In her speech at the London conference of TheCityUK last Thursday, Kemi Badenoch denied that Britain’s economic prosperity is mainly attributable to colonial exploitation. She made this historical claim because of its present political significance. If post-colonial governments really believe in the narrative of simple victimhood at the hands of oppressive imperial capitalism, they will draw the wrong conclusions about the route to economic success. But even if they don’t believe it, they are cynically using it to undermine Britain’s diplomatic position at the World Trade Organisation. (Badenoch could have added that, if a British government comes to believe it – as a Labour administration under Keir Starmer is likely to – British taxpayers will be exposed to claims of over £18 trillion in reparations for slavery.)
Very shortly after the speech, the historian William Dalrymple tweeted that Badenoch “needs to learn some history and not let ideological wishful thinking overcome historical facts”.
But the truth is that the economic effects of British colonialism are highly contested among historians. So, someone who pretends that there are straightforward ‘facts’, which anyone who isn’t stupid or wicked (or Tory) acknowledges, can only be one of three things. Either he’s ignorant, unaware of the historical debate. Or he’s careless, referring to ‘facts’ simply, rather than what he ‘believes’ to be facts. Or he’s lying, knowing full well that the facts are contested, but deliberately pretending otherwise. Which of those Dalrymple is I cannot possibly say, though charity obliges me not to presume the last option.
II
In general, neo-Marxist readings of colonial economics are driven by theory that struggles to accord with the empirical data. So, for example, J. A. Hobson, the Guardian correspondent whose theory was adopted by Lenin, argued that financial capitalists such as Cecil Rhodes – but “of which the foreign Jew must be taken as the leading type” – had manipulated the British into the Boer War of 1899-1902, so as to maximise their profits by grabbing the Transvaal goldfields. Yet, those who have examined the historical detail find this thesis quite implausible. Thus, for example, the South African-born historian G. H. L. Le May wrote in 1965 of the general view that the South African conflict had approximated “the simple Marxist pattern of imperialist war”, that “[t]he facts do not support this contention”. And on Hobson’s thesis in particular he pronounced, “The explanation of the war as a capitalists’ conspiracy must be discarded; it is too smooth and rounded to fit easily into the jagged background of events and personalities.” In 2003, Dennis Judd and Keith Surridge concurred, having this to say about the economic thesis:
It was easy at the time, and has ever since remained a strong temptation, simply to attribute the outbreak of the war to the inexorable demands of capitalism and big business… In many ways it is compelling, certainly easier on the intellectual faculties, simply to accept the ‘capitalist conspiracy’ theory of the war, rather than to tease out all the ambivalence, confusion and paradox… At any rate, historians as distinguished as Eric Hobsbawm have stuck to the view that “whatever the ideology, the motive for the Boer war was gold”.
Even today, less distinguished historians such as Harvard’s Caroline Elkins continue to parrot the myth (Legacy of Violence: A History of the British Empire, 2022, p. 81). Marxist dogma plus fashionable Anglophobia trump empirical facts.
III
It was another neo-Marxist, the Trinidadian historian Eric Williams, who first developed the thesis that profits from the slave trade made “an enormous contribution to Britain’s industrial development” (Capitalism and Slavery, 1944). This thesis has long been controversial and largely discredited – with all due respect to Sathnam Sanghera, who has puffed Penguin’s 2022 edition as “compulsory reading”. Williams himself was quite clear in not claiming that the slave trade was “solely and entirely responsible for industrial development”. So, the controversy has concerned its effect relative to other factors. In the late 1960s Roger Anstey minimised its effect by calculating that the profits from the slave trade fell far below Williams’ estimate and could not have financed the industrial revolution to a significant extent. Anstey’s general view has been confirmed more recently by David Richardson, who estimated that profits from the slave trade probably contributed under 1% of total domestic investment around 1790. In 2010, David Brion Davis, the distinguished historian of slavery and its abolition in the Western world, confidently pronounced the last rites on Williams’ thesis, declaring that it “has now been wholly discredited by other scholars”.
