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The Imperial Origins of State-Led Development

Lenin said “Imperialism is the Last Stage of Capitalism.” Globalization protesters routinely link American imperialism to promotion of capitalism overseas. For example, Naomi Klein’s 2008 book The Shock Doctrine: The Rise of Disaster Capitalism draws a vivid connection between American interventions overseas (like the CIA overthrowing Allende in Chile, or today’s Iraq) and the promotion of free markets (“neoliberal economics”).

It’s plausible that there are sometimes connections between military interventions and the economic interests of the intervener. Yet it is not so obvious that imperialism promotes free markets. Historically, the most egregious imperialism, such as the British Empire, actually promoted state-led development rather than free markets.

This is yet another insight of Suke Wolton’s book on the colonial invention of “development” that I discussed yesterday. Propagandists like Lord Hailey offered the necessity of state-led efforts to promote development as yet another justification for the continuation of British colonial rule during and after World War II. This is not so surprising – when the “state” is the colonial ruler, and you want to convince people that poor societies need the colonial ruler, then you want to emphasize the paramount role of the “state” in development. According to Hailey, the state’s “primary function” was the “improvement of the standards of living … in the Dependencies.” The government was the “most active agency for promoting social welfare and improving the general standard of living.” Private enterprise is never mentioned in the British colonial propaganda covered by Wolton.

So it was not such a surprise that the early development theories in the 40s and 50s, in the political environment created by colonial pro-state propaganda, said that countries could not break out of their “poverty trap” without a coordinated state effort at a “Big Push.”

What about imperialism and attitudes toward development today? One intriguing thing I wonder in the light of both today’s post, and yesterday’s post on colonial racism and paternalism, is the affection of today’s British public and academics for paternalistic and state-led theories of development somehow related to the British colonial past? As compared to the lack of sympathy for such theories among the American public and academics, when America lacks much of a colonial past and traditionally criticized colonialism?

Of course, the US has been no slouch as an imperialist lately. Yet today’s US imperialism does not obviously promote free markets. The US quickly abandoned a brief experiment with trying to create the perfect free market in Iraq (correctly derided by Naomi Klein) after the insurgency arose. Now in both Iraq and Afghanistan, there is heavy reliance on the aid-military-state complex to promote development. It is true that American companies have benefited from both interventions, but NOT from free market opportunities in either country. No, they grow fat on aid-government contracts.

So imperialism is not so clearly linked to capitalism and free markets after all; historically there has been a closer link between colonialism/imperialism and state-led approaches to development. People who like Imperialism are fond of a big military state presence, so it’s not so surprising that they are also fond of a big economic state presence.

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14 Comments

  1. Patrick wrote:

    A couple things, probably to muddy the waters just a little bit more:

    1) “the affection of today’s British public and academics for paternalistic and state-led theories of development” struck me a little wrong. I mean, I’m assuming that’s backed up with public opinion data or something? Also, assuming that the British public do go wild for paternalistic theories of development (which I’m assuming is your way of saying they’re the opposite of neoliberals), how can you be sure that this is more a function of their imperialistic tendencies/yearnings than a function of their specific history (I’m thinking perhaps a violent adverse reaction to Thatcherism)?

    2) I think your point in the second-to-last paragraph merits additional emphasis: there is not really a clear-cut division saying that the US practices neoliberal colonialism, while the UK practiced/dearly misses state-led colonialism, both ostensibly for “the good of the natives”. Iraq is the largest recipient of US non-military aid, and while I don’t know the details of that, I’m betting most isn’t going to the (direct) promotion of free enterprise. On the other hand, a lot of British colonialism started as a capitalist venture (well, at least for the day): think the British East & West India Companies.

    I’m sure you could teach me a thing or two about economic history, but from my point of view imposing neoliberal policies on colonized (or “colonized”) countries usually has aims that fall somewhat short of Adam Smith’s perfect markets, and even the most centralized state-led projects usually have bits that are for the private benefits of a few individuals or corporations. It’s not so much useful drawing a thick or even thin line between the two, but rather more useful to look at a development project, or even Development, as a whole and tease out the bits that fall short of of their stated goals of helping the downtrodden, and take that as a starting point for criticism and improvement.

    Posted September 17, 2009 at 9:49 am | Permalink
  2. Matthias wrote:

    “Private enterprise is never mentioned in the British colonial propaganda covered by Wolton.”

    Perhaps because no mention was necessary.

