Download Early Modern Capitalist Development and Fleecing a Global Economy

Early Modern Capitalist Development and Fleecing a Global Economy:
Merchant Imperialism and Textiles
Hyung Nam
Social Studies Department
Wilson High School
Portland, OR
NEH Summer Seminar for School Teachers, 2011
The Dutch Republic and Britain
How did Britain acquire global supremacy in the eighteenth century and how did it
become the richest country in the world? Was this the triumph of a capitalist system and
homo-economicus based on free market forces and trade, encouraging efficiency and
technological innovation, and culminating in the industrial revolution, as neoclassical
economists would like us to believe? Was this a result of an hegemony of imperialism,
mercantilism, and state-sponsored, corporate monopoly capitalism? These questions have
important implications for globalization policies and development strategies of newly
developing countries today. Has free trade global capitalism been beneficial in the past and
will it be so today?
There have been ongoing debates about the history of economic and capitalist
development among and between neoclassical economists and various Marxists. Both have
had tendencies to be more theoretical than historical, though Marx himself was well rooted in
economic and social history of the early modern era. For quite some time, ideologues of
laissez-faire capitalism have used “deductive logic [to explain the emergence of capitalism
and] the dynamics of a commercial economy . . . expounding with an unflinching faith the
immutable laws of the market”(Wrightson, p. 9). Lately, views about our current economic
problems and capitalism have become so critical and controversial that some have even
decided the term capitalism is too burdened with negative connotations. This is exemplified in
recent changes in the Texas state social studies standards and textbooks such as McGruder’s
American Government, which replaced the term "capitalism" with “the free enterprise
system.” emerged in the 1999 World Trade Organization meeting which sparked a growing
awareness of global protest movements of labor, environmental and human rights activists
opposed to “free trade” policies. At the 2003 WTO meeting in Cancun, a Korean farmer and
a former president of a South Korean farmers federation, Lee Kyung Hae, stabbed himself in
protest against WTO agricultural policies. Lee had protested at the WTO headquarters in
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Geneva months before where new agriculture policy was being drafted, pleading the case of
Korean farmers driven to ruin or suicide by import of subsidized US and EU agriculture.
Especially in our current global economic crisis, neoliberal and neoclassical economists
increasingly argue for laissez-fair policies, privatization of the public sector, and austerity
measures, hailing the benefits of the invisible hand, comparative advantage and dynamic
efficiency of free markets and free trade. With hailing of some of Adam Smith’s economic
ideas, one would think that laissez-fair capitalism and free markets lead to the historical
development of the wealthiest and most powerful countries in northwest Europe.
Do the Dutch and especially the British achievements reflect the development and
achievement of a system of free enterprise along the lines ofAdam Smith’s prescriptions for
free trade and free markets and Hugo Grotius’s call for freedom of the seas? What
implications do historical interpretations of this period have for our understanding of the
development of capitalism and our contemporary debates about globalization and free trade
today?
Many historians and theorists have tried to explain the development of capitalism and
urbanized, modern societies out of the medieval agrarian social order. Some, like Weber,
argued for the influence of culture and Protestant religion of the Dutch and English in the
emergence of capital investments and banking, while others examined political and
institutional changes. Others have focused on demographics, while others have focused on the
European enlightenment, political liberalism and the scientific revolution. Marxists focused
on primitive accumulation of capital, through a transformation of the social order which
proletarianized the masses through violent enclosure and expropriation of the commons the
people subsisted on, aided by “aggressive colonialism and protective legislation, [ensuring
commercial supremacy in overseas markets and] industrial predominance” (Wrightson, p. 11).
Following Marx, writers from Lenin to dependency theorists have depicted the development
of Western European global capitalism in the modern age as primarily the result of imperial
centers exploiting colonial or neocolonial peripheries.
The two North Sea countries, the Dutch Republic and England, are important in the
historic development of capitalism. These countries developed out of traditional medieval
societies into the first successful capitalist nations based on an increasingly integrated global
market economy. Even before the industrial revolution, these North Sea countries developed a
complex, multilateral global trading system with two focal entrepots (Amsterdam and
London), joint-stock companies (the predecessors of the modern corporation), financial
innovations in credit and bond markets, tradable futures in commodities, large scale
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manufacturing capable of exports, and a society in which the market increasingly penetrated
society and transformed the older social order.
