by Jason Hickel
p. 77 ‘The population of England’s urban . . .’ The proportion of the population in England and Wales living in rural areas dropped from 65 per cent in 1801 to 23 per cent in 1901, while in France it was still as high as 59 per cent in 1901. Fairlie, ‘A Short History of Enclosure’.
p. 78 ‘This was the basic mechanism . . .’ Of course, coercion was a central piece of this system as well, but as a background condition – it kept the system in place and prevented rebellion against it.
p. 80 ‘In other words, the scarcity . . .’ I take this contrast from Polanyi’s chapter heading: ‘Habitation versus Improvement’, in The Great Transformation.
p. 80 ‘Ireland was exporting thirty to . . .’ Seamus P. Metress and Richard A. Rajner, The Great Starvation: An Irish Holocaust (New York: American Ireland Education Foundation, 1996).
p. 81 ‘According to Locke, this added . . .’ This logic was also developed by William Petty and John Davies, who were crucial to justifying the new imperialism.
p. 81 ‘These land grabs took . . .’ For example, 1,000 Indians were killed in the Apalachee massacre of 1704, and another 1,200 or so were killed at Fort Neoheroka in 1713, to list two of the biggest massacres of that century.
p. 83 ‘Yet farmers found that . . .’ Mike Davis, Late Victorian Holocausts (London: Verso, 2000), p. 290.
p. 83 ‘And with water sources enclosed . . .’ Ibid., pp. 327–31.
p. 83 ‘The human toll was staggering . . .’ Ibid., p. 7. Davis presents a number of different estimates based on different sources; 29 million is the high estimate.
p. 84 ‘During the period from 1875 . . .’ Ibid., p. 299.
p. 85 ‘ “We are not dealing . . .” ’ Ibid., p. 9.
p. 86 ‘It worked: India, once . . .’ Ibid., p. 298.
p. 86 ‘By the time they left . . .’ Angus Maddison, The World Economy, OECD, 2006.
p. 88 ‘And, as in India . . .’ Davis, Late Victorian Holocausts.
p. 88 ‘In the middle of the . . .’ Paul Bairoch, Economics and World History (Chicago: University of Chicago Press, 1995).
p. 88 ‘Even as late as 1800 . . .’ Paul Bairoch, ‘The Main Trends in National Economic Disparities since the Industrial Revolution’, in Paul Bairoch and Maurice Levy-Leboyer (eds), Disparities in Economic Development since the Industrial Revolution (New York: St Martin’s Press, 1975), pp. 3–17.
p. 88 ‘Indian artisans enjoyed a better . . .’ Davis, Late Victorian Holocausts, pp. 292–3.
p. 88 ‘From 1872 to 1921 . . .’ According to figures cited in Davis, Late Victorian Holocausts, pp. 311–12.
p. 92 ‘Ten million Congolese perished . . .’ Adam Hochschild, King Leopold’s Ghost: A Story of Greed, Terror, and Heroism in Colonial Africa (London: Pan Books, 2006), pp. 225–33.
p. 93 ‘And the costs of caring . . .’ Harold Wolpe, ‘Capitalism and cheap labor power in South Africa: from segregation to apartheid’, Economy and Society 1(4), 1972, pp. 425–56; J. S. Crush et al., South Africa’s Labor Empire: A History of Black Migrancy to the Gold Mines (Boulder, CO: Westview Press, 1991).
p. 94 ‘From the late 15th . . .’ I am indebted to Naomi Klein for the concept of the sacrifice zone.
p. 94 ‘By contrast, incomes in Western . . .’ Ha-Joon Chang, Bad Samaritans (New York: Bloomsbury Press, 2008), p. 25.
p. 94 ‘At the end of this . . .’ Thomas Piketty, Capital in the 21st Century (Cambridge, MA: Harvard University Press, 2014), p. 69.
p. 95 ‘This agenda became particularly clear . . .’ The Roosevelt Corollary was initially established to allow the US to respond militarily if Europeans invaded Latin America, which happened in 1902 when Britain, Germany and Italy blockaded Venezuela to demand debt repayment.
p. 96 ‘The first was that the . . .’ One reason for this is that manufactured commodities have greater ‘elasticity of demand’, meaning that their prices rise as incomes rise. Another reason is that technological innovation makes primary commodities cheaper at a more rapid rate than manufactured goods.
