Capital and Imperialism: Theory, History, and the Present

by Utsa Patnaik

  Figure 7.1: Indices of Total Cereal Output and Per Capita Cereals Output, 1700–1800

  Sources: Table 7.1.

  The authors are sanguine about per capita output and believe that on the whole English agriculture continued to feed the larger population adequately. They support the Overton position that the agricultural revolution was a reality in the eighteenth century.9 This conclusion however is contradicted by Overton’s own statement:

  Population grew at an average of 0.26 per cent per annum from 1700–1750 whereas all the agricultural output indices grew more rapidly (ranging from 0.38 to 0.60 percent per annum): from 1750–1850 population grew at an average of 1.07 percent per annum and the estimates of agricultural output ranged from 0.77 to 0.82 percent per annum.10

  Figure 7.2: Indices of Population, Total Cereal Output and Per Capita Output 1700–1800

  Source: Table 7.1.

  On the basis of every revised series of population, it is obvious that per capita agricultural output as well as wheat output declined between 1750 and 1800, and remained stagnant between 1800 and 1820, and it appears from Overton’s statement that the subsequent rise was not enough to recover the lost ground, and that on balance per capita output remained lower in 1850 than a century earlier. This is also the finding of recent detailed research with time series data for the period, even after allowing for a possible substantial margin of error.11 The interesting point is that the decline is concentrated in the second half of the century and later when the maximum “improvements” were taking place with the transition to capitalist agriculture.

  From Table 7.4, the annual compound rate of net output growth for wheat over the entire eighteenth century works out to 0.32 percent, with the first half registering 0.31 percent and the second half 0.325 percent. This rise in the growth rate of net output is so insignificant in the second half of the century that it could not cope with the acceleration in the rate of population growth, and so the per capita net output fell.

  TABLE 7.3: Gross Output and Net Output of Corn (Wheat) in England and Wales, 1700–1850

  Source: Turner, Beckett, and Afton, Farm Production in England, 1700–1917, chapter 7

  The annual per capita output in bushels is converted to kilograms for comparison with present-day levels in developing countries in Table 7.4. The initial level of 140 kg. per capita, virtually unchanged between 1700 and 1750, is itself extremely low. If we accept from the writings of contemporaries and those who have investigated diet composition that at least three-fifths of the population relied on wheaten bread (while the remainder consumed other grains), then the per capita figure for the wheat-dependent population is raised to 233 kg. in the mid-eighteenth century. This is still quite low and compares poorly with many Asian and North African developing countries today, such as for example Indonesia and Egypt, whose grain consumption out of domestic output in 2007 was 250 kg. and 358 kg., respectively.12

  By 1800, per capita wheat output was down to an astonishing low of 112 kg. Owing to cropping pattern and dietary changes, two-thirds of the population is estimated to have become dependent on wheaten bread. This seems too low and is probably obtained by including the Irish population, which subsisted on potatoes but which should not be counted when we are considering the grain output of England and Wales. But even taking this figure to be correct for England and Wales, per capita availability from domestic production for them would have been at most 168 kg. by 1800 and remained unchanged in 1820. So, effectively, the decline would have been from 233 kg. to 168 kg. for the wheat-dependent population, or by 28 percent. Given the inequality in the distribution of incomes, the quantities affordable by the laboring poor would have been much lower; little wonder, then, that they rioted for cheap bread. It remains to be worked out what the situation for those dependent on rye, oats, potatoes, and the like would have been.

  TABLE 7.4: Annual Per Capita Output of Wheat, England and Wales, in Bushels and in Kilograms13

  Source: Net output figures derived earlier divided by population figures from Lee and Schofield, British Population in the Eighteenth Century.

  Net Imports of Grain into England

  Domestic production can be augmented by imports, and actual availability is given by domestic output plus net imports. Imports from Ireland supplied nearly one-eighth of Britain’s consumption of wheat and wheaten flour by 1800.14 But imports from Europe were artificially restricted by the Corn Laws, and the absolute quantities imported were kept so low that they had a negligible impact on availability, right up to the 1820s. From Table 7.5, we see that grain was being exported in the first half of the eighteenth century, but by the end of the 1760s net exports became negligible and the direction of the import-export balance was reversed. Net grain imports started and grew slowly but steadily from the beginning of the 1790s. Imports doubled by the decade 1810–19 and doubled again by 1830–39 to 1.3 million quarters, or 16,230 tons. From Figure 7.3, we see that, as domestic per capita output fell, the net imports started rising. However, this chart must be read carefully as the variables are plotted on different axes, and the absolute import figures translate into an amount per capita that was quite trivial and would have raised availability by about one kilogram annually for the wheat-consuming population by 1820.