The slave trade is one thing; slavery itself, another. Some argue that, of all economic sectors, the Atlantic slave-based economy – especially sugar production – made the most significant contribution to Britain’s industrial development. Yet David Eltis and Stanley L. Engerman are highly sceptical: “Sugar was just one of hundreds of industries in a complex economy; and while sugar was one of the larger industries, its linkages with the rest of the economy and its role as an ‘engine’ of economic growth compare poorly with textiles, coal, iron ore, and those British agricultural activities which provided significant inputs to industry.” Another economic historian, Joel Mokyr, agrees: “In the absence of West Indian slavery, Britain would have had to drink bitter tea, but it still would have had an Industrial Revolution, if perhaps at a marginally slower pace.”
Most recently, Maxine Berg and Pat Hudson have contributed to the debate with Slavery, Capitalism, and the Industrial Revolution (2023). Here they argue that “the role of slavery in the process of industrialisation and economic transformation… has been generally underestimated by historians… Slavery, directly or indirectly, set in motion innovations in manufacturing, agriculture… shipping, banking, international trade, finance and investment, insurance…” But David Eltis doubts it: “Even though Britain never had the largest slave empire and even though the Iberian powers clearly did, but never showed traces of industrialisation, the authors are certain that their long list of descriptive links between the slave sector and the rest of the economy is evidence of slavery triggering accelerating economic growth first in Britain.” Moreover, many of the beneficial innovations would probably have been stimulated by other causes. Besides, Berg and Hudson are in fact very cautious in what they claim: “We do not argue that slavery caused the industrial revolution,” they write. “Neither do we suggest that slavery was necessary for the development of industrial capitalism in Britain. Even less does our study attempt to estimate that the gains from slavery contributed a particular percentage of Britain’s economic growth, GDP or capital formation in the eighteenth century, as earlier studies have attempted… many aspects of the impact of slavery are not measurable in quantitative terms.” Such modesty falls a long way short of endorsing Williams’ claim of slavery’s “enormous contribution” to Britain’s industrial prosperity.
One thing that Berg and Hudson completely fail to factor into their account are the costs to Britain of her imperial efforts to abolish the slave trade and slavery at sea and on land, worldwide, over the course of a century and a half from 1807. Eltis has reckoned the cost to British taxpayers of transatlantic suppression alone as a minimum of £250,000 per annum – which equates to £1.367–1.74 billion, or 9.1–11.5% of the UK’s expenditure on development aid in 2019 – for 50 years. Moreover, in absolute terms the British spent almost as much attempting to suppress the trade in the 47 years, 1816-62, as they received in profits over the same length of time leading up to 1807. And by any more reasonable assessment of profits and direct costs, the 19th Century expense of suppression was certainly bigger than the 18th Century benefits.
Chaim Kaufmann and Robert Pape took a broader view. In addition to the costs of naval suppression, they considered the loss of business caused by abolition to British manufacturers, shippers, merchants and bankers who dealt with the West Indies. They also factored in the higher prices paid by British consumers for sugar, since duties were imposed to protect free-grown British sugar from competition by foreign producers who continued to benefit from unpaid slave labour. Overall, they “estimate the economic cost to British metropolitan society of the anti-slave trade effort at roughly 1.8% of national income over 60 years from 1808 to 1867”. Although the comparisons are not exact, they are illuminating: in 2021 the U.K. spent 0.5% of GDP on international aid and just over 2% on national defence. Kaufmann and Pape conclude that Britain’s effort to suppress the Atlantic slave trade (alone) in 1807–67 was “the most expensive example [of costly international moral action] recorded in modern history”.
IV
Beyond slave-trading and slavery, what were the economic effects of British imperial dominance? Can they be reduced to Britain’s leeching wealth from exploited subject peoples?
For over a century, that is what Indian nationalists have claimed. It is also what the politician Shashi Tharoor claims in his 2016 book, Inglorious Empire: What the British Did to India. Against him, however, the Bengali-born, LSE-based economic historian Tirthankar Roy has declared of the nationalist critique that “generations of historians … have shown that it is not [true]”. Pace Tharoor, the statistic that India produced 25 per cent of world output in 1800 and 2–4 per cent in 1900 does not prove that India was once rich and became poor: “[i]t only tells that industrial productivity in the West increased four to six times during this period …. The proposition that the Empire was at bottom a mechanism of surplus appropriation and transfer has not fared well in global history”.