p. 96 ‘This meant that they had . . .’ Economists Raúl Prebisch and Hans Singer described this effect in 1950, in what is now known as the Prebisch–Singer hypothesis. The Prebisch–Singer hypothesis has been confirmed with recent evidence that the terms of trade for most commodities do deteriorate over time (while others are flat); see, for example, David Harvey et al., ‘The Prebisch–Singer hypothesis: four centuries of evidence’, Review of Economics and Statistics 92(3), 2010, pp. 367–77; and Rabah Arezki et al., ‘Testing the Prebisch–Singer Hypothesis since 1650’, IMF Working Paper, 2013. The Prebisch–Singer hypothesis fell into disuse during the period of globalisation beginning in the 1980s, when global South economies (with the exception of most African countries) began to export simple manufactures. Of course, the principle still applies, but today the unfair terms of trade are between the simple manufactures of the global South versus the complex manufactures of the West.
p. 97 ‘Together, these two patterns . . .’ The term ‘unequal exchange’ was coined by Arghiri Emmanuel, and made famous by Samir Amin.
p. 97 ‘By the end of the colonial . . .’ United Nations Development Programme, Human Development Report 1999: Globalization with a Human Face (New York: Oxford University Press, 1999), p. 38. If we use the Maddison Project data, the figures are slightly different: 6.3:1 in 1800 to 31.8 in 1960.
p. 97 ‘That is twice the amount . . .’ Samir Amin, Unequal Development (New York: Monthly Review Press, 1976), p. 144.
Four: From Colonialism to the Coup
p. 99 ‘In 1910, the richest . . .’ Thomas Piketty, Capital in the 21st Century (Cambridge, MA: Harvard University Press, 2014), p. 349. During this period (between 1870 and 1910), aggregate private wealth was six to seven years of national income in Europe (Piketty, p. 26). In the United States, this era saw the rise of powerful industrialists and financiers – John Rockefeller, Andrew Mellon, Andrew Carnegie, Cornelius Vanderbilt and J. P. Morgan – symbols of social inequality and known by their critics as ‘robber barons’ for the extent to which they made their riches through sometimes brutal monopoly power.
p. 100 ‘The following decade became known . . .’ The accumulation of income and wealth among the rich was aided by tax cuts in their favour. The Coolidge administration cut taxes with the Revenue Acts of 1924, 1926 and 1928, reducing inheritance taxes and bringing the top marginal tax rate down to 25 per cent. These tax cuts were conducted according to the policy of Andrew Mellon, Secretary of the Treasury, one of America’s richest men, who claimed (as Ronald Reagan did in the 1980s) that reducing taxes on the rich would yield higher tax revenues. Of course, some context is necessary. When the income tax was first established in 1913, the top marginal rate was only 7 per cent. It was raised to 77 per cent in 1916 to finance the war. The Coolidge tax cuts were dramatic, but only against the backdrop of wartime rates.
p. 100 ‘Once Europe withdrew from Africa . . .’ Latin America was decolonised during the early 19th century, long before the rest of the global South, after a struggle for national independence led by figures such as Simón Bolívar. In the wake of decolonisation, however, most Latin American countries were controlled by autocratic governments, and by the early 20th century the United States began to exert a strong influence over the region.
p. 102 ‘These measures, he said . . .’ Keynes outlined these ideas in 1933 in The Means to Prosperity (copies of which were sent to the governments of Britain and the United States), and more thoroughly in 1936 in his famous text The General Theory of Employment, Interest, and Money.
p. 102 ‘When Franklin Delano Roosevelt came . . .’ The Works Progress Administration was established in 1939 to employ unemployed citizens in public works projects.
p. 102 ‘When the Second World War . . .’ The Roosevelt administration raised the top marginal tax rate to 75 per cent in 1939, and then to 94 per cent in 1944. It remained above 90 per cent until the mid-1960s.
p. 102 ‘This new system relied on . . .�
�� In the United States, the key piece of legislation was the National Labor Relations Act of 1935, which facilitated trade unions and collective bargaining.
p. 103 ‘In 1944, the Bretton Woods institutions . . .’ While the Bretton Woods institutions were Keynesian in spirit, in reality Keynes himself disapproved. The problem with the World Bank and the IMF is that creditor nations (like the US) get all of the power, and can dictate terms to debtor nations. Keynes argued instead for an International Clearing Union – a kind of global central bank – which would automatically shift finance from surplus countries to deficit countries through a demurrage system. Keynes’ proposal was defeated at Bretton Woods.
p. 103 ‘Middle-class women, for example . . .’ Consider, for instance, Betty Friedan’s critique of women’s social subordination in her 1963 book The Feminine Mystique.
p. 104 ‘The progressive political parties that . . .’ See, for example, Frederick Cooper, Decolonization and African Society (Cambridge: Cambridge University Press, 1996).