  TABLE 7.5: Annual Average Net Imports of Wheat and Wheaten Flour into England, 1720–29 to 1880–89 (in thousand quarters)

  YEAR

  CORN (M – X)

  1720–29

  –105.5

  1730–39

  –296.7

  1740–49

  –289.3

  1750–59

  –312.8

  1760–69

  –138.5

  1770–79

  –43.1

  1780–89

  –23.4

  1790–99

  324.5

  1800–09

  580.9

  1810–19

  662.9

  1820–29

  814.7

  1830–39

  1,298.4

  1840–49

  1,782.0

  1850–59

  3,240.0

  1860–69

  5,844.0

  1870–79

  9,160.0

  1880–89

  11,372.00

  Sources: Mitchell and Deane (1962) and E. J. Hobsbawm (1972).

  The failure of the so-called agricultural revolution in the eighteenth century to raise output sufficiently was compounded by the import restrictions on grain. These produced a period of acute stress for the bulk of the population, which was obliged involuntarily to consume less. The rise in rent and profits in agriculture in this period came primarily out of a redistribution of incomes entailed in food price inflation, away from the net food-grain purchasers and toward the food-grain producers and sellers, and, in particular, toward the landlords who skimmed off a larger surplus, as well as toward all employers of wage-paid labor in agriculture, all of whom experienced a profit inflation.

  It was only in the 1830s that imports start growing much faster, and they took off after the repeal of the Corn Laws in 1846. From below 2 million quarters at the time of repeal, imports multiplied over the next two decades and reached 12 million quarters by the 1880s.15

  Concluding Observations

  In eighteenth-century England, there may well have been a revolution in the social relations of production, associated with a process of primitive accumulation of capital, of which the Enclosure Movement was the quintessential expression, but the resulting capitalistically organized agriculture showed little success in meeting the challenge of industrialization. Capitalist farming did not raise the productivity of land and labor to the required extent. After 1750, despite all “improvements,” yields actually declined, leading to a situation where there was hardly any increase in the net output of the main food-grain crop, wheat. Not surprisingly, there was a substantial decline in per capita output for the population dependent on wheat. Shortage of food constituted
a serious bottleneck for the growth of the factory system, which could take place only at the expense of a severe reduction in the living standards of workers, leading to political unrest and a prolonged agitation for unrestricted food imports.

  Figure 7.3: Annual Imports of Corn (Wheat), Average of Decades 1720–1880 (in thousand quarters)

  Sources: Table 7.5.

  Figure 7.4: Annual Per Capita Corn (Wheat) Output in Kg. and Corn Imports in 10,000 Quarters, 1700–1850

  Sources: Tables 7.4 and 7.5.

  The subsequent increase in import dependence for foodstuffs and raw materials by Britain did not curb the second phase of industrial development after 1815, and further rise in dependence to a point where imports of primary products even exceeded domestic output did not constrain Britain’s balance of payments. This was because of Britain’s relationship with its tropical colonies of conquest. The trade that Britain carried on with these colonies was of a special nature. Much of it was the unrequited transfer of goods from these colonies, without any quid pro quo, a sheer “draining away” of part of the colonies’ economic surplus, which not only financed Britain’s current account deficits with the rest of the world but even paid for its capital exports to the temperate regions of European settlement. But appreciating the importance of this relationship requires that we disabuse ourselves of the idea of an “agricultural revolution” in England that prepared the ground for the Industrial Revolution. We discuss this relationship in the next chapter.

  CHAPTER 8

  Capitalism and Colonialism

  Of all the different regimes that capitalism has built to overcome the problems it would face if it were indeed a closed and self-contained system, the ideal one from its point of view has been colonialism. Within the term “colonies,” one must distinguish between the colonies of settlement, located in the temperate regions, and the colonies of conquest, located mainly in the tropical and semi-tropical regions. To be sure, the colonies of settlement also entailed conquest that drove the original inhabitants of these territories either to extinction or to “reservations.” And conquest that allowed mass emigration from Europe to these lands played an enormous role in the economic and social stabilization of metropolitan capitalism (by keeping labor markets tighter than they would otherwise have been) as well as effecting a massive diffusion of capitalism. However, we use the term “colonialism” throughout this book to refer not to the colonies of settlement in the temperate regions but for colonial possessions, the tropical and semi-tropical regions acquired through conquest and made into appendages of the metropolitan economy.

  Such colonial possessions fulfilled several functions: they provided markets for metropolitan goods (what economic historian S. B. Saul calls “markets on tap”) and hence the exogenous stimulus needed for capital accumulation; they provided primary commodities for metropolitan capitalism; they provided these primary commodities gratis, as the counterpart of the economic surplus appropriated by the metropolitan economy; and since siphoning off the surplus kept local absorption of the exportables (or of goods producible on the same landmass as the exportables) restricted, it kept at bay the problem of increasing supply price and the threat it posed to the value of money in the metropolis.

