THE CREATION OF WORLD POVERTY
TERESA HAYTER
Pluto Press in association with Third World First
Second edition 1990
PART VII
Chapter 9: Markets and the Destruction of Industries
- The overseas activities of the British obtained for them the raw materials, in particular cotton, that were essential for the expansion of industry. It also provided markets.
- At the end of the 17th century British exports were about 5% of the value of the of national income; a century later they were about 15%; and by the end of the 19th century they had reached a peak of over a third of national income.
- The search for new markets continued to motivate expansion through the 19th century and still does so today.
- These days a large proportion of the production of the biggest and best-known companies is for export, and more than a third of the exports of industrialised countries go to what are now the underdeveloped countries.
- Some of the products currently pressed upon the peoples of underdeveloped countries involve the creation of artificial ‘needs’ through advertising, and some are, as the forcing of opium into China was, downright harmful.
- Babies die because their mothers are convinced by advertising that Western powdered milk must be ‘better’; cigarettes with a high tar content and drugs that are banned in developed countries are dumped in underdeveloped countries.
- As early as the 17th century, colonies were prohibited by law from turning to any industry which might compete with the industry of the mother country.
- When the Irish attempted to make their wool into cloth, their cloth industry was prohibited by British laws; moreover, their wool could only be exported to England, at prices dictated by the English, who the re-exported what they didn’t want themselves.
- One of the more notorious facts of British colonial history is that the British subsequently proceeded to destroy the industrial economy of India itself. Between 1815 and 1832 the value of Indian cotton goods exported fell from £1.3 million to £100,000.
- By the middle of the 19th century India was importing a quarter of all British cotton exports. The British eliminated competition from Indian textiles through an elaborate network of restrictions and prohibitive duties.
Sir Charles Trevelyan declared to a parliamentary enquiry in 1840: “The population of Dacca has fallen from 150,000 to 30,000 or 40,000 and the jungle and malaria are fast encroaching upon the town. Dacca, which used to be the Manchester of India, has fallen off from a flourishing town to a very poor and small one.”
- The duties imposed on Indian exports into Britain were, in spite of the ‘free trade’ doctrines being promoted at the time, 5 to 20 times higher than the duties that were allowed on British imports into India. And the destruction was completed by physical means where necessary.
In Egypt, the British followed a similar policy. As Lord Cromer, who governed Egypt from 1883 to 1907, put it when looking back on the results of his policy: “The difference is apparent to any man whose recollections go back some 10 or 15 years. Some quarters of Cairo that formerly used to be veritable centers of varied industries – spinning, weaving, ribbonmaking dyeing, tentmaking, embroidery, shoemaking, jewelry making, spice grinding, copper work, the manufacture of bottles out of animal skins, saddlery, sieve making, locksmithing in wood and metal, etc. – have shrunk considerably or vanished. Now there are coffee houses and European novelty shops where once there were prosperous workshops.
Chapter 10: Free Trade and Comparative Advantage
There thus began the gradual process of the conversion of the dominated territories into markets for the products of European industry and suppliers of raw materials and primary commodities.
- The theories of free trade and comparative advantage have held powerful sway in the West. They are propounded as a scientific explanation of reality but they are, in fact, ideological tools.
For a considerable period the British, by means which were sometimes far from ‘natural’, not only destroyed the long-established industries of others, but protected their own from competition. Friedrich List, who argued in the 1840s for the protection of nascent German industry against competition from the then established British industries, wrote, after reviewing the benefits derived by Britain from the protection of the Navigation Acts: “England therefore prohibited the articles competing with those of her own factories, the silk and cotton goods of the East. This prohibition was absolute and under severe penalties, she would not consume a thread from India. Their policy has been attended by the most splendid success. What would have been her condition, has she purchased for these last hundred years the cheap goods of India?”
Once British industry was established, it was safe to argue the virtues of Free Trade. Similarly, these days, the United States government and the International Monetary Fund argue that it must be beneficial for all countries to open their doors to imports; but there are signs that, with United States fears for their industrial competitiveness, a change of theory among the (North American) gurus of neo-classical economics is on the cards; and in Britain it is again becoming almost respectable to argue openly for import controls, as the Cambridge Economic Group does, to protect declining British industries.
- A particularly blatant example of the use of force to impose ‘free trade’ was the Opium Wars against China.
- The Chinese government had attempted to ban the importation of opium and also imposed duties on imports of manufactured goods.
- In 1840 the British fleet attacked China and the result was a series of treaties granting foreigners special privileges in so-called Treaty Ports, the cession of Hong Kong, the lowering of duties, and eventually the legalisation of the opium trade.
- The use of force to open up new markets was common practise. Where trade on ‘normal’ commercial terms was not possible, colonization and direct rule were resorted to.
- When, towards the end of the 19th century, Britain’s industrial preeminence was threatened by other European powers, they and Britain again embarked on another process of colonization, this time mainly in Africa, in order to obtain for themselves protected markets abroad.
- This struggle for markets led the Europeans to fight among themselves, and culminated in the first world war of 1914-1918.
Chapter 11: Hunger
The inexorable conversion of the dominated areas into markets for European manufactured goods and suppliers of primary commodities and raw materials for European consumption undermined not only their previous self-sufficiency in manufactures, but also, increasingly, their ability to feed themselves.