p. 105 ‘The policy suspended the long . . .’ In 1933 the United States signed the Convention on the Rights and Duties of States. Article 8: ‘No state has the right to intervene in the internal or external affairs of another.’ Within a few years thereafter the United States relinquished its control over Panama and Cuba.
p. 105 ‘Founded in 1948, the Commission . . .’ Prebisch ran the Commission from 1950–63. He developed his ideas about unequal exchange at the same time as Hans Singer, who was a student of Keynes – hence the double name of the Prebisch–Singer hypothesis. Prebisch’s key work in this vein was The Economic Development of Latin America and its Principal Problems (New York: United Nations, 1950).
p. 105 ‘Prebisch argued that underdevelopment . . .’ Prebisch made this argument in the Havana Manifesto, among his other publications.
p. 105 ‘In Argentina, for example . . .’ While Perón and Prebisch shared the goal of achieving economic independence, Prebisch did not always agree with Perón’s import substitution policies, which he felt were pursued at the expense of exports. See ‘Raul Prebisch: Latin America’s Keynes’, The Economist, 5 March 2009.
p. 106 ‘These developmentalist policies mimicked . . .’ Ha-Joon Chang, ‘Kicking away the ladder’, Post-Autistic Economics Review 15, 2002.
p. 106 ‘And they worked equally well . . .’ Robert Pollin, Contours of Descent (New York: Verso, 2005), p. 133. Note that the 3.2 per cent figure excludes China.
p. 106 ‘And the new wealth was . . .’ UN, Human Development Report 1999/2000, p. 39.
p. 107 ‘By the early 1980s . . .’ According to the United Nations Population Division.
p. 107 ‘The same is true of . . .’ Leandro Prados de le Escosura, ‘World Human Development 1870–2007’, Review of Income and Wealth 61(2), 2015, pp. 220–47.
p. 107 ‘During the same period . . .’ The per capita income ratio of the US to Latin America shrank from 4.7:1 to 4.2:1, while the ratio of the US to the Middle East and North Africa shrank from 7:1 to 5.4:1 and the ratio of the US to East Asia shrank from 13.6:1 to 10:1. For South Asia, the ratio continued to grow. (GDP per capita, constant 2010 US$; data from World Development Indicators.)
p. 108 ‘Import substitution policies meant that . . .’ Smaller, Western-based exporters of consumer goods were hurt by import substitution industrialisation (ISI) in the global South, as high tariffs excluded their goods. But larger exporters of heavy equipment benefited from ISI, for ISI governments were in need of such equipment. Foreign direct investors also benefited – in cases where such investment was allowed – for they got to reap the benefit of operating behind the barrier of a closed market. In fact, the United States government promoted ISI across the global South during the 1940s and 1950s, partly as a way of absorbing the surplus heavy manufacturing capacity left over from the Second World War, and partly to assist the interests of large US foreign investors. The preferred plan was to gradually shift global South countries from ISI to export-led industrialisation under a free-market model in hope that this would help global South countries to repay their debts, even if it meant making some US businesses uncompetitive. But protectionism in the US, which was difficult to dislodge at the time, precluded this option – so they chose instead to deepen ISI, while negotiating for the best possible terms. See Sylvia Maxfield and James Nolt, ‘Protectionism and the Internationalization of Capital’, International Studies Quarterly 34(1), 1990, pp. 49–81.
p. 109 ‘When President Dwight Eisenhower took . . .’ My grasp of this narrative owes much to Naomi Klein’s The Shock Doctrine (London: Allen Lane, 2007) and Noel Maurer, The Empire Trap: The Rise and Fall of US Intervention to Protect American Property Overseas, 1893–2013 (Princeton, NJ: Princeton University Press, 2013).
p. 110 ‘Operation Ajax was one of . . .’ The first successful attempt by the United States to overthrow a foreign government was in Cuba in 1933, when the US backed Fulgencio Batista in his uprising against the revolutionary government of Gerardo Machado. But this did not become a common strategy until after the Second World War, with the formation of the CIA.
p. 111 ‘Despite being offered full compensation . . .’ John Perkins, Confessions of an Economic Hit Man (San Francisco: Berrett-Koehler Publishers, 2004), p. 73.
p. 111 ‘The new government quickly deregulated . . .’ Perkins, Confessions, p. 73.
p. 112 ‘When opposition arose, it was . . .’ This story is told most eloquently in the autobiography of Rigoberta Menchú, a well-known indigenous leader and winner of the Nobel Peace Prize. Rigoberta Menchú and Elisabeth Burgos, I, Rigoberta Menchú (New York: Verso, 1984). The 200,000 figure comes from Billy Briggs, ‘Secrets of the dead’, Guardian, 2 February 2007.