As Jan De Vries and Keith Wrightson point out, before the industrial revolution, from
the late 15th century through the 18th century, both societies and both economies were
transformed through “industrious revolutions,” becoming increasingly productive,
economically diversified, urbanized and integrated and more market dependent in production
and consumption via internal commerce as well as intra-European, Asian, and New World
trade. Their higher standards of living were evident in the changing consumption patterns of
novelties from tea, coffee, sugar, and even Asian ‘luxury’ products broadly across the
populace of both nations, especially evident in the emergence of a “middling sort,” an early
version of middle-class consumers, whose economic demand was both a product and cause of
this increasingly commercial society. The Netherlands developed earlier but Britain gained
supremacy eventually, becoming the first industrialized nation in the early 19th century.
Economic histories of the early modern Dutch Republic and England underscore that a
market economy gradually developed to an advanced stage by means of an “industrious
revolution” in the 17th and 18th centuries based largely on internal developments and trade (De
Vries, Wrightson) These developments and the dynamism of trade and the North Sea
economy cannot be explained solely by imperialist and mercantilist policies of the early
Dutch Republic or England. Before industrialization, both the Dutch and the English
developed proto-industries based on woolen textiles (eventually new draperies), relatively
high wage economies for a substantial part of the population, increased agricultural
productivity based on convertible husbandry, an international trade system and growing
demands of an increasingly consumer society with significant purchasing power. Many
historians have pointed out that much of this development was endogenous. “Most British
economic historians would agree that intercontinental commerce and imperialism should not
be inflated (as they are in meta-narratives of the World Systems School of Historical
Sociology) into one basic process that continuously fuelled the transformation. . . Most of the
raw materials, inputs, factors for production, knowledge and technologies required for the
growth and diversification of industrial production continued to be procured on domestic
markets” (“Mercantilism and Imperialism in the Rise and Decline of the Dutch and British
Economies 1585-1815,” pp. 473-474). Jan De Vries argues against historians and
theoreticians who focus on the role of conquest and mercantilism in economic development
and argues that “no single obvious unifying theme renders the economic history of the 17th
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and 18th century Europe intelligible” (236). He argues that European salt trade was more
important than the royal chartered monopolies and slavery (143).
There were many factors that contributed to the economic achievements and growth of
both the Dutch and the British economies, especially in the early modern era. By the 17th
century, the Dutch Republic developed as the first modern economy. It achieved high
standards of living and strong economic growth through trade and manufacturing without an
industrial revolution (De Vries). The Republic proved that modern economic development
was not a one-track process through a technological industrial revolution. Nevertheless,
“colonization and commerce with other continents did more to transform the Netherlands and
England into successful market economies than the strategic pursuit of expansion overseas did
for any other European nation” (“Mercantilism and Imperialism in the Rise and Decline of the
Dutch and British Economies 1585-1815,” p. 469).
Despite the writings of Hugo Grotius about the freedom of the seas, when the Dutch
wanted to get in on the valuable Asian trade that the Spanish and Portuguese monopolized,
the Dutch created the Dutch East India Company (VOC) and pursued imperial conquest in
order to monopolize lucrative trades in spices. “Over the first half of the seventeenth century,
the Dutch attacked the Portuguese, Spanish, and Chinese empires and established a network
of fortified trading posts, bases and plantations of their own in Asia under the control of the
Verenigde Oostindische Compagnie. Like the Portuguese (but with more success) the Dutch
used naval power and colonization in an attempt to monopolize the transshipment and sale of
Asian spices (mace, nutmeg, cloves, and cinnamon and more important foodstuffs such as
pepper and coffee) to Europe for profit of the Republic”(“Mercantilism and Imperialism in the
Rise and Decline of the Dutch and British Economies 1585-1815,” p. 471). Even by 1680,
“the VOC embarked on military conquest of Bantam, whose sultan had operated a pepper
emporium open to all traders” (De Vries, p. 135) However, the monopoly capitalism of the
VOC and WIC were not central to the Dutch economic success. The Dutch had fewer
chartered monopolies than the English, though many Dutch rentiers shut out of the VOC
invested in English joint stock trading companies. Later, this economy of merchants,
financiers, and manufacturers stood out among European nations in adopting a relatively free
trade policy in terms of low tariffs. Again, the Dutch achievements were not all derived from
conquest and monopoly, but as De Vries and Van Der Woude point out, referring to the work
of Peter Klein, monopoly control of markets, rather than efficiency of market forces alone,
contributed to the success of Amsterdam as an entrepot: “the strength of the stapelmarkt lay
not so much in the efficiency of competitive markets as in the ability of leading merchants to
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limit competition, indeed to monopolize supplies of commodities and control prices. . . such
exercises in market control, far from subverting the stapelmarkt, actually strengthened it,
since merchants able to limit risk exposure reinvested more of their monopoly profits it its
expansion”(De Vries and Van Der Woude, p. 670). In fact, these authors point out that the
VOC was able to accumulate much capital and was much more profitable in the earlier
monopoly trades compared to the expanded trades in more competitive markets.