- Colonies were converted into virtual plantations (or mines) producing one or two crops (or mineral products) for export to Europe.
In the process, Europeans took much of the best land. This happened on a massive scale, especially in America and Africa. Lord Delamere got 100,000 acres of the best land in Kenya at a penny per acre. The amount of land available for subsistence, in other words for the production of food for local consumption, was drastically reduced and is still decreasing in many parts of the world. The local people were forced into native reserves (as in some parts of Africa) or onto difficult and mountainous terrain (as is the case all over the Caribbean and Latin America and also in India, especially in the South). The land left for subsistence was too intensely cultivated and began to be exhausted and eroded, and the plantations themselves often had a devastating effect on the natural fertility of the land.
- In the period between 1934-35 and 1939-40, the area of India’s soil under food crops declined by 1.5 million acres, while during the same period the area under export crops increased in the same proportion.
- In Gambia, rice farming was widespread before the colonial era, but so much of the best land was given over to groundnuts that rice had to be imported on a large scale to try to avoid famine.
- In Latin America the spread of the plantations began producing hunger at an earlier time. Sugar was succeeded by other crops, in particular rubber, but the sugar plantation remains the archetype.
- This process is continuing in many parts of the world. The desert in West Africa is spreading. With the growth of refrigeration the number of food crops that can be exported for luxury consumption in the developed countries has increased.
- Particularly in recent years, many countries, some of them the same ones that are exporting massively to Europe, North America and Japan, have become heavily dependent on imports of food for barest survival.
- Not only countries, but also individuals living in rural areas as well as in towns, have become precariously dependent on buying food and are deprived of the basic security of being able to produce for themselves.
- In India there seems to have been a drastic increase in deaths from famine from 1800 onwards, with at least 16 million people dying in the 19th century, nearly all of them in the last quarter of the century.
The deaths resulting from the Great Bengal Famine of 1943 amounted to as many as 3 million. Sen says that there was no significant decline in the amount of food available in that year compared to previous years in which there were no famines; the problem was that people in rural areas in Bengal did not have the money to buy it. The food went to Calcutta, and also out of Bengal: it went in fact to where the money was. There are stories of destitute people, who had trekked into Calcutta in search of food, dying in front of full shop windows. Sen gives some similar evidence to show that the famines in Ethiopia in 1973 and 1974, which were responsible for the deaths of between 50,000 and 200,000 people, were not the result of overall food shortages in Ethiopia as a whole, but of a terrible decline in the purchasing power of people in the areas affected by the families.
In general it is clear that a very important factor contributing to hunger is the unequal distribution of food and the money to buy it. This inequality is increasing. The colonial powers have tended to reinforce the power of landlords or, as in the cases of Latin America and Africa, to create new landlords. In India peasants have become deeply indebted to money-lenders and traders who are able to force them to sell their crops cheaply in order to obtain further credit. Such traders hoard food and sell it in times of scarcity at prices that peasants cannot afford. Although overall food production may be potentially adequate for everybody in countries such as India, the food is disproportionately available to the rich, especially in towns or in prosperous areas. There is much evidence that this increasing inequality means not only that the rich are getting richer, but also that the poor are getting poorer and therefore more malnourished.
In the last 20 years or so, there has been what is called in the West a ‘Green Revolution’, which has been promoted as a solution to the problems of underdeveloped countries. It has consisted mainly in the development of high-yielding varieties of seeds. What the Green Revolution does not do is solve the problems of distribution. There have certainly been considerable increases in overall food production in a number of underdeveloped countries, especially in Asia. But the increases have not been distributed to those who need them and malnutrition persists. An ILO study shows that in the 7 largest South Asia countries the rural poor are worse off than they were 10 or 20 years before; it notes that, ironically, ‘the increase in poverty has been associated not with a fall but with a rise in cereal production per head, the main component of the diet of the poor.’
The Green Revolution was born in Mexico in the 1940s in the context of the need to get more food to the cities. As Moore Lappe and Collins explain: “All effort went to the development of a capital-intensive technology applicable only to the relatively best-endowed areas or those that could be created by massive irrigation projects. The focus was on how to make seeds, not people, more productive. True rural development based on making each rural family productive and better-off would have meant that the rural majority itself would have eaten much of any increment in food production. This increment was exactly what the ascendant urban interests counted on taking out of the countryside.”
- This pattern has persisted. The Green Revolution, as it is practiced by the agencies of the West and the governments they support, has been described as a policy of ‘backing the best’.
- The inputs – fertilizer, pesticides, irrigation, machinery and good land required to make the miracle seeds produce their miracle yields – are beyond the reach of most small farmers, who have little or no access to credit; and the whole thing bypasses the landless.
- There is plenty of evidence that the numbers of landless are increasing as a result of the greater profitability of agriculture: land-owners mechanise production and evict their tenants.
- The new demand for fertilizers, pesticides and machinery, which has been created by the adoption of Green Revolution seeds, has also resulted in bigger markets for major agribusiness firms which have become increasingly important in the multinationals’ league.
- This factor no doubt also partly explains the eagerness with which the techniques of the Green Revolution are promulgated in official circles.
Chapter 12: Workers and wages