p. 112 ‘In 1964, in an operation . . .’ See Phyllis Parker, Brazil and the Quiet Intervention, 1964 (Austin, TX: University of Texas Press, 1979).
p. 113 ‘In response to growing citizen . . .’ By the mid-1970s, Latin America was firmly in the hands of right-wing dictatorships. The dictatorships of Argentina, Chile, Paraguay, Uruguay, Brazil and Bolivia collaborated in Operation Condor, a clandestine campaign designed to assassinate leftist activists. Operation Condor had explicit US support (including technical and financial support) under Henry Kissinger. It is estimated that 60,000 assassinations were carried out. See Larry Rohter, ‘Exposing the legacy of Operation Condor’, New York Times, 24 January 2014.
p. 113 ‘The tactical support for many . . .’ For example, Guillermo Rodriguez, the military dictator in Ecuador from 1972 to 1976, was trained at the School of the Americas.
p. 114 ‘When the CIA made it . . .’ Sukarno had endorsed plans by the Indonesian Communist Party to arm workers and peasants as a people’s militia. Suharto considered this a direct threat to the military’s primacy.
p. 115 ‘In his place, Western governments . . .’ Between 1962 and 1991, the US gave $1.03 billion in development aid and $227.4 million in military assistance to the Mobutu regime. Carole Collins, ‘Zaire/Democratic Republic of the Congo’, Foreign Policy in Focus, 1 July 1997.
p. 116 ‘During Mobutu’s long reign . . .’ Leonce Ndikumana and James K. Boyce, ‘Congo’s odious debt: external borrowing and capital flight in Zaire’, Development and Change 29, 1998, pp. 195–217.
p. 116 ‘ “We hereby commit ourselves to . . .” ’ This passage represents small portions of the text of the ‘Common Man’s Charter’ with some sentences truncated and merged.
p. 120 ‘The elite – those whose wealth . . .’ The argument that the elite class was looking for a solution to Keynesianism has been made compellingly by David Harvey in A Brief History of Neoliberalism.
p. 121 ‘These policies were improving people’s . . .’ Klein, The Shock Doctrine, p. 53.
p. 122 ‘Before long, the Chicago School . . .’ Klein, The Shock Doctrine, p. 56.
p. 123 ‘Juan Gabriel Valdés, a Chilean . . .’ Juan Gabriel Valdés, Pinochet’s Economists: The Chicago School in Chile (Cambridge: Cambridge University Pre
ss, 1995), p. 13. Classes were also held at the Catholic University of Santiago, which partnered with the University of Chicago.
p. 123 ‘His victory was an impressive . . .’ The International Telephone and Telegraph Company (ITT) paid out $700,000 to Alessandri, and the company’s president paid an additional $1 million to the CIA to help manipulate the elections. ITT owned 70 per cent of Chilteco, the phone company that Allende would later nationalise (an investment of $200 million). Daniel Brandt, ‘US responsibility for the coup in Chile’, 28 November 1998, www.namebase.org. See also ‘Covert Action in Chile 1963–73: Staff Report of the Select Committee to Study Governmental Operations With Respect to Intelligence Activities, United States Senate’, https://archive.org/details/Covert-Action-In-Chile-1963-1973.
p. 124 ‘Allende’s nationalisation and land reform . . .’ Brandt, ‘US responsibility for the coup’.
p. 124 ‘At the time, 20 per cent . . .’ Klein, The Shock Doctrine, p. 64.
p. 124 ‘President Richard Nixon famously ordered . . .’ This job fell to the Washington-based Ad Hoc Committee on Chile, which included major US mining companies operating in Chile, as well as ITT.
p. 125 ‘Two hundred thousand fled . . .’ Klein, The Shock Doctrine, pp. 76, 107.
p. 126 ‘The CIA funded a group . . .’ This group was led by Sergio de Castro and by Sergio Undurraga. They produced a 500-page economic plan for the new junta to implement. Eight of the ten principal authors of the plan had studied at the University of Chicago. Seventy-five per cent of the funding for this work was coming directly from the CIA. Sergio de Castro became a senior economic adviser in the new regime. Klein, The Shock Doctrine, p. 77ff.
p. 126 ‘To quell it the Chicago . . .’ 177,000 industrial jobs were lost in Chile between 1973 and 1983.
p. 126 ‘ “an orgy of self-mutilation” ’ Cited in Klein, The Shock Doctrine, p. 77ff.
p. 126 Eventually things got so bad . . .’ For instance, Pinochet sacked Sergio de Castro, one of the leading Chicago Boys, who was Finance Minister at the time.