The decline of the Dutch economy was partially caused by the mercantilism,
protectionism, imperial domination, and trade wars of competing nations (most notably the
British) in the global economy. This international political context contributed to the Dutch
decline in trade, deindustrialization and fiscal crises. While the Dutch did create some new
industries in sail cloth, paper, silk and cotton printing, entrepreneurial innovation alone was
unable to overcome such unfair competition and the economy eventually suffered from
rentiers shifting investment into nonproductive investments in government debt, including
overseas to the Bank of England. However, even through the political turmoil of the French
Revolution and napoleon, the Netherlands remained one of the richest countries in the world
and has practiced relatively free trade, with some exceptions in the 17th century and again
under King William I from 1824 to the late 1840s (Kicking Away the Ladder, p. 44)
England also developed a market economy in the 17th century, although London’s
economic achievements did not rival the Dutch until after the Dutch decline in the mid 18th
century. While there was significant development in England’s rural proto-industry--the
putting-out system of merchant-organized textile manufacturing--this early modern industry
did not contribute to England’s and British economic development by market forces alone.
Compared to the Dutch, the British more thoroughly pursued a policy of imperialism and
mercantilism. Then, from their already advanced state of economic development, with
increasing agricultural productivity, urbanization, commercialization, and higher standards of
living, the British eventually accomplished technological breakthroughs in the early 19th
century to become industrialized, aided by the geographic luck of the abundance of cheap
coal. At that point, especially given the political and fiscal problems of their Dutch rival,
Britainbecame the richest and most powerful country in the world, simultaneously reaping the
benefits of industrialization and imperial hegemony.
Trade wasimportant in the success of both the Dutch and English economies, but this
was not a free trade: “To succeed in Asia, Europe’s national and quasi public corporations
required strong support from their home states and the power to intimidate suppliers (as well
as rivals) in order to maintain and, whenever possible, extend their monopolistic and
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monopsonistic positions in intercontinental trade”(“Mercantilism and Imperialism in the Rise
and Decline of the Dutch and British Economies 1585-1815,” p. 481). Furthermore, empire
not only allowed capital accumulation for expanding merchant trade, it aided the development
of manufacturing, early industry, and innovations in financial capitalism:
Since exports consisted overwhelmingly of manufactures, it is important to observe
that over two long swings in industrial expansion, between 1700 and 1760 and again from
1780 to 1801, about half of the increment to manufactured output was sold overseas.
Furthermore, the bulk of all extra industrial output sent abroad traveled outside traditional
European markets, which absorbed all but 10 per cent of English-made exports as late as the
1660s, to American, African, and Asian consumers, who probably purchased up to 70 per cent
of exports during the years of war with Napoleon between 1803 and 1851. . . at the macro
level the figures and contemporary commentaries validate the point that the growth of British
industry from Restoration onwards was promoted by increasing involvement with the
international economy in general and with an ‘Imperial’ system in particular (“Inseparable
Connections: Trade, Economy, Fiscal State and the Expansion of Empire,” pp. 53-54)
Textiles starting with wool and then cotton were central to England’s economic
development, and state policies including protectionist tariffs and import substitution played
an important role, rather than such important industries being left to develop through market
forces alone. The policies of enclosures of the commons for commercial pastures and wool
exports feeding the industry of Flanders not only proletarianized the masses into wage
laborers, but also supportedmanufacturing that stimulated even more manufacturing. Woolen
cloth was England’s first key industry, accounting for half of its export revenue during the
18th century.