    It is clear that ‘development’ in the colonies never was aimed at improving the well-being of colonized people per se. Colonialism and imperialism were both strategies aimed at acquiring (or denying to other colonial powers) access to markets, resources, or trade routes.

    So the British Empire did colonialism, and then development, in the pursuit of its own strategy in its rivalry with other powers. Whatever increase of welfare for colonial peoples that came out of this process was pretty much a byproduct, and not the focus of the colonial process itself.

    None of this is ‘against capitalism’, and the British example is clear in that political and military domination of foreign lands went hand-in-hand with ‘free trade and free enterprise’ at home. Destroying India’s textile industry was part and parcel of a greater policy of keeping British industry in a dominant position, so as to reap the benefits of ‘free’ trade relative to its rivals.

    ‘It is true that American companies have benefited from both interventions, but NOT from free market opportunities in either country.’

    Businesses, under capitalism, have nothing against getting easy rent from government, at home or abroad. Nothing ‘uncapitalistic’ about ‘growing fat on government contracts’.

    There wouldn’t be such a massive military industrial park in the US if government weren’t subsidizing it permanently.

    ‘historically there has been a closer link between colonialism/imperialism and state-led approaches to development.’

    Usually because governments did colonialism to favor the interests of domestic firms abroad… there’s nothing like semantically shifting (domestic) ‘pork barrel spending’ into ‘charitable giving by States’. In the name of helping Africans, we can subsidize domestic pharmaceutical industries, hire thousands of aid workers at home, and feed tremendous burocracies. However, this has nothing to do with capitalism vs. statism.

    Posted September 17, 2009 at 11:27 am | Permalink
  3. Jim wrote:

    “the affection of today’s British public and academics for paternalistic and state-led theories of development ”

    I too would be interested to see what evidence you have to back up this eye-catching claim.

    Also, I think you’re peddling bad history in your haste to assign guilt by association. For one thing, did you never hear of dependency theory? Y’know, that line of thought popular in poor countries in the mid 20th Century that was both anti-imperialist and anti-free markets? The history of development thinking and state-led economic theories is vastly more complex than you’re letting on.

    Incidentally, was this Lord Hailey you’re so fond of ever actually in a senior Colonial Office position with responsibility for Africa? You’re talking like he ran the show, which does not appear to be the case.

    Posted September 17, 2009 at 12:11 pm | Permalink
  4. QT wrote:

    “the affection of today’s British public and academics for paternalistic and state-led theories of development ”

    Shouldn’t one also consider the socio-economic dynamics of GBR? Britain has a long history of socialism. The Fabian Society for example was started in 1884 and became one of the pre-eminent academic societies in the Edwardian period. With the adoption of a welfare state after WWII, is it any surprise that British academics & the public favor statist solutions?

    Lord Hailey seems blissfully unaware of the opium wars.

    Posted September 17, 2009 at 1:13 pm | Permalink
  5. Fips wrote:

    Just to point out that Lenin wrote about Imperialism as the highest (or latest) stage of Capitalism, not necessarily its last.

    Posted September 17, 2009 at 1:54 pm | Permalink
  6. Richard wrote:

    “the affection of today’s British public and academics for paternalistic and state-led theories of development ”

    It is also interesting to note that the British government has adopted the non-interventionist policies in Hong Kong and Hong Kong has evolved to become one of the freest market economies in the world. And it enjoys a kind of prosperity that no other previous British colonies could have enjoyed.

    Of course, the issue is far more complicated than that. But it is just interesting to not that the attitudes of the British colonizers have changes somehow.

    Posted September 17, 2009 at 3:55 pm | Permalink
  7. Richard Xie wrote:

    “the affection of today’s British public and academics for paternalistic and state-led theories of development ”

    I totally agree that the policies British government has adopted in colonies like India are not in the interests of the Indian people, but rather to defend its position as the world leader in textile industry.

    It is also interesting to note that Britain has actually adopted non-intereventionist policy in Hong Kong, which later has evolved to be one of the freest economies in the world and enjoyed a level of prosperity that no other colonies could have enjoyed. Of course, there are some other underlying factors there, but the institutional factors might be one of the fundamental reasons.

    Posted September 17, 2009 at 3:59 pm | Permalink
  8. LorenzofromOz wrote:

    That imperialism and capitalism have no particular connection to each other is perfectly obvious from history. The Soviet Union was an imperial state, as was Mao’s China.

    Even more to the point, imperialism is simply what rulership does. From the earliest days, when rulership developed, it would seek to increase its control of peasants, trade nodes and trade routes to increase its power and wealth. The notion that there is a “proper” territorial limit to states–beyond their capacity to control territory–is something of a modern invention. Of course, what we lack is much sense that there is a proper internal limit to the ambit of state action. Welfarism is, in a sense, internal colonialism.