  Two Instruments

  The two main instruments used by the imperial powers in their colonies were capturing the colonial markets and appropriating a part of the surplus without any quid pro quo. Capturing colonial markets often required breaking down the natural economy, or the local exchange economy that prevailed earlier, through the forcible introduction of the cash nexus via, for instance, insisting upon cash payments of land revenues to the colonial state. Through these means, which supplanted the earlier exchange economy, to bring in a cash-mediated commodity economy, craft producers who met the local demand for manufactured goods were supplanted to open the way for imports of such goods from the capitalist metropolis.

  Likewise, the appropriation of surplus took different forms, depending upon what had existed earlier. In many colonies where plantations were introduced and worked with slaves, it took the form of the surplus appropriated from slave labor (slave rent); in others, such as the already densely populated Asian countries where local empires had existed and surplus extraction had been imposed by earlier rulers, the metropolitan countries that became the new rulers simply took over the apparatus already in place, though giving it their own stamp. In India, the British took over the right to revenue collection that the Mughal emperors had exercised, though in doing so they substituted for the tax on produce that had existed earlier a tax on land, in the process introducing legally enforceable property rights in land and thereby creating a land market.

  These two instruments were independent of each other but additive in their effects. They were independent in the sense that the extraction of surplus by the colonial rulers predated the quest for markets by the metropolis, which really began in the early nineteenth century and proceeded on its own trajectory. They were additive in a way that the following hypothetical example will clarify.

  Suppose in a pre-colonial economy there are 100 peasants producing 200 units of agricultural goods (food in this case), of which they give 100 to the emperor. The emperor, whose own demand for food is negligible, uses this surplus to employ 100 artisans for producing manufactures for the imperial household, paying 1 unit of food as the wage per artisan (we abstract, for simplicity, from the raw material requirement of manufacturing). The artisans also produce manufactures for the peasants. Suppose the unit of manufacture is defined as that which one artisan produces. Then food and the manufactured good will be equal in value, since there are no “profits” in either peasant or artisan production and the peasants and the artisans would be expected to have equal per capita (post-tax) earnings (1 unit of food in value). If both peasants and artisans spend their earnings on food and manufactures in the ratio 1:1, then the economy will have 300 artisans, producing 300 manufactured goods, of which 100 will go to the emperor, 50 to the peasants, and 150 to the artisans themselves, which they will consume together with 150 of food made available to them by the peasants (50) and the emperor (100).

  Now if the emperor’s position is taken by a metropolitan country, then the entire 100 of revenue, instead of being spent locally, will be siphoned out of the country in the form of food, which would displace 100 artisans. In addition, if the peasants now begin to buy the 50 manufactured goods not from the local artisans but from the metropolitan economy, then all the 300 artisans (including those producing for the artisans themselves) will become unemployed. The metropolitan economy would have sold 50 manufactured goods in the colonial market and would have taken out 150 food of which 100 would be without any quid pro quo.

  Three points are to be noted about this case. First, in the pre-colonial situation, the Gross Material Domestic Product of the economy would have been 500, consisting of 200 food and 300 manufactured goods. This falls to 200 after the colonialization of the economy. The term deindustrialization has been used to describe this situation, since it is the industrial sector that has shrunk by this amount, which, incidentally, shows the complete vacuity of the proposition that “free trade” is always beneficial for the economy. This proposition is based, inter alia, on the assumption that there is full employment of all factors in the post-trade situation, which obviously does not hold, since the displaced artisans have nowhere to go: they simply cannot move into food production as no virgin land exists in the economy to accommodate them. Such “deindustrialization,” it should be noted, refers not simply to a decline in the proportion of the workforce employed in industry, but a decline in this proportion that is associated with an overall macroeconomic contraction of the economy. It must therefore be distinguished from the term “deindustrialization” used of late in the context of advanced countries like Britain.1

  Second, the cause of deindustrialization associated with colonialism is not just the import of metropolitan manufactured goods. Such imports, matched by fo
od exports of equal value, cause in the above example a reduction of only 100 in the local manufacturing sector’s output and employment (50 directly and 50 through the “multiplier,” that is, the reduced demand for manufactures by the displaced artisans themselves). The further reduction, over and above this, of 200, is caused by the economic surplus of 100 being siphoned off abroad (which displaces 100 artisans directly and another 100 through the multiplier effect). The siphoning off of the economic surplus by the metropolitan power, in other words, not only has the effect of taking away commodities gratis but also of causing the deindustrialization of the economy through an absolute shrinkage in the level of its macroeconomic activity.

  Third, as this example clearly shows, taking away 150 units of food by the metropolitan economy does not create an iota of excess demand pressure either in the colonial economy or anywhere. Thus, even if food production is subject to “increasing supply price” or is rigidly limited by the absolute fixity of the size of the landmass, no inflationary pressures are generated despite the metropolitan economy taking away 150 units of food. This is because an income deflation has been imposed on the colonial economy through the twin processes of a siphoning away of its surplus, and a displacement of its artisans through competition from imported goods.