This early proto-industry based primarily on woolen cloth was supported by laws and
policies of the state dating back to Henry VII from 1498 through 1596 that restricted export of
raw wool or unfinished cloth through bans or various duties to promote English
manufacturing as described by Daniel Defoe’s 1728 A Plan of the English Commerce (Bad
Samaritans, p. 40) While many early protectionist measures primarily imposed duties for
revenue, in effect the state intervened in the market to promote woolen manufacturing, since
raw wool was taxed more heavily than cloth. Such policies by the hand of the state, rather
than the invisible hand of market forces operating on their own, helped to turn England from
exporting raw wool and short cloth to the Low Countries to becoming a major manufacturer
and exporter of woolen cloth. Before the rise of Amsterdam and the creation of the Dutch
Republic, the Low Countries had advanced economically with the manufacture of woolen
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textiles, which played an important role and eventually expanded the rich trades. English
mercantilist policies were a major contributor to the ruin of the manufacturing of textile
industry in Flanders even before defeat of the Spanish and the choking of its trade on the river
Scheldt by the Dutch Republic.
These measures are significant, considering that England’s woolen industry provided
at least half of its export revenue in the 18th century (Kicking Away the Ladder, p. 21). In
addition to tariffs, the 1699 Wool Act limited production and export of wool in Ireland and
American colonies, while the Navigation Acts beginning in 1651 required all trade to be
conducted on English ships and limited the trade to be complementary rather than competitive
with English merchants and shipping. By such policies and by colonial conquest, the British
dominated a superior Irish woolen industry not by efficient competition of the invisible hand
but by the fistof colonial mercantilism. By 1721, a whole regime of mercantile policies
expanded under British Prime Minister Robert Walpole, reduced duties on raw materials used
for manufacturing, while also reducing or eliminating duties for exports of manufactured
goods, subsidizing exports of some British goods, and increasing duties on foreign imports of
manufactured goods. Walpole stated: “it is evident that nothing so much contributes to
promote the public well-being as the exportation of manufactured goods and the importation
of foreign raw material” (Bad Samaritans, p. 44). Through the 1820s, the British had some of
the highest tariff rates in Europe averaging 45-55% compared to 6-8% in the Low Countries,
8-12% in Germany and Switzerland, and 20% in France (Bad Samaritans, p. 45)
Trade and manufacturing in textiles continued to become even more important.
According to Allen, “cotton was the wonder industry of the Industrial Revolution. From small
beginnings, employment reached 425,000 in the 1830s and accounted for 16 per cent of jobs
in British manufacturing and 8 per cent of British GDP” (Allen, p. 182). While British
technological innovations in spinning machinery and the development of highly productive
cotton mills were important, they did not achieve economic success by themselves in a global
free trade system. Even before the fruition of spinning technology in the 1830s, British
mercantilist policies and the monopoly power of the British East India Company weakened
the most successful manufacturer of cotton in the world and thereby forced India to
complement various stages of British economic and industrial development.
The Indians had created and led a global industry in cotton for many years, and
initially in the late 17th century, European trading companies exported this lighter and betterproduced fabric to Europe. But it was not long before the English East India Company gained
hegemony and prohibited local Indian merchants from trading freely with other European
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companies and also forced weavers to work exclusively for them. In 1701, English wool and
linen manufacturers passed a ban on the import of printed Indian calicoes, while white cotton
was allowed for printing in England, and while re-exports were still allowed, especially in the
slave trade (Allen, pp. 212-13). British cotton production began with this protection and the
ban was extended to all purely cotton cloth in 1721. British cotton would remain
uncompetitive and of lesser quality than fine Indian cotton cloth until further innovations in
mechanized spinning. Even then, productivity of Lancashire cotton mills relied on cheap
imports of raw cotton from Bengal (after the East India Company subdued them in 1757) and
from American colonies (dependent on slave labor). By 1803, British cotton manufacturing
outpaced wool as the biggest export and by 1873, an estimated 40-45% of British cotton
textiles were sold in India. There was real British technological innovation but it did not
compete against Indian cotton industry by market forces alone. As the British dominated over
Irish wool not through free market forces alone, they dominated over Indian cotton with the
aid of imperial conquest and mercantilist policies. Meanwhile, the British hegemony
prevented attempts by Indians to impose tariffs on British cotton in the 1890s.
