Economic Theory

Colonialism – the foundation of Western prosperity?


On 28 May, the IEA hosted the panel discussion “Colonialism – the foundation of Western prosperity?”, on the subject of the IEA publication “Imperial Measurement: A Cost–Benefit Analysis of Western Colonialism”. The author of that publication, the IEA’s Editorial Director Dr Kristian Niemietz, was one of the panellists. The article below is based on his opening remarks.

 

I was initially going to talk about “Imperial Measurement” itself, but then I thought, maybe it makes sense to go several steps further back, and start with a broader, more general question.

Which is:

Why does any of this matter today?

Why are we even having this event? It’s 2024! There’s a lot going on in the world right now. So why on earth are we sitting here, talking about the old Empire?

It is not at all self-evident that it matters. It certainly isn’t to some of my detractors.

In fact, on the day Imperial Measurement was published, I was on Times Radio, and my interviewer, Matt Chorley, was quite clearly annoyed with me. Not because of anything I said, but simply because I had written this publication at all.

He said (and I paraphrase):

None of this has any practical policy relevance today. You could have written a report on how to sort out the NHS. You could have written a report on how to sort out the housing crisis. Instead – you’ve done this. You’re just needlessly stoking a Culture War. You’re just doing this to wind up the Guardian.

But I’d say, it does matter how we think about the origin and causes of the West’s prosperity. Even if it doesn’t tell us how to sort out the NHS, or the housing crisis.

Why? I’d put it this way:

Think of the economy of Dubai. Dubai is a very rich place. It’s a place that we associate with skyscrapers and luxury shopping. Nonetheless, despite their economic success, I’ve never heard anyone say that we should learn from the economic model of Dubai. I’ve never heard anyone say that we should learn from their economic policies, or their institutions, or their enterprise culture. Why not? Why does nobody say that?

Why, that’s obvious. It’s because we don’t attribute their success to any of those factors. We don’t think of Dubai as a place that gets things right. We think of them as a place which merely got lucky. They’re a petrodollar economy. They got oil. Anyone can get rich when they have oil. That’s not an achievement.

In economic terms, we think of that as almost a form of cheating. If you’re rich because of oil – it doesn’t really count. It means that there’s nothing to be learned from you. You’re just the economic equivalent of a lottery winner.

If you take the standard Guardian view of the Industrial Revolution, you will see the economic rise of Britain and the West in very similar terms. Except, in our case, it wasn’t oil which made us rich, but slavery and colonial exploitation. But the implication is the same: in economic terms, it’s a form of cheating. It doesn’t really count. We didn’t get rich because we got things right. We didn’t get rich because we found an institutional formula, or a policy formula, which generates wealth. We just plundered others. We cheated. There’s nothing to be learned from that “success”. It’s not a “model” to be emulated.

Now, I realise that even most Guardian readers would not claim that we owe our wealth exclusively through slavery and colonialism, and we got literally nothing right. They would say, maybe it was a mix of several factors. X% was slavery and colonialism, (100-X)% was domestic institutional factors. But that’s just a difference in degree: the more you attribute to slavery and colonialism, the less you will be interested in the domestic institutional factors that underpinned the Industrial Revolution.

If you think that X is sufficiently large, you are not going to develop much of an appreciation for the economic model under which the Industrial Revolution took place, and which developed alongside it. You are not going to ask yourself how we can build on that model, how we can enhance its best features, how we can make it even better. No: you are much more likely to become hostile and resentful towards that model. And if that model comes under attack – you are certainly not going to see much of a reason to defend it.

That’s why it matters how we think about the origins of wealth. That’s why it’s worth scrutinising the fashionable “woke” anti-capitalist narrative on this. That’s why it’s worth looking at the numbers, and asking: is the fashionable “woke” anti-capitalist narrative actually true? Do the numbers stack up? How big is “X”? What’s the upper bound? Is there any plausible scenario under which X could conceivably be big enough to justify such a narrative?

That’s what I’m trying to do in Imperial Measurement. I think it’s worth doing.

And if it also winds up the Guardian – I see that as an added bonus.

 

Head of Political Economy

Dr Kristian Niemietz is the IEA's Editorial Director, and Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).


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