    The period when “de-colonisation” began was also the period of the Marshall Plan, of LSE socialism in the UK. As de-colonisation marched along, it did in conjunction with the postwar expansion of welfare states. It is hardly surprising a very state-led notion of development became dominant.

    Posted September 17, 2009 at 5:24 pm | Permalink
  9. Stephen Jones wrote:

    —-“is the affection of today’s British public and academics for paternalistic and state-led theories of development somehow related to the British colonial past?”—–

    Sorry, Bill, bizarre. Are you suggesting the British public and academics are all clones of Paul Collier.

    Posted September 18, 2009 at 1:17 am | Permalink
  10. Bill, you’re making the very common mistake of conflating markets with capitalism. This is false. Markets have existed well before capitalism, and in non-capitalist states now. In fact, I would argue that the biggest problem in development is that we have spent so much time trying to ‘perfect’, ‘prop up’ or otherwise polish or intervene in markets without spending any significant time understanding what kind of economic system these markets exist in.

    For contrasting views on this, there’s De Soto on the one hand (capitalism does not exist in the developing world due to a failure of capital) and Khan and others on the other hand (Capitalism does not exist because the socio-political relations that lead to and sustain it do not exist). Neither school denies the existence of sophisticated markets or of sophisticated entrepreneurship. Neither of which = capitalism.

    Also, as a Brit (of sorts), you’ll find that ‘state-led capitalism’ has more or less disappeared from the political lexicon; even the Labour party very famously removed the clause (46? remind me) in it’s charter which calls for ‘public ownership of the means of production’.

    New Labour is paternalist, but not remarkably statist as far as the economy goes (education and health, yes). Just as the Conservatives have been paternalist (One Nation Tories, anyone?) but avowedly anti-statist (with the exception being in health, where they will not do away with the NHS and never have done in any period in power since it’s establishment in the 1940s).

    Posted September 18, 2009 at 2:17 am | Permalink
  11. h wrote:

    Dear Professor Easterly,

    I admired your book, “White Man’s Burden,” and your speech given at Google (posted some time ago on YouTube), but I wish you would spend less time (as you have throughout your blog and perhaps more than was necessary in your book) on historical analysis, despite its admittedly great importance, and more time in generating specific ideas consistent with your view of what development economists should do in practice. Much of your writing seems to be well-pondered criticism, but little more – particularly with respect to what the average person of moderate means can do to improve the situation (with two possible exceptions I remember mentioned in your book, micro-financing and political lobbying, the latter of which was given little exposition regarding the how’s, what’s, etc.). I wonder, for instance, what you would specifically do if you controlled a significant amount of aid money (besides adding the oft-repeated responsibility component to whatever tasks you and the people working for you, would undertake).

    h.

    Posted September 18, 2009 at 2:39 am | Permalink
  12. LorenzofromOz wrote:

    I have greatly expanded on my point about welfarism being internal colonialism here including a particularly grotesque example of development “colonialism” at its worst: but one where citizens of a developed democracy (Australia) were the “beneficiaries”.

    Posted September 18, 2009 at 5:03 am | Permalink
  13. Asif Dowla wrote:

    David Hulme of Manchester University told me that most of the development studies programs in British Universities were run by former British Colonial Officers. These programs were created to maintain influence in the old colonies and create cushy jobs for colonial officers.

    Posted September 18, 2009 at 9:31 pm | Permalink
  14. Santtu wrote:

    “Businesses, under capitalism, have nothing against getting easy rent from government, at home or abroad. Nothing ‘uncapitalistic’ about ‘growing fat on government contracts’.”

    The fact that there are capitalists who are statist, does not make statism capitalism.

    Rent-seeking via government is a failure of democracy, not a failure of capitalism.

    The state is, by definition, ‘uncapitalistic’, as it is, by definition, an infringement upon private property. If private property is compromised, then the possibility for the private ownership of capital goods must be at least as compromised as the institution of private property in general.

    Posted September 20, 2009 at 9:51 am | Permalink
  • About Aid Watch

    The Aid Watch blog is a project of New York University's Development Research Institute (DRI). This blog is principally written by William Easterly, author of "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics" and "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good," and Professor of Economics at NYU. It is co-written by Laura Freschi and by occasional guest bloggers. Our work is based on the idea that more aid will reach the poor the more people are watching aid.

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