From the beginning of English empire in Ireland to its crown jewel in India, British
imperial conquest and mercantilism extended throughout much of the world. Both Ireland and
India exemplify the devastating impacts of exploitative British power and policies. English
imperialism started in Ireland, where the English expropriated much of the land, used Penal
Laws to reduced the Irish to second class citizens whose labor could be exploited, and drained
the country of money through taxes and rents. English mercantilist policies destroyed the Irish
industries in wool, linen, and glass so as to avoid competition with Ireland and to use them to
complement English economic development, even exporting food to England while they
starved during the potato blight. “From the 15th through the 19th centuries, successive
English monarchies and governments enacted laws designed to suppress and destroy Irish
manufacturing and trade. These repressive Acts, coupled with the Penal Laws, reduced the
Irish people to "nakedness and beggary" in a very direct and purposeful way” (“Great Irish
Famine”).
India had been the biggest economy in the world up to the 18th century but was
transformed from being an exporter of manufactured goods to becoming an importer of goods
and exporter of complementary raw materials for the British Empire. India became the crown
jewel of the vast British Empire. P.J. Marshall writes about the change in British imperialism
and the swing to the east beginning as a monopoly and leading to conquest and subjugation
and the drain of income from India to Britain:
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The British stake in India brought about by grants and conquests between
1765-1818. . . The East India Company ruled some 40 million people and
disposed of a revenue of 18 million [pounds sterling] raised in taxation, a sum
that amounted to around one-third of the peacetime revenue of Britain itself. . .
A new pattern of trade was, however, emerging, speeded up by the ending of
the East India Company’s commercial monopoly in 1813. Primary products,
raw silk and cotton, indigo, and sugar, were replacing cotton cloth as the staple
of India’s exports to Britain, while India was importing more and more British
manufactured goods, textiles above all. Indian commodities both sustained a
large part of the China trade [most importantly in tea] and its exports and were
the vehicle for the transfer to Britain of up to 5 million [pounds sterling] a
year, consisting of charges that the East India Company was obliged to pay the
British state and of private savings being remitted home ( "Britain without
America—A Second British Empire," pp. 82-83).
Michael Parenti, in Against Empire, described the impact:
In 1810, India was exporting more textiles to England than England was exporting to
India. By 1830, the trade flow was reversed. The British had put up prohibitive tariff barriers
to shut out Indian finished goods and were dumping their commodities in India, a practice
backed by British gunboats and military force. Within a matter of years, the great textile
centers of Dacca and Madras were turned into ghost towns. The Indians were sent back to the
land to raise the cotton used in British textile factories. . . By 1850, India's debt had grown to
53 million pounds. From 1850 to 1900, its per capita income dropped by almost two-thirds. . .
The massive poverty we associate with India was not that country's original historical
condition. British imperialism did two things: first, it ended India's development, then it
forcibly underdeveloped that country (Parenti). The British cotton manufacturing developed
only after its conquest of the leading cotton manufacturer in the world, thereby reversing
development of its main competitor in that industry:
In 1757 (the year of the Plassey defeat), [Robert] Clive of the East India Company had
observed of Murshidabad in Bengal: “This city is as extensive, populous and rich as the city
of London...” Dacca was even more famous as a manufacturing town, its muslin a source of
many legends and its weavers had an international reputation that was unmatched in the
medieval world. But in 1840, it was reported by Sir Charles Trevelyan to a parliamentary
enquiry that Dacca's population had fallen from 150,000 to 20,000. Montgomery Martin, an
early historian of the British Empire, observed that Surat and Murshidabad had suffered a
similar fate. The percentage of population dependent on agriculture and pastoral pursuits
actually rose to 73% in 1921 from 61% in 1891. W. Digby noted in "Prosperous British India"
in 1901 that "stated roughly, famines and scarcities have been four times as numerous, during
the last thirty years of the 19th century as they were one hundred years ago, and four times as
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widespread." In Late Victorian Holocausts, Mike Davis points out that there were 31 serious
famines in 120 years of British rule compared to 17 in the 2000 years before British rule”
(“The Colonial Legacy - Myths and Popular Beliefs”).