On the contrary, the British Empire’s commitment to free trade gave Indian entrepreneurs new opportunities to grow. Some of them visited England in the late 19th Century, observed the workings of manufacturing industry, imported machinery and expertise to India, built factories employing Indians, and then outcompeted Manchester. This is exactly how the Tata Iron and Steel Company began in Bombay – the same company that now owns what remains of the British steel industry.
What is more, colonial governments often protected native producers against British business, in order to moderate economic and social disruption, partly because they genuinely cared for the welfare of native people and partly because they didn’t want to have to manage the political unrest that foreign commercial intrusion could excite. Famously, in 1910-11 colonial officials barred Lever Brothers from acquiring concessions in Nigeria on which to establish palm-oil processing mills with widespread hinterlands, since Africans were already producing for the world markets and generating tax revenue and because the alienation of large areas of land risked provoking native opposition.
Further still, the British were the leading exporters of capital from the mid-19th Century to at least 1929. Between 1876 and 1914, Britain invested over a third of its overseas capital in the Empire, over 19% of it in India. Of course, British investors often made a profit out of this. That’s the thing about investment: you tend to want to grow your money, not waste it. But if the British gained, so did colonial peoples. Take railways. By 1947, British India had 45,000 miles of railway track, most of it constructed with private capital, whereas five years later un-colonised China still had less than 18,000 miles. For sure, the railways served military purposes. But they also served commercial and economic ones: one estimate reckons that when the railway network reached the average district, real agricultural income rose by about 16%. And it served the welfare purpose of efficient famine relief, too.
A basic reason why the British sent their capital overseas to the Empire, enabling the growth of businesses and the building of infrastructure, was that colonial states provided sufficient political stability and legal certainty to make the risks of financial ventures worth taking. (Badenoch hints at this in her reference to the economic effects of the Glorious Revolution of 1688.) That explains why Australia’s economic growth compares so favourably with that of many Latin American countries, and why, between the 1860s and 1890s, Australia was the richest country on earth.
In sum, the considered judgement of the Swiss historian Rudolf von Albertini, whose work – according to the world’s “leading imperial economic historian”, David Fieldhouse – was based “on exhaustive examination of the literature on most parts of the colonial world to 1940”, was simply this: “colonial economics cannot be understood through concepts such as plunder economics and exploitation”.
V
Kemi Badenoch had very good reason to contradict the historically dubious, economically misleading, and politically opportunistic claim that Britain’s current prosperity is simply or mainly the product of colonial exploitation. And if William Dalrymple really didn’t know that, well, he “needs to learn some history and not let ideological thinking” cloud his vision.
Nigel Biggar, CBE, is Professor Emeritus of Moral Theology at the University of Oxford and author of the bestselling Colonialism: A Moral Reckoning, whose paperback edition, with a new Postscript, was published by William Collins on March 14th.
Stop Press: Doug Stokes made a similar argument in the Critic yesterday, arguing that Britain’s wealth is not due to slavery, but to freedom, markets and the rule of law, as did Robert Tombs in the Spectator.
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So essentially, she turned the bank into a vehicle for her own vanity, and to counter personal perceived grievances against society. Splendid work.
You would have to have a heart of stone not to laugh.
I do have a heart of stone, and I’m still laughing
It caused share prices to fall. So no, I’m not laughing.
Share prices go up and share prices go down.
Well, if you think the shares are now undervalued, then you should BUY BUY BUY, TonyRS!
Oh, wait, svb collapsed already.
Question is, was the share price fall cause or effect?
I think we can all agree it was an effect.
Except, once again, I expect “the little people” will have their pockets picked in order to bail out the Banksters and Regulators who failed to do their jobs.
Capitalise the profits; socialise the losses.
Point taken.
A useful reminder of the limit to compensation from the BoE if your bank folds; £85K, I think.
I believe that the FDIC will try to recover most if not all of depositors money
It is reported the losses on the fixed interest investments exceed the capital of the bank. The fact they have closed the doors suggests it has gone through their capital ratios. If that is so there is simply not enough there to pay off the depositors in full.
