenth century (Table 1.1).

Table 1.1

Shares of world GDP (percent)

	1700	1820	1890	1952
China	23.1	32.4	13.2	5.2
India	22.6	15.7	11	3.8
Europe	23.3	26.6	40.3	29.7

Source Davis (2001)

India and China together in 1700 used to contribute almost half the world production, which declined to 14% in 1890 and 9% in 1952. At the same time the share of Europe went up from 23% in 1700 to 40% in 1890 and 29.7% in 1952.

India had suffered most. Its share of the world production came down from 22.6% in 1700 to just 3.8% in 1952. China’s share came down from 23% in 1700 to only 5% in 1952.

Destruction of Agriculture

Karl Marx (1957) wrote in Consequences of British Rule in India,

England has broken down the entire framework of Indian society, without any symptoms of reconstitution yet appearing. The British in East India accepted from their predecessors the department of finance and of war, but they have neglected entirely that of public works.

There have been in Asia, generally, from immemorial times, but three departments of Government; that of Finance, or the plunder of the interior; that of War, or the plunder of the exterior; and, finally, the department of public works. Climate and territorial conditions, especially the vast tracts of desert, extending from the Sahara, through Arabia, Persia, India, and Tartary, to the most elevated Asiatic highlands, constituted artificial irrigation by canals and water-works the basis of Oriental agriculture. Hence an economical function devolved upon all Asiatic Governments, the function of providing public works. This artificial fertilization of the soil, dependent on a Central Government, and immediately decaying with the neglect of irrigation and drainage, explain the otherwise strange fact that we now find whole territories barren and desert that were once brilliantly cultivated, as Palmyra, Petra, the ruins in Yemen, and large provinces of Egypt, Persia, and Hindostan; it also explains how a single war of devastation has been able to depopulate a country for centuries, and to strip it of all its civilization.

Destruction of Self-Sufficient Rural Economy

“British steam and science uprooted, over the whole surface of Hindostan, the union between agriculture and manufacturing industry.”

“The third form of destruction was the destruction of the self-sufficient village society of India. Under this simple form of municipal government, the inhabitants of the country have lived from time immemorial. These small stereotype forms of social organism have been to the greater part dissolved, and are disappearing, not so much through the brutal interference of the British tax-gatherer and the British soldier, as to the working of English steam and English free trade.”

“Those family-communities were based on domestic industry, in that peculiar combination of hand-weaving, hands-spinning and hand-tilling agriculture, which gave them self-supporting power. English interference having placed the spinner in Lancashire and the weaver in Bengal, or sweeping away both Hindoo spinner and weaver, dissolved these small communities, by blowing up their economical basis” (Marx 1957).

Deindustrialization of India Under the British

After destroying its agriculture, British had embarked upon the destruction of the Indian industry. Several Indian historians have argued that British rule led to a deindustrialization of India. By Act 11 and 12 William III, cap. 10, it was enacted that the wearing of wrought silks and printed or dyed calicoes from India, Persia, and China should be prohibited, and a penalty of £200 imposed on all persons having or selling the same. Similar laws were enacted under George I, II, and III, in consequence of the repeated lamentations of the afterward so “enlightened” British manufacturers. And thus, during the greater part of the eighteenth century, Indian manufactures were generally imported into England in order to be sold on the continent, and to remain excluded from the English market itself.

Ramesh Chandra Dutt (1887) argued: “India in the eighteenth century was a great manufacturing as well as a great agricultural country, and the products of the Indian loom supplied the markets of Asia and Europe. It is, unfortunately, true that the East India Company and the British Parliament, following the selfish commercial policy of a hundred years ago, discouraged Indian manufacturers in the early years of British rule in order to encourage the rising manufactures of England. Their fixed policy, pursued during the last decades of the eighteenth century and the first decades of the nineteenth, was to make India subservient to the industries of Great Britain, and to make the Indian people grow raw produce only, in order to supply material for the looms and manufactories of Great Britain.”

According to Karl Marx (1957), “However changing the political aspect of India’s past must appear, its social condition has remained unaltered since its remotest antiquity, until the first decennium of the 19th century. The handloom and the spinning wheel, producing their regular myriads of spinners and weavers, were the pivots of the structure of that society.”

“It was the British intruder who broke up the Indian handloom and destroyed the spinning wheel. England began with driving the Indian cottons from the European market; it then introduced twist into Hindostan, and in the end inundated the very mother country of cotton with cottons.”

“From 1818 to 1836 the export of twist from Great Britain to India rose in the proportion of 1 to 5,200. In 1824 the export of British muslins to India hardly amounted to 1,000,000 yards, while in 1837 it surpassed 64,000,000 of yards. But at the same time the population of Dacca decreased from 150,000 inhabitants to 20,000. This decline of Indian towns celebrated for their fabrics was by no means the worst consequence.”

There is a good deal of truth in the deindustrialization argument. Moghul India did have a bigger industry than any other country, which became a European colony, and was uni...

Table of contents

• Cover
• Front Matter
• 1. Idea of Imperialism and Capitalism
• 2. British Empire and British Industrial Revolution
• 3. Financing Industrial Revolution
• 4. Consequences of British Industrialization
• 5. American Empire and Its Consequence
• 6. Dutch Empire and Consequence
• 7. Japanese Empire and Consequence
• 8. Russian Empire and Consequence: Refutation of Lenin’s theory
• 9. Lenin’s Theory on Capitalism
• Back Matter