Ricardo Duchesne wrote: > Come on, progressive economists, Fostater pleads, how can you say > that the colonial trade was not responsible for the industrialization > of Europe? I would suggest, rather, that the political effect of > dependency theory on the left has been divisive, setting up countries > and ethnic groups against each other, foregoing universalist > aspirations, which the right quite effectively took on as its own > in the late 70s. But I really dont want to get into this. > > Here's more on O'Brien and some of his other, subsidiary, arguments, > which I think might very well be enough to settle this issue here in > pen-l: > > 1) It has not yet been shown that the rates of profits which European > colonialists enjoyed in the periphery were "persistently" above the > the rates "which they could have earned on feasible investments" in > their home countries, or in other economies of the world. Citing > studies on profits from the sugar plantations, he says that, > over the long run, such earnings were *average*, fluctuating around or below > 10%. Or, if I may add another figure, the percentage of slve profits > in the formation of British capital was a tiny 0.11% (Anstey). > Engerman, for his part, has calculated "the gross value of slve trade > output" to England's national income to be 1%, to rise to 1.7% in > 1770. (Of couse, if we take the triangular trade as a whole we are > dealing with something more substantial, but I would agree with Rod > that forward and backward linkages hold for any industry.) > > O'Brien also cites other studies which question the profitability of > the Navigation Acts. If I may cite one source discussing a > particular aspect of these Acts "...The benefit to > the home country corresponding to the burden on the North American > colonies was still smaller. In fact, it was itself probably a burden, > not a benefit. Requiring certain colonial exports and imports to pass > through Britain had the beneficial effects of reducing the prices of > such goods to British consumers...The cost to British taxpayers of > defending and administering the North American colonies was, by > contrast, .... five times the maximun benefit" (Thomas and McCloskey, > 1981). > > Likewise, even if Europeans had been forced to pay 'free market prices' > for their colonial products, that would have simply worsened the > terms of trade *within* this sector, which constituted a small share > of total trade and an even smaller, "tiny" share of gross product. > > 2) What about Deane's claim that the colonial re-exports allowed > Europe to acquire essential raw materials - never mind profit > margins? First, O'Brien says that colonial foodstuffs contributed > marginally to the supplies of calories available to Europeans. > Second, that without the imported colonial produtcs, Europe would > merely have experienced, *in the short run*, before substitutions were > found, "a decline of not more than 3% or 4% in industrial output. ______________ I think the method of counterfactual is simply a poor way of doing economic history. The colonial empires were part of the rising capitalist and industrializing cores. A historian should be interested in seeing how they fitted in in the scheme of things. Colonialism was led by the mercantilist capital, and it established one form of relationship with the colonies. As the industrial capital came into ascendancy the relationship went through a change. A study of this changing relationship should through much light on the question of what that relationship meant to the rising industrial capital. When it comes to historical data, I think they are usually of rough nature and should be taken with more than a pinch of salt. And then who is to decide whether 3 to 4 percent fall in industrial output is big or small? There is no scientific way of establishing what is big or small in connection with such data, since we don't know what are the critical thresholds. My sense is that in this kind of literature any number is made to be either big or small depending upon what kind of rhetoric the numbers are inserted into. Furthermore, one should always keep in mind the terms of trade problems related to trade figures with poor countries. Let us suppose you forcibly take a lot of goods from me for free, so it will not show up in your import figures, but does that mean that I have made no contribution to your well being? Similarly, one of the objectives of colonial policies were to acquire "cheap" raw materials from the colonies, so obviously their contribution in monetary terms would appear to be small. Cheers, ajit sinha
