The British Empire and other major European powers did not significantly enrich themselves through slavery and colonialism but rather may have taken a net loss as a result, a report has asserted.
Contrary to narratives pushed by ‘anti-colonialism’ academics and promoted by leftist talking heads, Western capitalism was not built off the backs of colonialism and slavery, fresh research from Kristian Niemietz of the Institute of Economic Affairs claims.
The head of Political Economy at the IEA argues that while some select elite families within Britain and other colonial powers profited immensely during the time, such gains were not felt by the public at large, who rather than benefitting were instead steeply taxed to pay the exorbitant costs in extra military and administrative spending needed to maintain and protect far-away colonial outposts, a bill that citizens of non-colonial Western nations did not need to foot.
“Profits earned from overseas engagement were large enough to make some individuals very rich, but they were not large enough to seriously affect macroeconomic aggregates like Britain’s investment rate and capital formation,” Niemietz said.
He added that while the empire “did deliver some modest gains for the British economy, it came with eye-watering military and administrative costs and so may have failed any cost-benefit test.”
“The transatlantic slave trade was no more important for the British economy than brewing or sheep farming, but we do not usually hear the claim that ‘brewing financed the Industrial Revolution’ or ‘sheep farming financed the Industrial Revolution’.”
Niemietz also argued that colonialism itself is not a good predictor of a nation being wealthy, noting that Germany successfully industrialised its economy before engaging in serious attempts at colonialism while Japan was relatively poor by Western standards during its imperial era and only became rich following World War II after which it had lost its overseas holdings.
Additionally, the researcher pointed out that Western countries which either did not have colonial holdings or had short-lived or minor colonial possessions industrialised at roughly the same rate as the dominant colonial powers, saying: “So if there was an ‘empire bonus’, it is not visible in the macro data.”
“The best predictors of how rich or poor a country is today are economic policy and governance indicators such as the Economic Freedom Index and the Ease of Doing Business Index,” he said, adding: “This tells us a lot more than whether or not a country was involved in the slave trade, how many colonies it once possessed, or how long it held on to them.”
The report found that the only “major counterexample” was the Belgian Congo, often cited as one of the more brutal examples of Western colonialism. Niemietz found that the Congo was quite profitable for Belgium as a whole, despite the wealth generated still being mostly directed towards the elites.
However, the report noted it was a “highly unusual example” in multiple regards. To start, the Belgian Congo, also known as the “Congo Free State”, was not officially sanctioned by the parliament in Brussels, forcing King Leopold II to operate it as a “private for-profit company” of the crown without national support and crucially taxpayer money. Meanwhile, the Congo was “exceptionally rich” in sought-after natural resources, such as rubber and ivory.
“It does not show that ‘colonialism’ is profitable. It shows the Belgian Empire that a colony can be profitable if it is run like a profitmaximising private business, if parliament obstinately refuses to subsidise it, and if it is extremely resource rich,” Niemietz argued.
The report also noted that despite heavily profiting from the Congo, Belgium was already a major industrial power before any involvement in the central African country and “it would have been one even if no Belgian had ever set foot on Congolese territory”.
Niemietz did acknowledge that there is evidence that places in the world that were colonised did experience long term negative effects, particularly areas which were environmentally or otherwise inhospitable to Europeans at the time as they tended to establish authoritarian and “extractivist” forms of government, which when they left served as a power structure for continued poor governance from local elites.
“None of this means that there is a deterministic relationship between a country’s colonial past and its present-day economic performance. An extractivist post-colonial
institutional legacy is not a straitjacket that a country cannot break out of. But the legacy exists,” he wrote.
“A history of colonial extractivism, or a period of heavy involvement in the slave trade, made the subsequent development of good institutions less likely. The implication is that colonialism and slavery were not zero-sum games that benefited the colonisers at the expense of the colonised. It was more like a negative-sum game, which hurt the latter without really benefiting the former,” he concluded.