Maxine Berg points to research that indicates that “relative earnings, working
conditions and financial security among Indian calico weavers compared favourably with
those of English weavers” (113). The devastation that ensued in Bengal after British conquest
in 1757 stands in contrast to 17th century travelers’ observations:
even in the smallest villages rice, flour, butter, milk, beans and other
vegetables, sugar and sweetmeats can be procured in abundance. . . It exports
in abundance cottons and silks, rice, sugar and butter. It produces amply for its
own consumption of wheat, vegetables, grains, fowls, ducks and geese. It has
immense herds of pigs and flocks of sheep and goats. Fish of every kind it has
in profusion. From Rajmahal to the sea is an endless number of canals, cut in
bygone ages from the Ganges by immense labour for navigation and irrigation
(“The Colonial Legacy - Myths and Popular Beliefs”).
Those promoting free trade have pointed out the achievements of the British in light of
the economic liberalism of Adam Smith. Adam Smith famously argued for free markets and
trade and against mercantilism in his Wealth of Nations, first published in 1776. However, it
would be a misunderstanding to believe that the British promptly adopted Smith’s ideas and
to primarily characterize the economic attainments of Britain as a result of free trade and free
market policies. Free trade and a free market were not general principles of economics in the
early modern era. Economist Ha-Joon Chang, in Kicking Away the Ladder: Development
Strategy in Historical Perspective, argues that the British only slowly adopted free trade in the
1840s after Britain was able to establish a dominant economic position and even then, not
fully until 1860 with the Anglo-French free trade treaty (23). Free trade was practiced not on
principle but selectively for the commercial interests of the increasingly influential capitalist
merchants. Even after their brief implementation of free trade, once the British realized that
they could not compete with the protected and expanding US economy, the Tariff Reform
League began to press to readopt protectionist policies, achieving its goals in 1932. In its long
history of piracy, colonialism, slavery, conquest, unequal treaties, wars with rival economic
interests, royal chartered monopoly rights to trade, extensive use of protectionist duties,
import substitution measures, and neocolonialism, England and later Britain can hardly be
characterized as operating by free trade and free market principles.
In the 1770s, Adam Smith argued for free trade and criticized the English East India
Company’s monopoly charter, which Smith argued prevented a more efficient and beneficial
competition.(The original and a second company were united into a bigger chartered
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monopoly in 1702 as the United East India Company so as to avoid unprofitable competition
between the two companies). However, we can also see from many contemporaries that
Smith’s ideas of laissez-fairefree markets were not popular and that mercantilist measures
were widely supported despite their high fiscal costs.
Over the long eighteenth century, most statesmen, members of Parliament, Anglican
scholars, mercantilist intellectuals, and above all merchants perceived that economic progress,
national security and the integration of the kingdom might well come from sustained levels of
investment in global commerce, naval power and, whenever necessary, the acquisition of
bases and territory overseas. A degree of compliance secured from recalcitrant Parliaments
and from a traditionally rebellious body of taxpayers suggests that a strong degree of
agreement existed about the broad objectives and profitability of state expenditures
(“Mercantilism and Imperialism in the Rise and Decline of the Dutch and British Economies
1585-1815,” p. 474).
Furthermore, as P.J. Marshall points out, the British Empire continued in a new phase
with and after industrialization. State power also helped the competitiveness and profitability
of early English capitalist agriculture and manufacturing by regulating labor. Rather than
market forces determining the hours and wages of the landless reserve armies of the poor after
enclosures, ‘bloody’ acts of Parliament beginning with the Statutes of Labourers in 1349 set
maximum wages. In addition Poor Laws punishing vagabonds and vagrancy restricted free
labor. England’s manufactures and exports became competitive, not without such state
policies. The rising bourgeoisie needs the power of the state, and uses it to ‘regulate wages’,
i.e. to force them into the limits suitable for making a profit, to lengthen the working day, and
to keep the worker himself at his normal level of dependence. This is an essential aspect of
so-called primitive accumulation (Marx, pp. 897-901). Even up to the 18th century, various
laws regulated maximum wages (as opposed to minimum wages that would later be fought for
by labor). State power rather than market forces favored capitalists over labor in laws
including ones against combinations of workers and strikes:
While for more than 400 years laws had been made for the maximum beyond which
wages absolutely must not rise, Whitbread proposed in 1796 a legal minimum wage for
agricultural labourers. Finally, in 1813, the laws for the regulation of wages were repealed.