Besides, it will take months to unravel once the big law firms and accounting firms get involved and their fees will be eye watering.
Up to $250,000
Delusional. Completely detatched from reality.
Jay Ersapah…said I “feel privileged to help spread awareness of lived queer experiences, partner with charitable organizations, and above all create a sense of community for our LGBTQ+ employees and allies.”
A bit more attention to the job she was paid to do as opposed to her extracurricular activities might have paid dividends. Assuming of course that she was up to the job in the first place.
Sorry – but I would say rising interest rates and holding a lot of fixed income securities is what done it.
Failure to hedge for this risk shows poor financial accumen.
To paraphrase Warren Buffet.It’s only when the tide goes out that you see who’s not wearing a swimming costume.
Yes, and this “living queer” was more interested in the rainbow, signalling virtue and seeking attention.
So, maybe they should have picked someone who could run a large banking business sooner than someone whos best credential is just being gay!
Lefty idiots deserve all they get!
The FT has a sober analysis of what went wrong on the business side.
The age old banking nemesis: asset/liability mismatching.
Here by ‘Unnecessarily eating chicken but thereby risking to sh*t elephants’.
Should be accessible without Paywall through this link.
A bit of insider knowledge/trading on the large customers side also seems to be present. Plus ça change….
https://www.realclearpolitics.com/2023/03/12/the_spectacular_unravelling_of_silicon_valley_bank_593578.html?utm_source=rcp-today&utm_medium=email&utm_campaign=mailchimp-newsletter&mc_cid=673e4aec10
The FT article is not consistent with what has been reported. A temporary solvency problem would be supported by the authorities as that is one of their principal roles. Being a forced seller of that much government bonds would not have seriously upset the bond markets where daily traded volumes are enormous. Some commentators suggest that the losses realised on a sale are in some way different from losses booked when prices fall. That is not really true as bank solvency is a day to day hour to hour issue based on market values.
Management must have known they were bust quite a while ago.
Playing to the gallery of left wing friends is not what they are paid to do and their corporate and regulatory obligations make such activities secondary, to the extent their Directors permit it at all.
Their primary role is to run a compliant, financially secure business. They seem to have invested too much in fixed interest government bonds. I accept the rules do tend towards that but the over-riding obligation is to protect the depositors and the business.
It has been suggested elsewhere that the volume of deposits were so high they were unable to profitably lend (media wrongly calls this “investment”) so they stashed the funds in government securities. Any fool knows that excessive money causes inflation and the principal way of controlling that is for the central banks to raise interest rates. That they have done: too late and too little, I would say, but they did it.
Higher interest rates on all but short term bonds causes a fall in their value. Any bank employee should know that, especially the Risk Officer and whoever decides on investment and liquidity policy within the bank. To get caught out so badly and so suddenly is a disgrace for which heads should roll; disciplinary action should be taken and, I doubt not, litigation will ensue.
As central bank interest rates and guidance has been on a rising trend for so long, and inflation shows no sign of abatement (except in President Biden’s speaches), the falling value of bonds must have been apparent in the management reports at SVB for months. How come no one noticed and adjusted the book accordingly?
I expect that banks around the world will suffer share price drops tomorrow and the sorts of start-ups SVB lent to will also suffer. For most this ought to be short term but the mood of the market is to hammer any stock with any question marks and they generally do not recover quickly. Some VC investment funds and their invested businesses will not survive, no matter how good their underlying businesses. From interviews in California many of them apppear to have had all their surplus cash and all their credit lines with SVB which is unforgivable concentration of risk.
Maybe the FED and FDIC can induce commercial banks to take over SVB but with the likely litigation in prospect, I would be surprised if they thought it worthwhile. Maybe they will agree to take over the balances but not the buisiness; I doubt it.
No tears for Jay please. NHS Trusts will be queuing up to employ her/it/them/whatever
Halifax are you listening?. I withdrew my money because of insisting on pronouns for staff members. They’re the next domino. Get Woke, Go Broke.
It was an asset grab – nothing to do with wokery.