Imperial Measurement: a rejoinder to Will Hutton and the Guardian/Observer

Observer columnist Will Hutton is not a fan of my latest publication Imperial Measurement: A Cost-Benefit Analysis of Western Colonialism. As he puts it in last Sunday’s edition:

““Imperial Measurement” […] is a risible recasting of history that should have been ignored as self-serving ideological tosh. […]

Recent historical research, blithely dismissed by […] Niemietz, […] has increasingly uncovered a mountain of evidence that places ever more importance on empire […] as important drivers of the Industrial Revolution and evolution of our economy. […]

[T]o minimise and abstract, as Niemietz attempts, the economic impact of first the sugar and then cotton slave plantations, and also the industries that radiated from them, as not part of the story is plainly inadmissible.”

Hutton’s main objection to Imperial Measurement seems to be that there is a book  which comes to a different conclusion. Well, yes. Of course there is. There always is. That’s how this works. Different books come to different conclusions.

The book in question is Slavery, Capitalism and the Industrial Revolution by Maxine Berg and Pat Hudson, which Hutton appears to be basing his arguments on. I am not quite sure what he means by “blithely dismissed”, though. I’m not dismissing anything, neither blithely nor otherwise. I discuss Slavery, Capitalism and the Industrial Revolution in Imperial Measurement (and more extensively on the IEA blog), and explain why I’m not convinced by its main thesis. Again: that’s how this works. Authors read other authors’ work, and then explain why they agree or disagree.

Slavery, Capitalism and the Industrial Revolution is an attempt to rehabilitate the “Williams Thesis”, the idea that slavery (the slave trade itself, and the Caribbean sugar, coffee and tobacco plantations derived from it) made a large contribution to Britain’s Industrial Revolution. They do not do this by claiming that slavery accounted for a large percentage of Britain’s GDP, or its rate of investment and capital formation, or any other macroeconomic variable. Presumably, this is because other authors have tried this before, and they have not come up with much. What they do instead is to hunt for indirect, second-order and third-order effects. They do this, for example, by pointing out that there were spillover benefits for other sectors of the economy.

Hutton does this too:

“The ships and their cargoes […] needed insuring, generating a large marine insurance industry. Sugar refineries were prone to burning down easily […] causing the need for specialist fire insurance companies. No account of the boom in the textile industry either side of the Pennines or the City of London is complete without empire and the slave trade”

This may all be true, but my problem with it is that you could make a similar argument about virtually any industry. No industry exists in isolation. Every industry has some knock-on effects on other industries.

By that logic, you could also claim that the free-market think tanks based on and around Tufton Street are a “strategic industry”. Here’s why. Imagine we all disappeared. (Every Guardian/Observer reader’s dream, I know.) Plenty of people in Westminster would feel the knock-on effects. There are the street food stalls on Strutton Ground, where many of us get our lunch from. There are the publishing companies who proofread, typeset, design and print our publications. There are the event hire venues, and the catering teams who serve the wine and the canapes. Above all, there are the pubs of Westminster, who would undoubtedly notice the disappearance of some of their most reliable customers. So all hail Tufton Street, pillars of Westminster’s economy?

I am 100% sure that Will Hutton would reject that logic – and he would be right. “Rubbish!”, he would say. “If you lot did the decent thing and disappeared, all the Dark Money that you currently use to poison the national discourse would become available for other things. It would be spent by someone else. Perhaps not in Westminster, and perhaps not for those exact purposes, but somewhere, and on something.”

And this would be correct. But it is equally true that if the slave trade had not existed, something else would have existed instead. I don’t know what that “something else” would have been. But given how dependent the slave trade was on indirect state support, it is not implausible to assume that it might have been something more productive and beneficial even in purely economic terms, never mind the obvious immorality of the slave trade.

Which leads us to one of my main problems with Slavery, Capitalism and the Industrial Revolution. The authors make it very clear that the slave trade was propped up by the state, at a high fiscal cost. But they then count this fiscal cost as a disguised benefit, on the grounds that it stimulated those industries that supplied the army with arms, ships, uniforms etc. Hutton does this too:

“The trade needed protecting and policing. A strong navy was an imperative […] The navy was also a richly profitable and important market for British farmers and gun makers.”

This could be almost literally out of Frédéric Bastiat’s classic What Is Seen And What Is Not Seen. Bastiat describes a fictitious (?) policy under which the French army employs 100,000 people more than it needs, at the expense of 1m franc. He cites a fictitious (?) member of the public who argues that this is, in fact, a good thing:

“[I]s it not fortunate that the State is providing bread to these hundred thousand people? What is more, consider that the army consumes wine, clothing, and weapons, and thus provides activity for factories and in garrison towns, and that in fact it is the very salvation of its countless numbers of suppliers. Do you not tremble at the thought of abolishing this huge engine of industrial activity?”

Bastiat then explains why this reasoning is wrong:

“One hundred thousand men who cost the taxpayer one hundred million, live and provide a living for their suppliers to the extent that one hundred million can be spread: that is what is seen. But one hundred million, extracted from the pockets of taxpayers, interfere with the economic lives of these taxpayers and their suppliers to the tune of that one hundred million: that is what is not seen. […]

[D]ischarging one hundred thousand soldiers is not to annihilate one hundred million, it is to return this sum to the taxpayers. […]

[C]asting one hundred thousand workers onto the market is at the same time to cast the one hundred million intended to pay for their work onto the same market. As a result, the same measure that increases the supply of labor also increases the demand […]

[W]hen a taxpayer hands over his money, either to a soldier in return for nothing or to a worker in return for something, all the subsequent consequences of the circulation of this money are the same in both cases, with the sole difference that in the second case, the taxpayer receives something while in the first he receives nothing. The result: a net loss for the nation.” 

You won’t be surprised that Bastiat’s keen awareness of opportunity costs also led him to be sceptical of the (then still relatively recent) colonial project of French Algeria. He quotes a fictitious (?) French politician who promises:

“Vote in favor of fifty million […] to build ports and roads in Algeria, in order to take settlers there, build them houses, and clear fields for them. In doing this you will bring relief to French workers, stimulate work in Africa, and expand trade in Marseilles. It is pure profit.”

Bastiat then explains the flaw in this reasoning:

“Yes, that is true, if you consider the said fifty million only from the time that the state spends it; if you look at where this money is going, not where it came from; if you take account only of the good it will do on leaving the coffers of the tax collectors and not of the harm that has been done nor of the good that has been prevented when it entered these coffers. […]

Jacques Bonhomme […] would have rebuilt the fence around his garden and can no longer do so, that is what is not seen. He would have had his field marled and can no longer do so, that is what is not seen. He would have added a floor to his cottage and can no longer do so, that is what is not seen. He would have bought more tools and can no longer do so, that is what is not seen. […] [T]he work by the laborer, carpenter, blacksmith, tailor, or his village schoolmaster that he might have encouraged and that is now wiped out: all this too is what is not seen.”

Quite so. Bastiat and other liberal anti-imperialists already knew all this in the 1840s. Maybe one day, the Guardian/Observer will get there too.