According to Marx, “the provisions of thestatutes of labourers as to contracts between master
and workman, regarding giving notice and the like, which allow only a civil action against the
master who breaks his contract, but permit, on the contrary, a criminal action against the
worker who breaks his contract, are still in full force at this moment” (Marx, pp. 902-903)
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Even Lancashire’s fully industrial machinery, which produced cotton textiles with the
water wheel, were run not by free labor but by a form of child slavery with the aid of the Poor
Laws, in addition to the slavery in the Americas that fed the factories with raw cotton (Marx,
pp. 378-379 and 922-925). As P. J. Marshall argued writing of the changing but continuing
British Empire after the loss of the thirteen American colonies and industrialization: “In the
opinion of most contemporaries, industrialization did not reduce the need for protected
markets and guaranteed sources of raw materials to take in areas outside the Empire. Thus
both the loss of America and the industrial revolution contributed to the ‘globalizing’ of the
British economy during the nineteenth century. Attempts to acquire influence over territories
outside the Empire therefore acquired new urgency”(574).
Additionally, Chang points out that from 1719 to 1825 the British policy also
restricted emigration of its skilled workers to avoid transfer of advantages to any competitor
nation (Kicking Away the Ladder, p. 55). In the 1750s British policy restricted exports of
machines and tools, as new industrial technology became more important. The Netherlands
also adopted similar policies in 1751, though they were not strictly enforced. Thereafter,
patents and intellectual property rights controlled the transfer of technology, although the
Netherlands abolished patent laws in 1869 until 1912. It is ironic that, as Maxine Berg points
out, “British consumer goods achieved their success on principles of imitation in [Asian]
technology, design and marketing. . . [imitation] was a state national goal. A key aim of many
patents taken out for invention to produce new consumer goods in Britain over the period was
stated to be the ‘imitation’ of French and Chinese goods.” Meanwhile, state power and import
duties were imposed on foreign lacquerware and porcelain.
While it may not be conclusive that mercantilism and imperialism played the central
role in the development of global capitalism, it is clear that British success was not from free
markets and free trade alone. By the time the British repealed the Corn Laws and began
implementing free trade in the mid 19th century, British manufacturing was already
established and important competitors were weakened. It could then succeed in a ‘free trade
imperialism,’ having firmly established its manufacturing muscle through its conquests and
protectionism. German economist Friedrich List characterized British free trade policy as a
“kicking away the ladder” with which it had climbed to the top. Considering this history can
help us to see through neoclassical and neoliberal ideology today that promotes increasing
penetration of the market through privatization and shrinking of the state and free trade. The
prescriptions for developing nations to adopt free trade today in a global economy dominated
by industrialized countries and powerful transnational corporations are seriously questionable.
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Free trade and competition can work among equals but not between Davids and Goliaths. Just
as it was ironic and contradictory for Britain to preach free trade after it already gained
competitive advantage through mercantilism and conquest, it is contradictory for the EU and
the US to push free trade of its subsidized agriculture. Contrary to the ideology of neoliberals,
it is also notable that both the Dutch and the British developed fiscal states accompanied by
gigantic national debts and high taxation, with the British taxation being the result of
mercantilist duties and tariffs. Additionally, monopolies rather than free market competition
were important to not only the British but also the Dutch and other European economic
development, as De Vries and Van Der Woude point out: “In a world of shrinking markets,
the striving for consolidation and protection was a natural response, and the post 1670
Republic offers many examples, big and small: from the consolidation of the segmented labor
market, the “oligarchization” of political office, and the re-establishment of the WIC in 1674,
to the publishing monopoly over all navigational charts acquired by one firm, Johannes van
Keulen in 1685 (a monopoly it held until 1880). Efforts to limit competition and hold up
sagging prices were ubiquitous in this era not only in the Republic but all over Europe” (676).
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